258: The Best Strategies for Financial Health in Early Childhood Education with Kathy Ligon

In this episode, Kate and Carrie sit down with Kathy Ligon from Hinge Advisors to chat about the tricky balance between purpose and profit in childcare. Kathy shares smart tips on understanding occupancy rates, bridging the communication gap between directors and owners, and why financial health is key to quality care. 

They swap stories, offer practical advice, and remind us that a strong financial foundation helps everyone—kids, teachers, and families—thrive. If you’re in early childhood education, this episode is packed with wisdom and encouragement just for you! 

Childcare Broker & Daycare Business Consultants | HINGE Advisors

Boost- https://www.boostbyhinge.org/

Five Pillars of Purpose-Driven Profit Book by Kathy Ligon — HINGE Early Education Advisors 

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Transcript

Marie 00:00:03  Welcome to Child Care Conversations, the podcast where early childhood leaders like you get real world strategies, honest talk and a whole lot of support. Whether you're running one center or many, we're here to help you lead with confidence and clarity. This episode is brought to you by our summer partner Child Care Business Growth, your go to solution for filling spots, increasing revenue, and scaling your child care business without the burnout. We're proud to partner with a team that's as committed to your success as we are. Learn more at Child Care Business Growth. Now let's get into today's conversation. When we think you're really going to love.

Kate 00:00:50  All right everybody, we know how much you love love talking about money. But you know what. Today we're going to talk about kind of maybe why you need to know. And we are so excited to have Kathy Ligon with Hinge Advisors on. And Kathy, why don't you give us a five second? Who, what, where, when, why and how and we'll get started.

Kathy 00:01:15  Ooh. Five seconds. Thank you so much for having me, Kate. I have made it my life's work in this industry to help people understand the balance between purpose and profit or money and mission. The majority of the people get in the industry for the mission purpose part. And what I like for them to know is that part is not even possible. It can't. It just can't be done without the profit in the money, which sounds like they're at odds with each other. They're absolutely necessary for each other. That was more than five seconds. But that's the core, okay. I mean, because.

Carrie 00:01:58  And when people say, oh, I can't sell anything, I'm like, so you don't want any people in your business? Like, you can't run the business if you can't get people to come to your program, and you can't run your program if you don't have the money to pay staff enough with pay and benefits to want them to stay.

Kathy 00:02:17  Right, Kerry? So, you know, if you asked me to sell anything other than the work that I do, which is to help people sell schools and real estate, I'm sure I would be terrible at it, too.

Kathy 00:02:30  But if you've created something that you're passionate about, that you believe in, and I really hope that everyone feels like they do it better than anyone else. If we don't, we should take our ball and go home. Or we should work harder. We should do something different. We should look in our house and figure out what we need to do to be the best. But when you're the best, to say that to the world should be pretty easy.

Carrie 00:02:58  I think so. But we hear it all the time and people are like, well, I can't raise my rates because my parents can barely afford to pay what they're paying now. So we can't afford to we can't increase the rates. We'll lose all of our families.

Kathy 00:03:13  Yeah, that's a legitimate concern. And, you know, you might lose families. And I hate that, I really do. I wish that I could also, in my business, be everything to everyone. But if you think about it, that way is not possible.

Kathy 00:03:31  So your two options are that you won't be able to serve everyone, you won't be for everyone, and you have to be comfortable with that, or you won't be around to serve anyone. And I don't want you to be comfortable with that. So making the hard decisions is part of every business owner entrepreneurs world. Old and it's just a necessary component is is just what we have to do.

Kate 00:04:01  So, Kathy, one of the things that as we were talking or I was listening to you and Carrie kind of start is a lot of times we have directors who listen to our podcast, not necessarily owners. And so sometimes we have directors who really don't understand the finance piece because the owners don't share. What might be something that either they could share to maybe get their owner to open up a little, or that they just need to understand, as the director related to the money piece.

Kathy 00:04:32  Yeah. So, let me start the answer to that with by saying that you might be surprised how many owners also don't understand the money or the financial piece.

