How EJ Built a $20M+ Childcare Empire Using SBA Loans (Full Breakdown)

In this powerful episode of Success Formula, host Shawn sits down with EJ, a franchise childcare entrepreneur who has built a multi-million dollar empire by doing one thing differently than his competitors: staying obsessively hands-on. Starting with zero experience in 2018, EJ purchased his first school for $6.45M using SBA financing and a strategic real estate play that most business owners completely miss. Today, he operates multiple locations generating hundreds of thousands in annual revenue while simultaneously benefiting from property appreciation.


But here's what separates EJ from average operators: he's not chasing passive income. Instead, he's invested heavily in top-tier talent, created systems that scale, and maintained the kind of customer service and transparency that turns struggling schools into thriving institutions. In this conversation, we break down the financial mechanics of SBA loans, the dual-profit model of owning both the business and the real estate, why paying premium salaries for exceptional staff actually maximizes profit, and how state regulations impact your bottom line.


We explore EJ's operational playbook for scaling from one location to multiple schools, including how to fill new facilities with families, what to look for when acquiring existing schools, and why the best operators are never truly passive. You'll discover the teacher-to-student ratios that matter, insurance considerations that have tripled in recent years, pricing strategies that work in competitive markets, and the real estate appreciation play happening underneath your business operations.


Beyond childcare, EJ also opens up about his latest ventures: a luxury short-term rental property on four and a half acres in Galveston that sleeps 48 people comfortably, and an upcoming hotel acquisition outside of Round Top, Texas. Whether you're interested in the childcare industry, franchise models, commercial real estate investing, or just understanding how elite operators think, this episode delivers actionable intelligence you can apply immediately.


If you're an aspiring entrepreneur, business owner looking to scale, or investor exploring franchise opportunities, hit that subscribe button and ring the bell for more deep-dive conversations on Success Formula. Drop your biggest takeaway in the comments below and let us know what topics you want covered next.

Instagram- https://www.instagram.com/ejenergyhouston/

Tune in every Tuesday at 10 AM for another inspiring success story, along with the proven formula to help you achieve your own goals. Don't miss out on the insights that could change your life!

Buzzsprout- https://successformulapodcast.buzzsprout.com/
Spotify - https://open.spotify.com/show/7aRe06pXIq6yq8GQf62NBM
Amazon Music - https://music.amazon.com/podcasts/1393b77c-626a-4a53-bdd5-43ce3b1aa15b/success-formula-podcast
Apple Podcast- https://podcasts.apple.com/gb/podcast/success-formula-podcast/id1748704615

Our Social Media:
Youtube: https://www.youtube.com/@OfficialSuccessFormula
Instagram: https://www.instagram.com/officialsuccessformula/
Twitter: https://x.com/_SuccessFormula/
Tiktok: https://www.tiktok.com/@officialsuccessformula

Transcript

SPEAKER_00 0:00

Did it catch well first? I sat down with a man who owns the largest preschool in Titan.

SPEAKER_02 0:05

I bought my first school first $6.45 million.

SPEAKER_00 0:07

And he told me exactly what he paid for his first school, how much it cost to build one from the ground up.

SPEAKER_02 0:12

If you're looking at getting into the childcare business and just to back How much revenue this business actually generated?

SPEAKER_00 0:20

They were losing about $15,000. These numbers are not what I expected. This is one of those episodes where you are going to walk away with the information that you cannot find anywhere else. There were some times where we looked at each other like make sure you watch the full podcast because I couldn't believe what he said about and that'll bring us to about six figures a week. So before we get into the how-to that I wanted to talk about today, the you know, how to run a school, what made you decide to open a school? Like give me the background. Like where did you graduate from high school, college, and then leading up to opening the school?

SPEAKER_02 0:58

So I uh one of my good friends growing up in high school, his dad retired from JCPenney's at a pretty young age in his mid-40s. And so he still had some legs underneath him and he wanted to get in into his own business. And uh one of them was uh it was three things, and it was uh CC's pizza.

SPEAKER_00 1:17

So um I used to ether.

SPEAKER_02 1:20

Yeah, everything I think everybody did. Uh so essentially uh restaurants, retail or child care. And I specifically vividly remember him um asking this question and uh and he said simple no weekends, no holidays. And the light bulb went off at that at that time. So fast forward 2018, I was in the uh energy business. I was uh in the uh natural gas and power business. And uh I wanted to be my own boss, and I remembered that no weekends, no holidays. And so I called my my buddy. Um he he was running his his dad's schools. He had he had owned three uh since since the inception of him buying his first school in the late 90s. And I said I wanted to get in the business, and and he said I'd I'd help you out. And about a month later, Kids Our Kids International was having lunch with me, and I bought my first school. I was gonna develop.

SPEAKER_00 2:13

So you bought a pre-existing school.

SPEAKER_02 2:14

I did. So I was gonna develop. So I didn't know anything about the business other than childcare, and then I wanted to get in the business. And so I uh I was gonna develop and I got with uh with a banker and I told him, you know, this is what I want to do, and kind of had the green light on some some areas because in a franchise you you can't just say, hey, I want to develop here. There's there's certain guidelines, you can't be in a certain zone, three miles apart, this kind of a thing. So I'd gotten green light on an area of town that I wanted to develop in, and the banker looked at me and said, Why don't you just buy a school, an existing school? And I said, Well, that's great, but you know, it's not like I'm just driving around, there's for sale signs out there.

unknown 2:53

Yeah.

SPEAKER_02 2:53

I said, Oh, you gotta get with the broker. So I got with the number one broker, childcare broker, and uh he told me, First of all, you have no idea what you're doing. And so I'm gonna add, I'm gonna have you pay a little bit more, but it's gonna be worth it because you're gonna come to me for your second, third, fourth, fifth school. And so I bought an existing school that was kind of the crown jewel of schools in the Houston area. Okay. It was turnkey. I literally walked in. I said, I'm doing nothing different. This is not broken, do not try to fix it. And I kept the same staff, didn't I didn't change a thing. The owners were retiring, they were getting out of the business, and it was a smooth handoff. And pretty much I I when I would have situations, I would consult with some people that I that that I respected that were in the business. Um and um, you know, cut my teeth that way, made some mistakes. Um that of course, you know, whenever you make mistakes, you lose money, but that's how you learn. And and I just for since then just took on so much uh information and try to learn and and and listen to my customers, my my my staff and my uh my my parents.

