How to Scale a Childcare Business Without Running It Into the Ground
With Jason Lody

Expansion is exciting. Opening a second or third location brings in more revenue and lets you serve more families. But Jason warns against growing on hype alone. Before taking that leap, your core operation has to be rock solid. Jason learned this the hard way by moving too fast in his early days and making expensive mistakes. If you are looking to expand, it is not just about finding an open building. You need to know your numbers, fix your operational bottlenecks, and make sure the business does not fall apart the second you step out the door.

The Real Risks of Opening Another Center

Growth always involves risk. The trick is understanding those risks well enough to control them. If leaving your single center for an afternoon makes you nervous, imagine managing five or ten locations spread across a state. Liabilities compound fast. Every new lease adds rent, payroll, insurance, and equipment costs. Jason points out that every opportunity carries equal liabilities, so you have to weigh the pros and cons objectively.

Then there is market risk. Does the neighborhood even need another school? A great location on paper means nothing if a national chain is moving in next door or a competitor just got bought out by a major group. What looks like a goldmine today could be overcrowded by next year.

Fix Your Current Site First

Jason's advice for single-site operators is simple: do not expand until your first location runs smoothly. Refine the business model before you try to copy it.

For multi-site operators, look at each center individually. Identify which locations are performing well and which ones are dragging down the group. Check for bad habits in staffing, enrollment, or cash flow. Opening a new site will not fix problems at an existing one. It just multiplies them.

Success relies on replication. You need a clear playbook for how things run so you do not have to reinvent the wheel with every new building.

Get Honest About Your Numbers

Great curriculum and fancy branding will not save a center that runs out of cash. Before signing a new lease, you need to know your financial baseline and how much money you will burn while the new site fills up. Jason suggests having six months of operating cash in reserve before even thinking about expansion. Filling classrooms takes time. Every single day costs money, and relying on best-case enrollment projections is a quick way to go under.

Why EBITDA Actually Matters

Jason highlights EBITDA as a critical snapshot of financial health. It is not just an accounting term for the owner. Banks and prospective investors look directly at profitability and industry benchmarks to judge whether your business can handle more debt. Your financial statements are not just historical records for tax season. They are tools that tell you what the business is actually worth.

Build a Business That Functions Without You

Financial readiness is only half the battle. You also have to ask who is going to run the new site. If you spend your days unlocking the doors, running payroll, giving tours, and designing newsletters, adding another center just doubles your workload. You end up trapped working inside the business instead of managing it from above.

Jason uses a simple test: could you leave for three weeks without checking in? If payroll stops, purchasing breaks down, or your team cannot make basic decisions without your approval, you are not ready to scale. You need leadership and systems in place that keep the wheels turning when you walk away.

Standardize Everything Early

Scalability requires tight consistency. Jason gives his schools different names to keep them connected to their local neighborhoods, but the underlying operations are identical. Brand colors, software systems, and operational standards are locked in ahead of time. When a new site opens, the team does not sit around discussing software or marketing design. Those decisions are already made. That frees up energy for things that actually matter locally, like hiring teachers, enrolling kids, and building a strong team culture.

Do Not Let a Pretty Building Blind You

Emotional attachment kills deals during expansion. A beautiful building or an impressive sales pitch can make an acquisition look like a guaranteed hit. Never accept those details at face value. Once you sign the purchase agreement, your leverage vanishes.

Audit every claim before committing. If a seller claims 65 children are enrolled, demand proof. Check attendance logs, review classroom rosters, and match revenue against real bank deposits. Jason once bought a center advertised with 99 enrolled students. On his first day, only 20 kids showed up. That discrepancy wiped out his projected profit margins overnight. The lesson? Verify every single detail.

Audit Your Revenue Stream

Look closely at where the money comes from. A center might look profitable on paper because of temporary grants or local subsidies. If those funds do not carry over to a new owner, your future cash flow disappears. Ask whether the revenue relies on non-renewable grants or temporary subsidies, whether those income streams transfer to a buyer, and if every major line item can be independently verified. Treat financial reviews like a forensic audit and trace every dollar back to its source.

Prepare the Business, Not Just the Property

Expansion is not just a real estate strategy. It is an operational test. A great location cannot fix bad systems, high enrollment cannot fix poor money management, and a nice logo cannot fix missing leadership. Adding locations simply magnifies what is already there.

Before stepping forward, make sure your core site is profitable, consistent, and capable of running without you. Real growth is not about moving fast. It is about making sure your current step can handle the weight of the next one.