How To Set Up

The information below is intended to be used as guidance about what you will need to consider when setting up your own nursery. It does not cover each area in detail however, will give you an overview of what to consider and where to go for more information.

Market research

You must study the demographics, demand and competition in your area. Are there new housing developments with young families moving in, for example? It is important to look at the main employers in the locality and the needs of employees at smaller local businesses too. First and foremost you must have a budget in mind; the location could be ideal, but if it is too expensive then it just won’t work. Click here for advice on how to carry out market research.

Business structure

You need to structure your business correctly; are you a partnership? Limited company? There is plenty of information from the government here about what you need to know and also here with regard to other setting-up issues such as registering with HMRC and employing staff for the first time.

Business plan

It is vital that you have a business plan to be clear on what you are trying to achieve and how to achieve it. If you trying to access grants and funding, this will be essential. There are plenty of guides available online such as this one from Buckinghamshire County Council or this one from a private company.

Choosing a site

Once you have a budget in mind, you need to consider issues such as whether it has adequate parking for staff and parents or good public transport links. You may need to make a planning application for change of use if you are choosing a site on an industrial estate, business park or town centre office location.

Size matters

You need to think about how large your site needs to be. Remember, the larger the site, the more costs could be associated with adapting it to suit your purpose and then running it in terms of staffing, maintenance and so on.

Adapting the premises

You need to be prepared to carry out the all the necessary building work to equip your premises with different areas for different age groups of children, toilets, kitchen, office space and a suitable outdoor area.

Your offer

The The Early Years Foundation Stage Framework is the basis of a nursery’s offer. It can be found here.

You must ensure that your nursery is able to meet all its requirements. When setting up, you need to consider exactly what you will be offering as this can have an impact on the site you choose as it will affect income and expenditure. What about extra activity, language or music classes? Will you be offering early and late opening hours? Remember this will affect the number of meals you offer and therefore your expenditure.

Funding and finance

Government grants are available for new childcare settings from time to time. Check this page for the latest information. There are also other sources of start-up funding from regional and local governments, enterprise councils and so on.

Here are some useful links:

You will need to take on an accountant but you must also learn how to deal with income and expenditure, cashflow and basic bookkeeping yourself. This is a helpful place to start:


You must register with Ofsted to provide childcare. There are two registers in England; the Early Years Register if you look after children aged five and under and the Childcare Register if you look after children aged five to seven. You can find out more here.

And follow the Ofsted Common Inspection Framework so that you know what an inspector is looking for. With this specific guidance for early years.

If you are opening a nursery in Scotland, you must register with the Care Inspectorate.

If you are opening a nursery in Wales, you must register with the Care and Social Services Inspectorate Wales (CSSIW). You can find out more here.

Ensure you meet all of the Early Years Foundation Stage Framework requirements, which can be found here. You can find out more about registration here.


Click here to apply for a policy or see our separate section on insurance here.


Staffing costs are estimated to be about 80% of the costs of running a nursery. All providers working with children from birth to five-years old must follow the regulations on qualified staff to child ratios. These regulations are set out in the statutory framework for the early years foundation stage (EYFS). Providers must ensure staff have the appropriate qualifications to be counted in the ratios. You can find a list of appropriate qualifications here.

You must comply with all the necessary employment law and health and safety regulations for your staff. This government website is a good place to start.

You also need to have policies on everything from safeguarding to data protection and make sure that these are not just on paper but used in practice.

You will need to offer continuing professional development (CPD) training to staff. See our separate section on training here.

Branding and marketing

You should think carefully about a business name and branding as well as setting up a website to be able to market your nursery effectively, but also to be an important source of information for parents. You need to learn about registering a domain name and intellectual property law for the registration of your company logo. You can find out more here.

Diary of a new nursery

Dr Jane Todd opened Do Re Mi Nursery in Durham on New Year’s Day and we followed her journey. Click here to read the full article.