SPEAKER_00 4:03

As with any business, I think a lot of people think they need to know everything before they start, and you don't. I mean, yeah. I mean, buying a business is actually even easier because there at least there's a system or something in place. I mean, startups are really hard. Yeah. And it takes you, you'll waste a lot of money learning, uh, and then when you finally get good, you know, it's it's a lot of time lost, right? So, you know, buying a business is good, and there's tons of people. Every story I hear about somebody buying business, uh, it's people retiring and like, uh, you know, I'm I'm good. I just I don't want to deal with the day-to-day anymore. What did the numbers look like? And how long was how long was the school operational first? Like how long had it been at the end of the day.

SPEAKER_02 4:40

That's that particular school was opened in 2004. Okay. The numbers were were really good.

SPEAKER_00 4:45

Um, yeah, can you share can you share like the at least at least revenue and maybe EBITDA, just so I can get an understanding on, you know, or people can get an understand what something like that would go for as far as the sales price and like what it is bringing in.

SPEAKER_02 5:01

Uh with with the model of Kids Are Kids, uh you buy This is a franchise. This is a franchise. It's out of uh Georgia. There's about uh a little over 200 location store uh schools nationwide. Okay. Uh mostly concentrated down in Texas. Um Houston has about 60 locations. Okay. Uh mostly concentrated in the suburbs. Um we're starting to get in in inside the uh the city limits, but uh but mostly on the in the suburbs. You know, we like to be where the kids are at, right? Um I bought my first school for 6.45 million. Okay. And there's about uh there's about a about a five times uh Delta from there. Okay.

SPEAKER_00 5:42

From so five times multiple on the multiple correct. Okay.

SPEAKER_02 5:46

And that's really where you want to be.

SPEAKER_00 5:48

Um did you get traditional financing? Did you owner finance it? How did the acquisition?

SPEAKER_02 5:55

SBA financing, yeah. Uh 10% down, uh, and then you know you uh you get with SBA uh and you're off to the races.

SPEAKER_00 6:05

Was it how long was the school in business before you bought it?

SPEAKER_02 6:07

So I bought it in 18, 2018, and it was it it it opened in 2004, that particular location.

SPEAKER_00 6:13

Oh wow, okay, so super established. I mean, it's not going to be a good one.

SPEAKER_02 6:16

Very much established, um, not going anywhere. Very great name. You know, I uh again life teaches you all these lessons as you go. And I remember a buddy of mine, um, he had opened up a a smoothie, a smoothie shop. This is back when Smoothie King was just getting going. They were popping up everywhere. And he opened up his own, his own mom and pop, you know, smoothies RS, whatever it is. And I remember him telling me, he goes, if I had to go back, I would open up a franchise. And again, I took that information and I applied it to 2018. And I said, okay, franchise, gonna have to pay a little bit because there's there's royalties and franchise fees and all these kinds of a thing. But it it's it's the formula is there again, you know, that they've gone through all of the rigorous, you know, testing and and what works and what doesn't. And so you're buying uh system, you're buying a system, you're buying a process, you know, everything down to minute details are already turnkey for you.

SPEAKER_00 7:10

Did it cash flow? So you put down 650. Did it cash flow the first day? It did. So with SBA loan, is it 30 years? Is it 25 years? 20 year am. Okay. And do you have to refinance it ever or is it a balloon?

SPEAKER_02 7:25

So it is a balloon. You pay pre-payment prepayment penalties. It is pretty expensive, I will tell you that. Uh, the interest rates are a little higher.

SPEAKER_00 7:31

Um but so in 2018, though, where were rates at that time? Oof.

SPEAKER_02 7:37

So is it as is it a fixed rate all the way for the the So I have I have an I have a 504 and a 7A. So there's two different loans. Uh one of a six and a half, and some of them are floating. Um there was a time where I did have a double digit interest rate.

SPEAKER_03 7:52

Okay.

SPEAKER_02 7:53

Um, but again, I didn't have 20% to put down. You know, SBA, it's it's it's easier financing, lower um uh loan to values, right? Sure. But they want their money. After 10 years, there's no prepayment penalty, and that's when you can refinance and you really start making that. You know, right now I am in year eight. My prepayment penalty is nothing compared to what I would say per month. I think if I, you know, right now I'm in the middle of refinancing a couple of my buildings, and um by me saving one month of of no mortgage payment, I'll make that up. Did you buy the property as well? I did. So back to the model. Okay, so it's a front end and a back end, right? So the front end is the business part, you're making money on the business, and the back end is the appreciation of the real estate. So I own both. How many square feet is a building? Uh my first building is it's two buildings, and the combination is about 20,000 square feet. Wow. Okay. And I sit on about three acres.

SPEAKER_00 8:53

Yeah, so so you I mean, that's huge. So you're not you're not just buying the business, you're buying the real estate also. Exactly. Yeah, very interesting.

SPEAKER_02 9:01

Yeah. I mean, it's expensive, right? But how much did it cash flow day one?

SPEAKER_00 9:07

So like just roughly?

SPEAKER_02 9:10

Uh about 20%. Okay. Yeah, 20, 20, between 20 and 25%. Okay. Um, and there's there's peaks and valleys during during the school year. So right at the beginning of the school year, you see your tuition or your your your uh enrollment slowed it, slowed down a little bit, and then it starts picking up. Summertime is really when you make a lot of money because you have all these summer camp kids that are coming in.

SPEAKER_00 9:32

How many kids in what ages are the school that you purchase? The first school that you purchase?

SPEAKER_02 9:36

Yeah. So I'm licensed for uh six weeks, all the way up to 12 years old.

unknown 9:42

Okay.

