The Childcare Business Coach
The Childcare Business Coach
Building a Resilient Childcare Business: Strategies for Thriving Amid Economic Challenges
Are you ready to transform your childcare business into a resilient asset that thrives even in economic storms? Join me, Evelyn Knight, as I share insights from my 17-year journey navigating the ever-evolving landscape of childcare. Learn how to tackle the economic challenges of 2024 brought on by subsidy changes and financial setbacks, drawing inspiration from Southwest Airlines' innovative problem-solving ethos. I reveal strategies for diversifying income without burdening parents, ensuring your childcare program stands strong against financial difficulties.
We'll confront the startling reality that 91% of childcare centers falter before a decade, with an even smaller fraction successfully sold. Discover the critical steps to treat your business as a future-focused asset, avoiding the fate of those who failed to prepare for the future. Plus, explore the game-changing potential of tools like Kangaroo Time that streamline operations and promote innovation. Tune in to this episode for actionable strategies and personal anecdotes that will empower you to build a successful, sale-ready childcare business while embracing change and innovation.
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www.childcarebusinessprofessionals.com/grow2025
Welcome to the Child Care Business Coach Podcast. My name is Evelyn Knight. I hope everybody is doing well and I'm excited for today. Today is the first day of our free webinar series that we're doing for everybody on thriving through any economy, and I'm really excited about this because it kind of takes me back to my roots.
Speaker 1:In 2020,. I saw that there was a lot of turmoil happening and there just was a lot going on in ECE and I was doing okay because I had set up a backup plan and so, even when the economy was at its worst in 2020, I was actually doing just fine. And so I had to really just kind of look around and I saw so many of you out there in despair that every single day, I started going on live to be the cheerleader, to be the cheerleader to let you know that we can do this. You can make it through this economy. We made it through 2020. And I know right now things have been pretty bad and they are going to get better. They are, I mean, but it's going to take some time before they get better and we can do this again. We can do this, we can make it through this economy. And there's something a little bit different this time and that's really why I decided I need to start hopping back in, doing these free webinars, really coming in and pouring into the ECE community.
Speaker 1:And there is something different. During COVID, I had savings and I had built myself up so that I could make it through hard times right. And 2024 was a really hard year for my child care center. Those of you here in Nevada, you guys know all of the subsidy changes and so many things happened last year that altogether, I lost a lot of money in revenue because of a lot of the changes that were happening. So let me know in the comments if you this has happened to you, or if you're listening to the podcast, send me a message and let me know is this something that has happened to you as well? Where we're? Just I don't know. Something is just. It was a hard year. I know the federal government cut our subsidy programs and so many people became reliant on that during the past four years that it made it really, really hard.
Speaker 1:But there is something different this time. I decided I don't want to go through my savings. We work hard to build up our savings and to build up our rainy day fund, but why do we have to use that? I don't want to go through my rainy day fund. I don't want to have to use the savings that I worked hard for right. So when we look at what we're facing right now, parents can't pay enough in tuition. If you're not living in a high income area, parents cannot pay enough right. So we have to find alternatives and we can, and I just really looked at 2024. And I did have to use a lot of my savings after there were a lot of things that happened and we took a couple steps backwards, and so I started really doing research last six months and that I'm not doing this. I'm not going to run a business where I have to dip into my savings anymore. I'm not going to do this and we don't have to. So I want to help you out there, you childcare leaders, in how can we diversify our incomes. We cannot put all of this on the backs of our parents, and there are other ways for us to keep reasonable childcare costs without going to our savings, having to get SBA loans to survive all the things. But we have to think differently.
Speaker 1:So this weekend I heard a story about Southwest Airlines that really intrigued me and changed a lot, and I want you to really think about this. Southwest Airlines was losing millions of dollars a year because it took 45 minutes for them to turn their flights around when they landed. So when they land, the passengers get off, the new passengers get on. It was a 45-minute turnaround time and that cost them millions and millions of dollars when you think of a fleet of airplanes, right? So they kept coming to the table and asking. So they kept coming to the table and asking how can or why are these airplanes stuck on the runway for so long? Right, and nobody can figure it out. Nothing was happening. So they hired someone to come in and help and that person changed one thing. The only thing that person changed was how they were framing the question. That's it. Instead of asking why are our airplanes stuck on the runway for so long, he came in and said how can we get our airplanes off the runway faster? Can we get our airplanes off the runway faster? And, ironically, I think it's hilarious that this big corporation had to hire one consultant to do one little thing, paid hundreds of thousands of dollars just to reframe a question. That's it.