Kathy 00:04:42  So and I don't say that disparagingly, we have educators who founded this industry. So the expectation that they would also be accountants and Financial wizards is ridiculous. It's one of the reasons that I created the five Pillars of Purpose Driven Profit, the title of my book, but also what I've coached on beginning with directors 39 years ago. So the concepts from the book were because I struggled with helping directors understand what they could do that would directly impact the thing that they were in the industry for, which was the education of children. And to break that down into a manageable concept with actionable steps. So where I would tell them to focus is on the first pillar and the most important one in their conversation with their owners, which is occupancy. So what I like to say about occupancy is that if you're not at least 70% full to license capacity. Don't even think about any other strategy. You will never expense control your way into financial health. So I think a conversation about, improving the occupancy, if that's something that that needs to happen in the school and its impact on financial health would be a great way to start and in developing that dialogue with their owner.

Kathy 00:06:20  Another great way might be to say, hey, I heard this podcast, I found this book, I checked it out. It was so interesting. Could we talk about this? I'm interested in being a part of your success financially, because I know that that means success for me and my fellow teachers and families and children. So can we talk about this? That might be a good place to start.

Kate 00:06:46  So you have a copy of the book for those who happen to be watching the video. And so it's.

Carrie 00:06:51  The. wind.

Kate 00:06:53  It's the five pillars of purpose driven profit. You can find it on Amazon in our show notes. There will be links. I think you can also buy it on the Hinge Advisor's website. Correct, Kathy.

Kathy 00:07:05  You can.

Kate 00:07:06  Yeah. Right. And so we'll talk a little bit before we end. I'm going to make Kathy tell us all the great things and how she's literally put her money where her mouth is. And she's actually talking. Walkie talkie walk. She's walking the talk.

Kate 00:07:19  Thank you. Mike. She's doing what she tells us we should be doing. So I think that's really cool. So, Carrie, you were going to say something. I'm sorry I ran.

Carrie 00:07:27  I'm sure I was, but you got a sidetracked. I mean, I think that that whole conversation between owners and directors can get kind of dicey. because an owner has the default position that when the director comes to them to talk about money, they think, oh, they just want more money for this, that or the other thing, which is going to make my life harder as the owner, because either I give them the money and then I have less money in my savings account for when the roof fails, or I tell them no. And now I have a grumpy director. So I think Cathy's approach of saying, hey, I read the five pillars of Purpose driven profit, and I'd really like to talk about it and how we can push this forward. And I now understand why I can't leave the infant room with six babies.

Carrie 00:08:26  I hadn't understood it. It makes it so much easier in my classroom when we've got five infants instead of eight infants, the teachers are so much happier. But now I understand. Let's talk about how we can improve the enrollment.

Kathy 00:08:39  Yes, I love I love that, early on in my career, I found a big barrier between teachers, directors and owners, and it still exists. Right. And understanding the financial picture. And I developed a game called Where Does All That Money go anyway. And and so I had teachers, decide how the money was going to get spent. And it was quite enlightening. But, you know, if you don't, if you've never been there, everything looks different from the outside, right? And so it's just an education piece. There is actually a chapter in the book for owners on how to communicate with teams and how to communicate with families, what the actual financial load of a school looks like. So I hope that that's a first step in giving some big, benchmarks for where does all that money go anyway? So that we can educate people a little better?

Kate 00:09:45  Oh, I agree with you 100% on that one.

Kate 00:09:47  That's that is awesome.

Carrie 00:09:49  So I want to just talk a little bit about where where do you make $1 million from selling this book, Kathy. Are you making a book off of this book?

Kathy 00:09:58  First of all, for anyone you know, I believe everyone has a book in them. So encourage everyone to write a book. And it is so much work. So I so underestimated that. so let me tell you what. caused me to put the energy into that book. Certain things get in my head, and you guys are probably like me, that sometimes it becomes more painful to keep it in there than just to do it. So the first thing was that I felt like there was I. Yay, Kate, I know you're going to show it to me. Kate. Just grab some books.

Kate 00:10:33  There we go. Like, yep, I got one of those.

Kathy 00:10:36  She's like, yes, I know. Yes I know. so I wrote the book. But I tell you what, the catalyst was on the other side of my brain, there was another, the terribly, difficult thing to keep in there.