SPEAKER_02 9:43

And everything in between. And what we do is um mom and dad will drop off six in the morning, six thirty at night, Monday through Friday, again, no weekends, no holidays. And then we also bust to our nearby elementary school. So if mom has to be, uh she's a nurse, she has to be at school at work at the hospital, let's say at six in the morning, she drops off. We bust them to the elementary because the elementary isn't open at six.

SPEAKER_03 10:05

Okay.

SPEAKER_02 10:06

And we feed them in the morning, we feed them breakfast, bus them, and then let's say mom doesn't get off till five or six. Well, elementary closes at, you know, shuts down at three, three thirty. We will pick them back up and then we'll house them until mom or dad gets off.

SPEAKER_00 10:18

Okay. What's the cost for something like that?

SPEAKER_02 10:21

So loaded question. So uh depends. If I have an infant, it can be up to $400 a week. But if I have an afterschooler, it's $130 a week. So everything in between. But the reason it's more expensive uh for an infant is because my teacher to student ratio. So for instance, if I have one infant, I can have for every four infants, I have to have one teacher. If I have a 12-year-old, I have 25 to one. So again, you know, that's what the reason for the cost difference.

SPEAKER_00 10:50

How did you know to go after the SBA and not traditional financing? Did somebody tell you about it?

SPEAKER_02 10:56

So I did a little research, yeah. But you know, getting around the right people, talking to different bankers, you know, um, and looked at the best option for me, you know.

SPEAKER_00 11:04

I think Gentry did an SBA on our very first building. Her other ones were traditional, but this building she did an SBA loan on. I'm like 95% sure if I remember right. And it was it was super fair. Like it was um It's a it's a good deal. I think on the next one they said she was making too much money, but like by the time she finally got it. You can start making too much money. What level what level is that? About 25 million your net worth if it's about 25 million. And then you can't get an SBA loan after that. Okay. So I ran into that problem before. Yeah. So with some partners that I have. What kind of licensing do you have to get to open a school?

SPEAKER_02 11:40

It's uh Texas State license through uh Health and Human Services. Um they come in and they basically look at a under a microscope and they're they're on top of you. And but at the same time, it makes you a really good school and you make sure you run a good school. How often do they inspect this?

SPEAKER_00 11:57

Like do they just come in as it's just the one time to get the twice a year.

SPEAKER_02 11:59

Okay. Or if there's an infraction that happens, for instance, let's say um I have a child that falls and breaks his arm, and they have to go to the hospital. I have to call licensing to let them know, and they'll come out and investigate, make sure that you know we weren't at at fault. Your equipment's not faulty or yes. Um it could be um, you know, even there's even uh parents can even call and and make a uh make a complaint against me. And that's happened. I've had some disgruntled parents call and they come out and they're like, all right, you know.

SPEAKER_00 12:28

Do you just have cameras?

SPEAKER_02 12:30

Everywhere, everywhere. I and I tell my staff, big brother's always watching. And when I walk around my schools, I know that I'm being watched. And I, you know, it and it it creates a level of comfort for the parents, but also we have to be on top of our game all the time.

SPEAKER_00 12:46

Yeah, especially when you're taking care of kids.

SPEAKER_02 12:48

And some some some of my competitors don't offer the cameras. It's helped us in a lot of ways, but it's also, you know, caught caused some problems because I would love to say that our staff is as is 100% on point, but there are times that people have bad days. Every day and it's gonna happen.

SPEAKER_00 13:05

Every business in the entire country. Exactly.

SPEAKER_02 13:07

And I would, I I cannot sit here and tell you, Sean, that I we're we're 100% all the time. I wish we could be, but if I can give it to close to that, it's a win in my mind.

SPEAKER_00 13:15

I think people just would appreciate the transparency in any business. Like if you're just transparent, uh you know, again, the if you didn't have them, you can hide a lot of stuff, or you might not be able to get the true story. Like you, I think you have to have something like that.

SPEAKER_02 13:30

Going back to the transparency thing, yeah. You know, one thing that you know I really take in when I first got in this business, because there are times where things happen and licensing does come in, and you have to stop and say, you know what, I need to be 100% honest because it will set you free. Yeah. Because if you're not and you get your hands slapped, it's not good, number one. But what I tell my my staff is we are messing with the two most valuable things that parents hold near and dear to their heart their money and most importantly, their children. And if we mess either one of those things up, it's bad news. So we are always honest, transparent, and full disclosure on anything. You know, you know, let's say, I don't know, they're a diaper change. We forget the diaper change. I mean, these little small things and they get a rash on their bottom, you know. It it's hard to to to hide that. Not that we ever would, but we got to tell mom and dad, hey, we messed up today. And and nine times out of ten, it's okay. Because parents do the same thing. Exactly.

SPEAKER_01 14:39

You know, and it's like, you know, John's, yeah.

SPEAKER_02 14:42

Johnny was on the swings and he fell down and he broke his arm. We're like, mom and dad are gonna be upset. 99% up.

SPEAKER_00 14:48

I've been telling Johnny not to jump off the swings like that, you know, and and my kid was in this daycare type thing in um early on, and he they told me, I didn't I don't know what happened, but he was jumping from one little platform to another. Of course, he falls and like cuts his eye open. But I mean it's like kids like how can like nobody could have prevented that, or they just don't play at all outside, right? Like you the Yeah, yeah.

SPEAKER_02 15:12

Like I we can't bubble wrap them. I mean, we want to, but uh it's just unrealistic.

SPEAKER_00 15:16

What are the the staff to children ratios that you need? Is there a certain amount?

SPEAKER_02 15:22

Yeah, so again, it's it's dependent on the child's um age group. So again, the younger they are, for instance, those infants, four to one. So four children to one.

SPEAKER_03 15:32

Okay.

