Running the business
Nursery business plan template for UK owners
A section-by-section business plan template for opening or running a UK day nursery, with the cost categories lenders expect, a break-even method that works, and the regulatory steps that determine your opening date.
A business plan is not paperwork for a bank manager. It is the exercise that tells you, before you sign a lease or a staff contract, whether the numbers work at the occupancy you can realistically achieve [1].
Nurseries are unusual businesses. Your capacity is capped by law through ratios, your largest cost is fixed contractually before your income arrives, a large share of your revenue is set by a local authority rather than by you, and demand is seasonal in a way that hits every August.
This template works through each section in the order a lender reads it, with the assumptions to state explicitly and the numbers people most often get wrong.
1. Executive summary
Write this last and keep it to one page. A reader should finish it knowing what you are opening, where, for whom, at what price, and why you will fill it.
- Location and catchment, in one sentence.
- Registered places by age band, and the ratio implications of that mix.
- Opening hours, session structure and weeks per year.
- Headline fees and expected funded-to-private income split.
- Break-even occupancy and the month you expect to reach it.
- Total funding required, split between capital and working capital.
- The management team’s relevant experience, briefly and factually.
2. Market research and demand
Demand evidence is where most plans are weakest. "There is a lot of demand locally" is not evidence. Numbers from named sources are.
- ONS small-area population estimates for children aged 0–4 in your catchment [2].
- Your local authority’s childcare sufficiency assessment, which states where places are short by ward and age band.
- A count of competing settings within realistic travel distance, with their capacity and published fees.
- Waiting-list evidence at nearby nurseries — ask directly, and note what you were told and when.
- Housing and employment pipeline: new developments and major employers change catchments faster than population estimates do.
| What to record | Why it matters |
|---|---|
| Places and age bands | Tells you where local capacity is actually short. |
| Full-day and session fees | Sets the ceiling on your private pricing. |
| Funded hours accepted, and any conditions | Reveals how competitive your funded offer must be. |
| Opening hours and weeks per year | Extended hours are often the cheapest differentiator. |
| Latest Ofsted outcome | Shapes parent perception before you open a door. |
| Online presence and photos | A weak local field online is a genuine opportunity. |
3. Your offer and capacity model
Capacity is not a single number. It is a set of room-level limits imposed by floor area and by ratios, and it drives everything downstream [3].
Build a room-by-room table: age band, registered places, ratio, and therefore staff required at full occupancy. A fifty-place setting weighted towards babies needs dramatically more staff than the same fifty places weighted towards pre-school, and the difference is your entire margin.
| Room | Places | Ratio | Staff at full occupancy |
|---|---|---|---|
| Babies (under 2) | 12 | 1:3 | 4 |
| Toddlers (age 2) | 16 | 1:4 | 4 |
| Pre-school (3+) | 24 | 1:8 | 3 |
| Total | 52 | — | 11 plus management, cover and breaks |
This table is an illustration of the method, not a recommendation — build your own from your registered places and room areas. Ratios and qualification conditions are set out in our guide to early years staff ratios.
Then decide what makes you different in a way a parent can see: extended hours, all-year opening, forest school, home-cooked food, a garden that is actually usable in February. Choose one or two and resource them properly.
4. Financial plan
Lenders read this section hardest. Include a three-year forecast with monthly detail for year one, and state every assumption in words next to the number.
| Category | What to include | Typical share of turnover |
|---|---|---|
| Staff costs | Salaries, employer National Insurance, pension, agency cover, training, DBS checks. | The dominant cost line in almost every setting |
| Premises | Rent or mortgage, business rates, utilities, maintenance, waste, security. | Second largest fixed cost |
| Food and consumables | Meals, snacks, nappies, wipes, craft materials, cleaning products. | Scales with occupancy |
| Insurance | Employers’ liability, public liability, buildings and contents, professional indemnity. | Small but non-negotiable |
| Systems and admin | Nursery management software, payroll, accountancy, telephony, website. | Small and often underestimated |
| Marketing | Website, photography, signage, open days, local advertising, directory listings. | Underspent in year one, then urgent |
| Regulatory | Ofsted registration and annual fees, ICO registration, food hygiene. | Small, but blocks opening if missed |
Separate funded income from private fee income in the forecast. They have different rates, different payment timing and different growth constraints. Our guide to funded hours rates explains how the payment cycle behaves.
5. Break-even and sensitivity
Break-even occupancy is the number that decides whether the business survives its first year. Calculate it properly rather than adopting a rule of thumb.