Speaker 1:So for us in childcare, we're looking at enrollment right now, why aren't people enrolling? Why can't I charge more? Why all the wrong questions? We're asking the wrong questions For me. I went through a little over $100,000 in savings last year just trying to keep up with what was going on at my child care center, and I decided no, I'm not doing this, I'm not going through my savings anymore. I'm not going to do this. So instead of asking why am I going through my savings, I need to ask a different question how can I create a program where I don't need to go through my savings? How can I create a program where I don't need to go through my savings? How can I create a program where I don't have to raise my rates and basically outprice some of my parents out of the system? What alternative measures can I take? This industry is dying.
Speaker 1:I was studying this all weekend 91% 91% of childcare centers fail before they hit the 10 year mark. I really want you to hear that. 91%, including the big corporations, fail. Only 9% of childcare programs survive past the 10-year mark. I was actually really proud of myself when I heard that, because I've been in business for 17 years. I'm like yes, I have beat 91% of the people out there 91%. But I want you to really understand and hear that. And did you know that the percentage of owners who can actually sell their company and exit is only 3%? That's insane. Only 3% have a viable company.
Speaker 1:There's a beginning to everything and there's an end to everything, and most of us don't ever think about the end, but you need to all the time. You should always be thinking of the end, not just the beginning. We don't know what's going to happen. I know that better than anybody. We don't know what's going to happen. I know that better than anybody. Losing my husband a few years ago was really hard. The me of 20 years ago, the me of 10 years ago, did not know that I was going to lose my husband, right? So what if it had been me? Instead, we would have had to sell my childcare center.
Speaker 1:So are you treating your program like it's an asset? Are you creating a viable business that can go beyond the 10-year mark? Number one and number two when you're ready to retire, do you have a viable product that you can sell? And I know, I know you guys, I'm not thinking about selling my company, right, I'm not, but I still need to make sure I can. At any moment, you don't know what life is going to throw at you. We don't know, we don't know. And so, if you really start looking at your business, well, the business, this is a business, but we don't treat them like they are, and that is the problem.
Speaker 1:Did you know that, with the studying I've been doing this weekend, there is one thing that separated the companies? That lasted beyond nine years? And, by the way, when I was doing this study, even fortune 500 companies, like 91% of all companies, go out of business within the first 10 years. They don't make it. Even fortune five company, fortune 500. Right now, a fortune 500 companies lifespan is 15 years. And there is one thing that was different about all the companies that made it past 10 years. There's one thing they all had in common they always had the end in mind. They were future focused. They weren't as concerned about what was happening today. They were always taking into account if I make this decision, what is going to happen to me tomorrow? That was the one difference. So, even if you're not planning on selling, you have to treat your center like you are, otherwise you're going to be part of the 91% that fail, and you'll be part of the 97% that, even if you do make it beyond the 10 years, you'll be part of the 97% that don't have a viable business to sell when it's time.
Speaker 1:There was here in my hometown there was a old auto shop been open for 30 years. The owner decided that he was ready to retire. He was done 30 years and it was a very high producing auto shop. It did really really well. He did really well, but when he went to sell he had nothing to sell because he treated his business like it was just a owner, operator, mom, pa, small business. He didn't treat it like it was an asset, so he had nothing to sell.
Speaker 1:Many of you do this. I get approached all the time. At least once a month people come to me to try and get me to buy their childcare program Right and the first thing I ask them is send me your documents. I want to see all your financials. So I get P and L's and I get balance sheets and all the things sent to me. Do you know that I would say 95% of the time there's nothing to sell. There's nothing to sell. I had one um sad story. And if you watch my other videos, uh, on my personal page. I don't think I've posted them on any of the groups, but on my personal page I don't think I've posted them on any of the groups, but on my personal page I'm opening a childcare program right now and I'm showing you the furniture that I have right.
Speaker 1:So a couple of years ago I had an owner approach me on buying her childcare program. I drove down to the city about two hours away and I looked at her books and all her financials. She was asking about $150,000 for the business. After doing my evaluation, it wasn't worth 150. I was being very generous and I offered her $25,000. That's it. Because she really didn't have a viable business and, honestly, the only thing I was buying from her were materials and supplies. So, to be honest, $25,000 was still offering too much money for this business. Of course she refused. She's like there's no way, no way.
Speaker 1:About a year later she was selling to one of my clients for $75,000. She did go from $150,000 to $75,000. Now my client lived in the area. She had some other motives, so she knew she was overpaying. But she was willing to overpay for this program because it fit her needs right. But it was not worth $75,000. Now, keep in mind, they started at $150,000. Now we're at $75,000. Now, keep in mind, they started at 150. Now we're at 75.