SPEAKER_02 15:32

And as you get older, you know, our older kids that are eight, nine, ten, those afterschoolers or those elementary kids, it's 25 to 1. But at my school, I run below the state ratios because parents want to see that. They don't want to see a crowded, you know, school. I could run, you know, my occupancy at one of my schools is almost 500. I could run that place to 500, but it's gonna put stress on my parents. Teachers are gonna be like, I don't want to work here anymore. You know, so I run below. And also love a care the level of care that you can get is gonna be better. You know, uh, we are a preparatory for elementary school, but we run it like a pre like a private school. You know, so if you go to private school, you're gonna get those lower ratios. We we want to do the same.

SPEAKER_00 16:15

What insurances do you have to have?

SPEAKER_02 16:18

You know, I get that question a lot. People are like, just through the roof. Oh my god, I can imagine your insurance. Um, when I first got started, my insurance was probably one of the lower on the line items. I would have thought the you know the insurance was gonna be through the roof and it wasn't. But we've gone through a couple of storms. And just like if you looked at your insurance, your car insurance, your home insurance, I mean, my insurance has almost tripled. You know, for instance, in one of my schools, my first school, it was about 40,000 a year. Now it's almost 120,000 a year.

unknown 16:49

Yeah.

SPEAKER_02 16:50

I do nothing different. Insurance costs are all across every every single industry. So everyone's general liability, um uh so uh general liability, uh, workers' comp, and then your uh bus, your auto. And between all three of those and my taxes. Now it's starting to be on the top line item because again, I gotta pay property taxes, and that's six six figures. Yeah, in Texas, that's huge.

SPEAKER_00 17:16

I keep seeing them talk about oh, they're gonna talking about proposing getting rid of the state the property tax. I think we've been talking about that for a while. I don't yeah, I don't see it happening. It would be amazing because I own a lot of property taxes.

SPEAKER_02 17:28

Well, just like anything else, they're gonna get you somehow, right? Yeah.

SPEAKER_00 17:32

So does the state right the state regulates all the standards as far as like the child to teacher ratio?

SPEAKER_02 17:39

And we have lobbyists in in in the state that you know that advocate for us. Uh you know, they they hear what what our needs and our wants are, but for the most part, everybody plays pretty fair at the sandbox.

unknown 17:50

I don't know.

SPEAKER_00 17:52

On the second facility, did you build it out? Did you develop it, or did you purchase another one?

SPEAKER_02 17:56

So that's my third. My third one was my build out that I just did. Uh it's one of the largest preschools in the state of Texas. It's two stories. And gone are the days of them, are they their daycares? These are immaculate buildings. Um, it's in Bridgeland, which is a Howard Hughes community. Familiar with it, yeah. Yeah. Um it sits on three acres, and that's about 20, about 25,000 square feet. What's the cost? That cost was a little under build-out cost was about five and a half million. We got it appraised the other day, close to eight. Yeah. And that was just right off the bat. Yeah. What and that oh, by the way, that was just the building. That wasn't the land.

SPEAKER_00 18:36

No, I know. So what did what year was that? Because costs have been going just crazy.

SPEAKER_02 18:43

I started that project uh about three years ago. Um still. There was a lot of, you know, we talked about this uh permits. Um, this also happened when so COVID backed up everything. I mean, I couldn't get a transformer to save my life, the you know, transformers were but you remember that? So so that that there was a lot of these delays um getting ready to close on another property to develop another school. And so we should streamline that pretty quickly. How much do you buy the land for? For this particular property? Yeah. Uh one point one point three, one point four, somewhere in there.

SPEAKER_00 19:17

So all in around what you're paid for the first school.

SPEAKER_02 19:22

Back in 2018. How long did so now the dynamic? I mean, now my my trajectory is going, okay, I need to start developing schools. But I will tell you this: my second school, I bought a struggling school and I've turned that around.

SPEAKER_00 19:34

I uh is it the same franchise? Did you go to the same franchise?

SPEAKER_02 19:38

Yeah, I cannot go into a different uh I've told the owners, listen, you have me all in. I am KRK, kids are kids. I'm not going to go into a different, you know. Some some other owners are, you know, have divide diversified themselves. I, you know, I want to focus solely on childcare, and that's that's my mindset right now.

SPEAKER_00 19:59

It's not going away. No, right? I mean, that's definitely a good business to be in.

SPEAKER_02 20:03

I mean, and then if you own the real estate too, I mean, that's definitely key. In the area that I'm that I'm looking at within the next 10 years, they're projecting 45,000 rooftops. That's just rooftops. Yeah, Texas is.

SPEAKER_00 20:13

And an average of three people. I mean, that's that's a small city. So give me the math on the struggling school. How much did you pay for it? What where's the location?

SPEAKER_02 20:22

The location is in Cinco Ranch and Katy, which you would think would be pretty decent, right? Saturated. Okay. Oh, there's so many schools out there. So you have to really stand out. You know, the mom and pops aren't doing well because they just don't have the name. Um What was the purchase price?

SPEAKER_00 20:38

Did you buy the building in there?

SPEAKER_02 20:41

Okay. Uh right now it it can appraise about close to six, five, five, five, and five, six for the building. Six on a good day, five and a half on a on a kind of a bad day. Uh so but I turned it around. You said loan? No, I didn't. Okay. No, uh conventional financing. Um we're turning that school around. As a matter of fact, I went in with my brother. My brother's a Houston firefighter, and when I got in the business, he wanted to, and and um he cut his teeth, was pushing a broom a couple years ago, and he told me, he's like, EJ, I can only push a broom so long. And I said, Okay, let's let's go. So we went in 50-50. Um, he's the owner operator. I'm just behind the scenes. And that's his school. You know, you hear horror stories about, you know, going into business with family. You know, that that's my brother at the end of the day. You know, I'm not gonna let anything in, we're not gonna let anything get between us. You know, we've had some little disagreements, but we have respect for each other.

SPEAKER_00 21:34

So give give me the math on the actual business. So you bought it for 5.3. No, I bought it for four point three. Okay. You bought it for four point three. What was the revenue? How much were they losing each month or each year? They were losing about 15,000 a month. Okay. And I went in and I f I found 30,000 a month. I was about to say, what is the first thing? So you walk in, you know while you're under contract, doing due diligence, that you can either cut costs, like where does Where does the value add come in? So when I walked in, they had a administration problem.