Kathy 00:10:50  And that was that. For 39 years, I've watched teachers give so much of themselves and be okay and be stable. Until an event happened that was financially difficult and it sent them out of the classroom, disrupting children and families and frankly, the whole school. So last summer, we started a nonprofit called boost. Boost is designed to support the human health crisis needs of early education teachers. And, all of the proceeds of the book go to boost. So that was what motivated me to put the energy into it. Since last summer, we've raised about $300,000 and deployed, grants to about 250 teachers. And to me that's 250 teachers, but it's 2500 children whose stability in their classroom has been impacted with 5000 families. And I don't know how many other team members. We would like to grow this, to just take off and support teachers all across the country. So that was the reason for investing in that time to get that book out of my head.

Kate 00:12:13  Well, I love it. And of course, Carrie and I are we, you know, we our own version of a side hustle, an accidental side hustle, is that we do help.

Kate 00:12:21  So those of you who listen to know this, if you listen regularly, we like to help folks get that book out of their heads. So, and it is truly an accidental side hustle. It was not on the 2025, business plan, so but we've really enjoyed it, and it doesn't have to be as painful as Kathy as it was for Kathy, but a lot of it's, you know, finding that right partner, coach, mentor to walk you through.

Carrie 00:12:49  How much you have in your head and you're trying to get 30 plus years of information condensed down into a couple hundred pages? I think that's probably got to be as much. What am I not going to say when you've waited this long to write your first book? You've got a lot of stuff that you have to decide. No, that doesn't need to go into this book.

Kathy 00:13:11  So Kathy needed a carry in a Kate a year ago is what.

Kate 00:13:16  You.

Carrie 00:13:16  Did, but it could be hard to decide what doesn't need to go in that book.

Kathy 00:13:20  Yeah, yeah.

Kate 00:13:21  That's right. Now we have a client who just decided he was going to write two books at one time because he had such a heart. Well, he had such a hard time condensing the way he wanted. And like, literally we were in the the final draft and he goes, I don't want this whole section in there. And we're like, that's half the book. Oh, he's like, I'm going to put it in the other book, and I want to do this in this book. And we're like, okay. Right. Like it's like.

Kathy 00:13:47  What? What should not go in as equally important as what should. So that's a really good point.

Kate 00:13:53  Well, and knowing who you're writing the book to, and I love that you found literally your mission for writing the book. And that was one of the things that, really resonated to me when you were talking about why you wrote the book. I felt bad that that it was such a such a just such an, an experience, I'll just put it that way.

Kate 00:14:16  But I am so glad you wrote it, and I love that you are using. You found a reason for the book, right? So I think that's great.

Carrie 00:14:24  And using your large voice in the community to say, hey, let's reach out and support each other. And it doesn't have to be somebody writing a check for $20 million. It can be, okay, we're each going to buy a copy of a book, and that book is going to help fund this. And it's a good book. So it's not like we're making you read some drivel. It's okay.

Kathy 00:14:51  Thank you for that. Yes, thank you for that, I really do.

Kate 00:14:55  Carrie's Amazon review. It's not a bunch of drivel.

Kathy 00:14:59  I'll tell you that. I'll tell you that, Carrie.

Carrie 00:15:01  That reminds me, I don't think I went in and wrote a review after I finished it. I need to go in and do that.

Kathy 00:15:06  Thank you. I would appreciate.

Kate 00:15:08  It. Well, anybody who's listening there, I'm going to challenge everybody.

Kate 00:15:11  If you are listening and you have read the book of anybody who's been a guest of ours in the last year, which is probably about 50% of our guests, go and leave them a review, because even books who've been around for a really long time with people who we all know their name, you know, they still also are only running, you know, some of the real successful books do have, like, you know, 50, 60 reviews, but you can always use more. And some of our other authors who've been around for a long time. Have multiple books. Like one book might have 20 reviews, but the others have got like 5 or 2.

Carrie 00:15:47  Stop talking about us.

Kate 00:15:49  Well, I mean, we do fall into that category, but I was thinking of other people. But it's.

Carrie 00:15:56  You know, and when you're looking for books to fill out your director library or your owner library, look at the reviews and see, does this book look like it's going to be something that is going to feed the need you have in your business, because you can get, you know, all kinds of books.