Speaker 1:Well, this owner decided to start nitpicking little things and she tried to raise the price, tried to get more out of my client. My client backed out. So, fast forward, about six months later I get a phone call and it is from this original owner and she says to me you know what? I'm just closing my doors. Do you want to buy all my furniture? Sure, I'll buy all your furniture.
Speaker 1:So I drove down there, took a look at all her furniture. She she, by the way, she had already tried to do like a garage sale, a rubber sale thing. She put things on Facebook marketplace, all the things right, all the things right. I ended up giving her $1,500. That's it, all the furniture in that building that was licensed for 50 children. I ended up paying 1,500. Now, think about it. I had offered her 25,000. She also was in contract with somebody for 75, which was way too much money. But because she didn't have the business acumen and she didn't have the right systems in place, she didn't have a business that was worth anything and, honestly, the 1500 I ended up paying is all it was worth. That was it. That was it because she had no viable business. That's. All she had was the stuff inside the building.
Speaker 1:So if you're in that situation now and you know deep down, like I got to do this I don't want to go through my savings or maybe you're out of your savings and you don't know how you're going to pay next month's payroll be sure to join us for the free webinar I'm doing. It's only an hour and a half away. We're going to be doing a free webinar on really how to make yourself resistant to the bad economies. If you can't make it live, we are going to have recordings, so please do not miss out. You have done hard things before. This is just another one.
Speaker 1:We can make it through this economy and we can do it by bringing in more streams of income instead of just relying on the one. Successful companies always have about five streams of income. In childcare, we have one, we have tuition. We need more, and really all it comes down to is changing the question how can we bring more income into our centers? And building up your business acumen so you really understand what actions you need to take when you need to take it, so that you don't find yourself so buried that you don't know how you're going to make it and you don't have to reach out to people like me to come in and take over your center. I don't like doing that. I would much rather help owners build their businesses, have a successful company and keep the business they dreamed of, instead of having to come in and bail them out. It's so much better for all of us if you get to keep your dream.
Speaker 1:So if you haven't signed up yet, please do so, and this is also going to work for you. If you're doing great, your center might be doing awesome. You might be in an area that isn't struggling like a big part of the United States. This program will also be great for you, too. In this workshop, I'm basically going to just teach you how to build more income. So if you are a serial entrepreneur and you're really just trying to build up your portfolio and you want the valuation of your childcare center just to be higher and higher and just make it a much more highly valued company, then this is also for you. So please make sure that you join us for our free webinar coming up.
Speaker 1:I am going to put the link in the chat right now. If you're watching on my Facebook group, I will have to put the link in the chat after, because I'm on a different platform platform and I should have it in the comments. If you're on YouTube or Instagram, it should be in there right now, but I will add it. Yep, that's right. Okay, I will add it for all of you. But, yes, please join us for our webinar. Christina, if you're in there, I would. You could drop the link in the chat. That would be awesome, but it will change your childcare business. It will.
Speaker 1:We don't have to suffer and you don't have to go through your savings to get through this economy. There are other ways and I promised myself in 2025, I'm not ever going to be in the position again where I have to blow through my savings. I'm not going to do it. I mean, it's great to have it, but when I have it, I want to use it to be my own bank. So if I need to go buy a new van or I need to do some construction project, I can use it. In that sense, I don't want to have to go and tap in because of tuition issues and we don't have to. So let's change this now together.
Speaker 1:And, by the way, this episode of our podcast is brought to you by kangaroo time, which is the most amazing software. I use it at my programs. I um absolutely love it. I can't even tell you guys how amazing kangaroo time is about training us and doing all the things. They meet with my management team once a week just to make sure that we are really fully utilizing the company to its fullest. They really want to make sure we're happy and that we are using their software to make our lives easier and that we're really getting our money's worth. I have tried some of the other software companies and they are absolutely the best. The other thing I have to say about kangaroo time is I really research companies before I allow them to endorse me or before I allow them to be one of our sponsors, and I promise you I will never bring on a sponsor that doesn't have integrity. I will vet them because that is very, very important to me.
Speaker 1:So thank you everybody so much for watching. Make sure that you go to childcarebusinessprofessionalscom slash grow 2025. The link will be in the notes and sign up for today's free webinar. If you miss the live. We will get you the recording, but you do not want to miss out, you guys, this is a big deal. You don't want to miss out. It is time for the EC revolution. You don't have to be the blockbuster of the industry. You can be the Netflix. So join us. Bye, everybody.