SPEAKER_02 22:04

Okay. They had, you know, they had a they had a director that just wasn't doing much. And um, you know, being in the business close to 10 years, you can kind of see that. Yeah. Just like if you walked into commercial, you know, a construction site, you're like, okay, we need to get some new subs in here. So I walked in and I said, okay, here we go. So where's the low-hanging fruit? Right. And so we found it. Um and we just started implementing it. And then I'm happy to announce that within and I knew it was going to be about a year to turn it around. It it's a it's a big operation, you know, between all three schools. I got about 150 employees. So to move that ship, although we know it's mom and pop, you know, because we own it, it still takes some time. And so when we came in, um, we did we we gave it uh new life. We uh painted it, you know, of course rebranded it up to speed.

SPEAKER_00 22:51

I'm sure if it was bad administration, it was bad everything, right? Yeah, bad everything's negative.

SPEAKER_02 22:56

Nothing against the old owners, you know. He the old owner um was letting somebody run it. Was letting somebody run it. He was already retired and he would rather live on his ranch. And he called me and said, EJ, you know, I got a sweetheart deal and we made it. Um and I'm very proud of my brother. I can honestly say that if I did it back in 2018, I probably wouldn't be in his situation. There were some times where we looked at each other and we're like, I mean, I'm I'm just throwing money. I mean, I was throwing like 30 grand a month at this thing. And I was like, when does this thing stop? You know? And finally, um, we're net positive back in since November. And so you know, now that it's net positive, now we can re-restructure some some numbers here. And now, you know, my my my brother, you know, we can start seeing the value of the property increasing. And so your EBITDA started increasing. So your value starts increasing, and and and so the returns are definitely there.

SPEAKER_00 23:48

Hey everyone, real quick, I just want to let you know this podcast is 100% independent. No ads, no sponsors, just real. If you're finding value in whatever we're doing here, the biggest help that you can give us is hitting subscribe and sharing this with someone who you think needs to hear it or someone that it will provide value to. That's how we continue to grow. And if you did that, I would really appreciate it. So on the third project that you buy and you develop yourself, how long does it take to fill up the school and to where you can start breaking even where because it's the same thing, you develop the building and then it's empty. Are you pre-enrolling like as you're building? Like what's the marketing look like?

SPEAKER_02 24:25

So the marketing is a lot of uh grassroots. You know, I you know, we do some Facebook, we do some internet, Google ads, those kind of things. But it but at the end of the day, it's do the parents come in and it feels like home, right? There's a level of customer service, you know, you've got to be hospitable, you know. Um, you gotta know these kids by name, you gotta know these parents by name. They love to see the owners um hands-on. I'm at my schools every day. I used to not be. When I first got in the business, I thought this was gonna be um like passive income. I'm gonna be semi-retired at 35 years old. And I did that. I I lived at the beach for a while and I did that, and then I realized, you know what? First of all, it got it it wasn't fun really quickly. I mean, it was fun on the front end, right? But you know, doing the same thing every day, it kind of got boring. And then I just didn't see, you know, I I I wasn't living my life to the fullest. I I didn't see much value in just waking up at the beach every day. Yeah, no, yeah, no purpose, right? That's not good for anybody. Yeah. And so I stopped drinking and I just got laser focused. And I and life is fun. It's really fun. You know, I I don't look at this as a job. I enjoy what I do. I love going into my classrooms and those kids with bright eyes and and the smiles ear to ear, and they're coming up to you, Mr. EJ, and you can never have a bad day. And if you do, go into room 300 with the with with two-year-olds. They're gonna come up to you and hug you and love you, and and it's just it's very gratifying. And I I just truly enjoy what I do.

SPEAKER_00 25:58

And so back to that that first or the the third deal, how long did it take you to fill up the school to where it's net where it's cash flow positive?

SPEAKER_02 26:07

So uh we would love to say that it's full now, but we're still the trajectory is up.

SPEAKER_00 26:11

Okay. I mean, it's a big facility, it's 25,000 square feet.

SPEAKER_02 26:14

So this that's my third one. So right now, um I have about 220 kids at that particular building. Um, when I start summer, I'll have a little over 300 kids, and that'll bring us about six figures a week.

SPEAKER_00 26:30

And how long has it been open? Since September.

SPEAKER_02 26:33

Okay. I would have opened up with 200 kids, but I missed school starting by one week. Okay. So mom and dad, we had them all there. School opens up and we run open because of center point. I was behind center. I couldn't get power. My building sat for eight months like a sitting duck, you know. And so I missed it. And I would have opened up with 200 kids. We opened up with 100. Probably the best thing because you know, you're opening up with kids and it's go, right? I mean, we're talking, you know, your staff has to be trained. This, you know, so we we kind of staggered it, which although the numbers we would have loved to seen those 200 on the front end, it really worked out for the best because we got all those kinks out, you know, and you know, from looking back to where we were in September to now, that it's completely different. You know, it's now a well-oiled machine and we're only getting better. So, you know, the next project that I do, I will stagger them. You know, I would love to say that I open up full, but you know, it it you'll probably have more complaints than anything because you're opening up the floodgates. So let's stagger it and um and and and build that that enrollment.

SPEAKER_00 27:49

How does the enrollment process work? So somebody comes in, I'm a parent, I want to sign my kid up. Like what's like start to finish to get them in.

SPEAKER_02 27:55

Sure. So they come in and tour and then we get we show them the whole facility. They answer questions, we ask questions, we answer them, that kind of a thing. And then they fill out an enrollment packet, they get us their their documents, you know, their records, shot records, and that kind of thing, and then they they get going. It's a pretty simple process.

SPEAKER_00 28:14

On the marketing side, outside of Facebook and word of mouth, like how how else do you get the word out that you're open?

