Small business: Own or rent? Little School

Maria Johnson, founder of Little School prefers to buy, rather than rent premises. Photo / Steven McNicholl

Maria Johnson, founder of private preschool chain Little School talks to Gill South. LIttle School owns all its school properties in Wellington and Auckland and are all houses.

At the moment Little Schools are located in Kelburn, Khandallah and Churton Park area in Wellington and also St. Heliers in Auckland. In Kelburn we have two preschools and an office building. We have also purchased a property in Remuera to open another preschool. I have always liked the idea of the preschools being in smaller houses in residential areas. It gives an automatic homely feel about them which our families always comment on. It also means the numbers of children we cater for are smaller which appeals to our programme.

Why do you own the houses your schools are in?

I have always liked owning the preschool properties as it gives me the freedom to be able to do whatever I want internally and externally to the property. There have always been quite extensive alterations done - which are expensive but at the same time the properties could always be turned back into liveable houses if required. It means I haven't had to get permission from landlords about what I am able to do. Also by owning the properties I have no unexpected surprises with lease agreements and rental issues or prices. I find owning the properties is beneficial as they are tangible assets as opposed to a leased property with goodwill.

How willing are banks to lend on the purchases?

I have always found the banks to be very helpful when it comes to mortgages. I have always done my homework and market research before purchasing any properties. Banks will always look at your credit history along with your business plans to protect themselves. They will also look at your demonstrated financial performance and your capacity to repay your loan. I guess for them the assurance that the property could always be converted back into a residential home is a safe guard along with the fact that our preschools are in areas where the property values are quite stable.

How do you custom-make your Little Schools?

I have a very particular design for Little Schools. They have to first of all meet the council and Ministry of Education requirements, so when purchasing I make sure the property is going to be able to cater to these. The properties have to be able to be designed so we have indoor outdoor flow along with the ability to make small learning areas and play spaces for the children. Because our programme is structured and our environment is used as our third teacher, the properties have to be able to re-designed to meet these needs.

Tip for other SMEs looking at buying their property

Separate the property out from the business so that the business rents the property from you.

Next week we look at SMEs who open their doors to interns and to school children looking for some career guidance. What's in it for them? Send in any of your thoughts or experiences to me, Gill South, at the link below.