- Total your fixed monthly costs — rent, rates, core payroll, insurance, systems.
- Calculate contribution per occupied place per month: average fee income per place, less the variable cost of that place.
- Divide fixed costs by contribution per place to get the number of places you must fill.
- Express that as a percentage of registered capacity — this is your break-even occupancy.
- Re-run the whole calculation at 60%, 70% and 85% occupancy, and again with the funded rate 5% lower.
State the resulting occupancy figure and how many months of working capital you hold before you reach it. A lender will ask; better that you have already answered.
6. Regulation, registration and premises
You must register with Ofsted on the Early Years Register before caring for children under the age of eight for more than two hours a day [4]. Registration determines your opening date, so put it on the critical path of your plan.
- Confirm planning permission and change of use for the premises before committing to a lease.
- Check building regulations, fire safety and accessibility requirements for the intended use.
- Apply to Ofsted, including DBS checks, health declarations and suitability evidence.
- Register with the local authority for food hygiene, and with the ICO for data protection.
- Put statutory policies in place — safeguarding, complaints, health and safety, SEND, behaviour.
- Sign your local authority’s provider agreement if you intend to deliver funded hours.
- Recruit and induct staff, allowing time for DBS returns before your planned opening date.
7. Risk register and mitigations
A short, honest risk section increases credibility with lenders. Name the risk, its impact, and the specific mitigation.
| Risk | Mitigation |
|---|---|
| Slower fill rate than forecast | Extra working capital; pre-opening marketing; waiting-list deposits. |
| Recruitment shortfall for qualified staff | Apprenticeship pipeline; verified bank list; retention plan built into pay structure. |
| Funded rate uplift below cost inflation | Model the downside; review private-to-funded mix annually; engage with rate consultations. |
| A weak first inspection | Robust induction and curriculum clarity from day one; external pre-inspection review. |
| Key-person dependency on the manager | Documented systems; deputy developed and paid to be a genuine deputy. |
| Utility or rent shock | Fixed-term contracts where possible; rent review dates modelled in the forecast. |
How Nursery Advice helps
Fill rate is the assumption a nursery business plan lives or dies on, and enquiries increasingly begin with an online search rather than a walk past your gate.
Every registered UK day nursery already has a page on Nursery Advice built from official records. Claiming yours lets you publish your own description, photos, fees, funded-hour availability and opening times, and receive enquiries directly — which is exactly the marketing line most new settings underfund in year one.
Claiming takes just a few minutes. Claim your nursery listing, or see what a claimed listing includes
Frequently asked questions
How much does it cost to open a nursery?
What occupancy do we need to break even?
Do I need a level 3 qualification to open a nursery?
How long does Ofsted registration take?
Should we buy or lease premises?
What insurance do we need?
How far ahead should the forecast run?
Can we get grant funding to open?
How many staff should we budget beyond ratio?
When should we start marketing?
Ready to reach more parents?
Claim your nursery listing on Nursery Advice — add photos, fees, open days and direct parent enquiries.
Claim your nursery →About this guide & sources
Every numerical claim in this guide is sourced from UK government, NHS or recognised charity publications. We re-check each source on the article’s review date.
- GOV.UK — Write a business plan (retrieved 2026-09-11)
- Office for National Statistics — Population estimates for the UK (retrieved 2026-09-11)
- Department for Education — Statutory framework for the early years foundation stage (retrieved 2026-09-11)
- GOV.UK — Register as a childcare provider (retrieved 2026-09-11)
- Health and Safety Executive — Employers’ liability insurance (retrieved 2026-09-11)
- Department for Education — Early education and childcare: statutory guidance for local authorities (retrieved 2026-09-11)
- GOV.UK — Business rates relief (retrieved 2026-09-11)
Keep reading
Funding & finance
Funded hours rates for nurseries: what providers are paid
A working guide to funded childcare for nursery owners: the entitlements, how local authority rates are set and paid, what you can and cannot charge alongside them, the supplementary funding streams, and how to protect cash flow.
Read guideRatios, staffing & recruitment
Early years staff ratios explained for nursery owners
A room-by-room breakdown of the statutory staff:child ratios for day nurseries, who can and cannot be counted, how ratios work during sleep, outdoor play and outings, and the record-keeping that protects you at inspection.
Read guideOccupancy & marketing
Nursery marketing ideas that fill places
Practical, low-cost marketing for UK nursery owners — how parents actually search and choose, what to fix first, how to run open days that convert, and how to turn a waiting list into occupancy.
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