SPEAKER_02 28:20

You gotta be you gotta be at your school. Um parents love that. And you gotta be in your community. I do a lot of um sponsoring, especially in my neighborhood. I tell them elementary schools, if you need sponsors, call me. I will do it, you know, whatever you need, you know, for a thousand bucks to sponsor, you know, whatever it is, whatever it is. I I I get that tenfold. You know, I make I get one student at 400 bucks a month a week. I mean, a thousand bucks, you know, I make that up in, you know, two and a half weeks, three weeks, you know, and I got a kid for a for for a whole year, you know, or whatever it is.

SPEAKER_00 28:54

And then usually how what's what's the churn rate? I mean, how often, besides like parents just moving to another location, I'm sure it's pretty steady where they keep the kid in the same place.

SPEAKER_02 29:05

Because again, you don't want to mess with the academics, they get to know their teachers, uh, you know, pulling the kid from one school to another, you know, uh it's it's cumbersome. It it throws everything off. Um, the kids, you know, they have friends, that kind of thing. You know, do we have some parents that you know we would love to satisfy more than others? Absolutely. But I would say 95, if not 99% of my my my parents stay with us um because you know, we we run a really good school.

SPEAKER_00 29:32

How do you know how to price the tuition? So I know and I mean I know it's a franchise, but if you if a market is like if you're growing too fast, do you start increasing the tuition and say, hey, next year, like this is gonna be our new numbers?

SPEAKER_02 29:46

Um conventionally each school uh increases their pricing between five and ten dollars once a year. I've increased it. Um I don't like to increase every year, um I increase every every two years at 10 bucks a week. You know, and you've got 200 kids, you can do the math, 300 kids do the math. Yeah. And then you know that that's that really helps out with um increasing the uh the teachers the teachers pay. Because all of my teachers um are hourly, my managers are salary.

SPEAKER_00 30:19

And how does someone pick a curriculum? Like how do you know what to follow? Is I mean the franchise. I know you have a franchise. Is there is there like a a a name of a curriculum that y'all are using?

SPEAKER_02 30:29

Uh it's proprietary to that. Okay. Yeah. Gotcha. Um it's in a booklet and it's literally start this is start the day to the end of the day.

SPEAKER_00 30:40

And it's I mean, it's just right there. Do you hire teachers that are just have never taught before and they want to give business? Yeah, okay. I will.

SPEAKER_02 30:48

Um I have learned that we pay for talent. You know, I've gone through that whole as with anything. Oh yeah. And, you know, right now, uh, one of my directors makes six figures. That's unheard of. I mean, she makes more than a high school principal. But I tell you what, when we when we talked, I said, this is what I want. And I'm getting, you know, she's the best thing that I've ever, you know, she's my regional. She is just aces. She is number one. And you know, you cannot there's no value to that, right?

SPEAKER_00 31:20

Yeah. A players are 100% what can help you scale a business faster hands and it's a good idea.

SPEAKER_02 31:27

If it wasn't for her, do it. You know, and and then and then of course she she teaches, you know, she she teaches my other managers on how things, you know, how she expects things, how I expect things. And, you know, it's just a very good relationship. So one thing that I, you know, that I would say to to the audience out there is pay for talent.

SPEAKER_00 31:46

What about the whole AI thing? Are y'all incorporating it? Like how are you how are you planning out like these next couple years? I mean, I guess are you using it? Are you incorporating it in what you're teaching?

SPEAKER_02 31:57

So AI from a marketing standpoint, we've used it. Okay. Um we're slowly integrating it into our uh academics. Okay. But you know, AI is not gonna change a diaper. You know, AI is not gonna, you know, tell you to, hey, get off that playground because you might break your arm, Johnny. Well, no, no.

SPEAKER_00 32:14

I I definitely know that. But I'm as far as like the curriculum side though, how are y'all looking at it? Is the franchise talking about it? Like, hey, whispers. We need to at least like start it figuring out how to I'm and it's so new too. It is, yeah. But it's like you almost have to teach it, you know, at at some age because everybody's gonna be working with it in some way, shape, or form in the future for sure. Um yeah, no, it's not gonna replace it, it's not gonna replace the actual care for a child. I was just thinking on the curriculum side.

SPEAKER_02 32:42

I think the state needs to evolve. And what I mean by that is um there's screen time that we have to abide by. So what is it? Students can't be on their on their pads longer than about 30 minutes.

SPEAKER_00 32:54

So iPad, computer, anything.

SPEAKER_02 32:57

It's gotta be hands-on, old school, big crayons, you know, reading books, that kind of a thing. So that's a Texas thing. It's a Texas thing, yeah. Yeah. So I mean, you know, 30 minutes a day, does it depend on the age group? Um it can, yeah. Yeah, um, but for the most part, it's about 30 minutes across the board.

SPEAKER_00 33:14

Huh. Okay.

SPEAKER_02 33:15

As you get a little older, you can we can stretch that out a little bit. But um, so you know, legislation needs to come in place. Okay. Um, and then with the students, uh, you know, otherwise there would be, you know, here's a tablet, just go sit in the corner, Johnny. You know, they're not really, you know, are they learning or are they just you know on YouTube all day long, right? But you know, we need to get some legislation in place that say, hey, we need to increase this because the reality of it is there are gonna be kids that are just gonna be on a computer all day long. I mean, for instance, when I was, you know, in the corporate world, I was on a computer all day long, you know.

SPEAKER_00 33:53

Yeah. What is the on the compliance side, you know, and I guess there's 30 minutes of screen time. Like what else, what are the other compliance stuff for state of Texas that you have to follow? Like some of the major stuff.

SPEAKER_02 34:06

Uh feedings.

SPEAKER_00 34:08

Okay. Um how do you determine what type of food? Again, again, franchise model probably dictates some of it, but what are they feeding kids nowadays in school? I don't I don't know.

SPEAKER_02 34:20

So we like to do a lot of fresh stuff, right? Um, we don't like to do stuff out of cans. If we can if we can cut it and chop it, that's that's gonna be ideal. But really, you know, chicken nuggets, hamburgers, sloppy joes, you know, and and and some of my some of my schools um work, you know, sloppy joes works at one school and might not work for another.

SPEAKER_00 34:41

Um, for instance, my deter how do you how do you determine it though?

SPEAKER_02 34:44

Is it like location or yeah, my location and what what you know I talk to my cooks and say, hey, it you know, how is oh they love this, Mr. EJ, or they don't, you know, um stake fingers or whatever it is. But I will tell you that my Bridgend location has a big Asian community. And so we're having to, you know, pick which is okay. I have a lot of vegans there. You know?

SPEAKER_00 35:04

Um is that big in the Asian community? Oh, yeah, absolutely. Okay. No meat. On the on the what else is it? So licensing, um, you have screen time. Screen time licensing.

SPEAKER_02 35:14

Uh feedings you can only feed X amount per day. Correct. Or, you know, how often we're feeding these uh, you know, the infants. What about like recess? What about PE? Is that all is that all regulated? It is all regulated. They have to be out there a certain amount of time. What's the time frame? 30 minutes per you know, each uh part of the part of the day. So how many in the front end and the back end? How many times a day do you get to do that? Uh once in the morning and once in the afternoon.

SPEAKER_00 35:40

And is physical fitness a thing? Like do you is it you're not going to be able to do that?

SPEAKER_02 35:44

No, we don't it's not like it's not like elementary school. Yeah. Okay. They just go out there and they run around. Okay. You know, um, get some of that energy out.

SPEAKER_00 35:51

What are some things that if somebody wanted to get into the business, they should look out for? Like if they're starting out, they kind of think they want to get into the school business. What are some things that you recommend that they look out for?

SPEAKER_02 36:04

So I I have a lot of people that I've gone, I want to get in the business. And then, you know, we we talk to them a little bit and then it just kind of goes away.

SPEAKER_03 36:09

Yeah.

SPEAKER_02 36:09

One thing that I would say, if they were serious about buying a school, I would do everything in that school. For instance, I would open every refrigerator, I would drive each bus, I would go inside, I would make sure that everything is running smoothly and you know, almost do your own inspection. Because when I bought the school, I just said, Oh, my inspector's gonna do it, it'll be fine. Well, I never got behind the bus, right? I didn't realize that those brakes were going out, right? Or the tires were wearing down. You know, so those small things that those add up, right? Um, as far as um, let's talk into the parents. We talked about it, just being truthful, honest, you know, give a good product. Um, you know, we're all doing this for money, but you know, um, you've got to give back. One thing that I have I've really hold near, dear to my heart is I treat my employees the way I want to be treated. And I do a lot of things for them. You know, I'll do lot of lottery ticket Friday, you know, walk around with lottery tickets, give them, you know, um catered food, you know, I'm sending to my beach house, you know. All my managers know that they can go and use my beach house whenever I want, you know.

SPEAKER_00 37:19

Um another reason why I wanted to build that short-term rental. Just it's like not only for profitable for sure, but yeah, just like letting friends and family employees.

SPEAKER_02 37:30

I have two right next to each other, employees, and then I have a lot in between and we do our big sheets out there, oh yeah, go use it.

SPEAKER_00 37:37

Like I'd rather it not sit vacant. Yeah, that was another thing I was thinking. I was like, ah, you know what, even uh definitely doing it to make profit, but you know, at the end of the day, um it'll be a valuable to whether it's employees, whether it's friends, families, um, relationships that we build on podcasts, anything. So it's super cool.

SPEAKER_02 37:55

If you're looking at getting into the child care business and just sit back, it's not gonna work.

SPEAKER_00 38:02

I don't think that's any business though. If you want to be excellent at something, you can't nothing is on autopilot.

SPEAKER_02 38:07

There's no passive top schools. Every one of those schools, those owners are hands-on. You know, they're very hands-on. They're inside their schools. Yeah, do I go on vacation? You know, there are days where I'll, you know, take a day, I'll do this, or go be with my son or whatever it is. I can absolutely do that, right? But for the most part, I'm there. And, you know, and and and most of the time, it's not real hard work, right? I'm just there overseeing, making sure, you know, for instance, that that janitor got those fingerprints off. You know, if nobody's doing that stuff, not gonna get done, right? Yeah, walking around my school. Accountability, yeah. Yeah.

SPEAKER_00 38:43

And if you're never there, it turns into, well, if you don't have a good operator, it will turn into the school. Correct. The failing school. Nobody's gonna do it.

SPEAKER_02 38:50

And you know this Sean. Nobody's gonna do it as well. And it happens slow. And then by the time you're gonna go to the street. You would love to think that your directors and your employees are gonna treat the building like, you know. But no, that that that bus driver is gonna screech down there and hit the brakes as hard as they can, you know, and then call and tell you, oh yeah, we need new brake jobs. You didn't want to tell me that when it was screeching, you know?

SPEAKER_00 39:09

Are there any things that you can think of offhand that you would change about some of the regulations that are in place that you have to follow?

SPEAKER_02 39:16

Yes, I would like to see the regulations be parallel to what elementary schools have to. If I'm taking an elementary school kid because I do, I think that the fairness needs to be where the state, the state guidelines are parallel to what the elementary schools are. And so we're not. We're highly, highly regulated. You know, for instance, if give me an example. Okay. Um, we talked about this earlier. Kid falls and breaks his arm. I've got to call the regul, I've got to call the state and let them know the state has to come out, review film or not, if we have film or not, talk to who is there, talk to the uh to the to the student, talk to staff members, talk to I mean, it's it's it's it's a probe. Elementary school, go home, Johnny, you know? So it's like that's not it's a it's an uneven plane field, and we are trying to get some of that um regulated.

SPEAKER_00 40:08

What else? What else is there that's not that's you're held to a different standard, I guess, than elementary school? I'm just curious.

SPEAKER_02 40:14

Um student ratios. Oh, teacher to student ratios. Yes. Um, just and the list goes on, Sean. I mean, it it's just it it's it's it's truly a a different playing field. And you know, I it if if we get if somebody calls and complains, that that inspector has to come out no matter what.

SPEAKER_00 40:33

And then is it the same for a public elementary school as a private elementary school?

SPEAKER_02 40:36

Is that the same regulations or I don't know the the I don't know that answer between the private private and public, but but for me, it's you know, uh we're licensed um through the state of Texas, you know, from from a preschool and and and daycare standpoint. I don't know, like for instance, like FBBA, you know, yeah, yeah, or or you know, St. John's, whatever. I I don't know what their regulations are in comparison to mine.

SPEAKER_00 40:59

Hey everyone, real quick, I just want to let you know this podcast is 100% independent. No ads, no sponsors, just real. If you're finding value in whatever we're doing here, the biggest help that you can give us is hitting subscribe and sharing this with someone who you think needs to hear it or someone that it will provide value to. That's how we continue to grow. And if you did that, I would really appreciate it. What do you wish somebody would have told you day one when you're buying the school? Now that you can go back and you're really experienced, you're a good operator. Like what do you wish you would have known day one when you were starting? Pay my staff more.

SPEAKER_02 41:35

Pay for talent. A people, yeah. Yeah, I think that's that's where where it lies. You know, um, I know some other schools that, you know, they only pay their they have talk to some owners. Well, I don't pay past this. Well, that's why your school's probably not that good. Yeah.

SPEAKER_00 41:51

Yeah, that goes that goes for any business too. I mean, uh having a player's quality people is gonna be such a big game changer. I can tell you when I don't know if you've seen the videos, but I bring my kids, my kid in my I bring Liam around and we go into businesses and it's just more like I'm teaching him all this stuff, but just so it's more hands-on and he's like he can kind of get it better in his brain. But I go into these businesses and the staff that is really good, and because all the bit like surprisingly, a lot of the business give me the numbers, like you like, oh yeah, we do 10,000 a day or whatever. The staff that is extremely good and they know a lot about the business, and they give me that, like those are the highest grossing stores. And then when you go into some of these places and the staff is super shitty, and they're giving me the numbers and like just everything from customer service, from um, you know, the quality of what they're doing, everything and the numbers they give me, and I'm like, it's like night and day difference. It's just it, it's like in me doing it and going into all these different places, that is the common denominator 100%.

SPEAKER_02 42:58

Yeah. I mean, you can ask me any questions about my numbers, and I'm gonna tell you right off the top of my head.

SPEAKER_00 43:01

Yep.

SPEAKER_02 43:02

I'm gonna be within five percent of it.

SPEAKER_00 43:04

It's not that, it's just the good employees not just know their numbers, they actually that's why the business is probably doing so much money, is because you have good customer service, it's clean, you have quality product um or service or whatever they're selling. And you can just tell the well-run stores make so much more money.

SPEAKER_02 43:22

You can tell a good school when you walk into one that's you know, it just doesn't feel like home. You know, I remember walking into that that school that I bought, that second school, the one in KD. And like seeing a hundred things that's wrong. It was just kind of like sad. And then came in depressed. Yeah, and came in and and gave it some life, you know, and and uh, you know, revived it. It's like a like water in a plant.

SPEAKER_00 43:44

You know, the bit I think a school even more so than a normal business. Because if you think about it, if you want your kid around who who you want your kid around, like do you want them around just a terrible staff member that's like depressed and Not really uh gives it their all every single day, or do you want like some quality person teaching your kid or your kid that that your kids are on?

SPEAKER_02 44:08

So I make it a point with my front front front staff, my managers, whether my curriculum coordinator, my um assistant director, my director, they need to know the parents' name by full first name and last name, and the teacher and the student's name. So when, for instance, if Liam was to come in, hi, good morning, Liam, good afternoon, hi Mr. Sean, how's your day going? That other school didn't know it. And so when we had to let the uh director go because she just wasn't the right fit for us, um, one of the things was is can you name any of the teachers? Can you name any of the students? She couldn't name them.

SPEAKER_00 44:40

That's a crazy problem. Yeah, that's a big problem.

SPEAKER_02 44:42

Because mom and dad, they pay a lot of money. I mean, up to $400 a week a week. I I hear I yeah, and I hear when I'm there, sorry, Sean. But when I'm there, I open the door. I agree with mom. And and sometimes I don't know their their names, but I know that they're mom and dad. Yeah. I know that they're grandma and grandpa, you know, and so you know, just that little bit of that customer service um and that hospitality, it goes a long way.

SPEAKER_00 45:08

Gentry was telling me the same thing about her business, is she was with you know, a lot of our salespeople one day, and she was like having trouble with a couple of them. It's like, hey, can you name any one of your customers? Even for like, and she could they couldn't name any one of their customers. And it's like, these people are spending thousands of dollars with you and you don't know their name. She was like, that was like customer service 101 25 years ago. Exactly. Like somebody comes in, they're like, Oh, hi, Mrs. Smith, and you sit down and like you know about their life a little bit. She was like, that's what makes them feel more comfortable, and then they're gonna spend more money or you just be more dedicated to the brand in general, right?

SPEAKER_02 45:45

It's like, man, they really take care of me when I I've gone to the same hairstylist for 15, some odd years. Yeah, she's like my counselor. I think a lot of hairstylists get you know because going it's that she knows everything about me, it's a customer service feeling, you know, and and I don't know what would happen if I left her, it'd be like a like a divorce. But again, going back to the parents, you know, they they they love the fact that my my staff knows them by first name. They love the fact that I'm there. And you know, again, it's that little bit of extra that we give to our to our to our parents, and that just goes a long way.

SPEAKER_00 46:24

Well, sweet man. That was a lot of good information. I had no idea how the school business worked, like no clue. Yeah, but I really appreciate it.

SPEAKER_02 46:33

If you're ever out there, I'd love to give you a lot of it.

SPEAKER_00 46:34

Yeah, no, we'll I'll bring Liam out one day. We'll that'd be awesome. We'll come check it out. We'll learn about the business. And yeah, it's a it's a beautiful school. I'm very, very proud. Yeah, you should be. Sounds like you run a very great operation, and that's what it takes to be successful in any business that you're gonna start. So, congratulations, man.