Carrie 00:16:15  And one of my favorite books is out of print and has been out of print for over 30 years, and I don't care. I keep using it. so find those books that are good books to build your director library because we need them. These are this is a way to have Kathy Langan as a mentor on your shelf. And when you need to be reminded Of of why interviewing and hiring affects your bottom line. You can just go to page 142, and Kathy will remind you of why hiring is a financial decision.

Kate 00:16:51  So, absolutely. So, Kathy, tell us, how would you like to wrap up the conversation? What would you like to say to a director who's listening, who might still not really be 100% sure what they need to do related to the money piece? Like, you know.

Kathy 00:17:09  Yeah. So, you know, I do like for directors and teachers to understand the impact of occupancy. So you asked me before, and I feel like the most important conversation, because it's the most important pillar of the five is a fully occupied school.

Kathy 00:17:29  And what that allows in the way of resources and hiring and raises and, curriculum materials. And it's just, it's just overwhelming. And so I think that the link between one more child, one more classroom, one more, you know, more difficult things to manage. And thriving in financial health isn't always clear. So I point that out first. The second thing is, I thought you had a beautiful concept about the conversation starter with the owner or person who could share more information and doesn't have to be give me a financial statement. I want to see how much money you're paying yourself. It could just be. Could you look at these five key concepts and give me some numbers every week? Could you tell me how we're performing in our occupancy? What? How do our tuition rates compared to others? How are we strategizing discounts? What is our percent we're spending on payroll? And what percent are we spending on rent or mortgage? So you could come up with a KPI for each of the five pillars that doesn't give away the whole shebang and doesn't cause the issues with the team, but gives an understanding of the five key metrics that make a healthy school that might be a good place to.

Kate 00:19:08  I love that I think that is a great again, what a great conversation that a director and an owner or administrative team leadership team could be having. And thank you, Kathy, for, for, for kind of pulling that into just such a nice little here. Here's your meeting in a box and you can share this episode even better. before you make that phone call.

Kathy 00:19:31  So I love the way you guys reframed this conversation for me because my typical response, like I said in the book, was, how does an owner communicate to teams and families? How does how does a team member who wants to be a part of the solution and wants to learn and grow, communicate to those who have the information to share? that was a great reframing for me. Love that you're doing that work.

Kate 00:20:02  Well, we have a lot of directors who, like, they don't want to have that conversation. And they do what what I call elementary math. And they look at the they look at the traditional like, what's the published rate? And then they do math on the number of kids in the building, and they don't think about the percentages, you know, especially if you have subsidized kids or discounts or free tuition kids.

Kate 00:20:25  Right. Like, but so they just do what I call elementary math. And so they're like, oh, you're making all this money because all they're doing is the what they think the revenue in is, which is probably not the true revenue in. Right. So.

Carrie 00:20:39  And I mean, if they're in another country because we have a tendency to be very Euro, you know, US centric, but like in Canada you may have room for more kids, but if the state doesn't have the revenue to pay for the subsidized care for more kids, you can't take more kids, right? And so you have and you have a maximum amount of profit you can make in some of those provinces in Canada. And so that makes every time somebody asks for an extra gross of googly eyes more of a problem, because that director has a or owner has a very narrow window of profitability that they're allowed to maintain. And so I think we we have to we have to think about those things, too, sometimes. And it hurts the head a little bit because you're like, so how is Germany funding it? How is the UK funding it? How is Australia funding it in Canada? And we should be learning from each other on how to have these mixed delivery models in different countries.

Carrie 00:21:42  Because I think what we have learned in the past ten years is a single delivery model of child care, where it's all parent pay or it's all government pay does not work. It has to be that mixed delivery model, I think.

Kate 00:21:56  Well, I just wish all the states would share because we do have some states that are doing some really some awesome things. And then we've got some other states that on paper it looks like it should be good, but chances are it's not. Yeah.

Kathy 00:22:11  So Kate, I will. I love that you said that. And then I will add to that that there's an education component in that as well too, because let me give you my favorite. So a handful of states are paying for the child care of early education teachers. Beautiful concept right? It makes it easier to recruit. The teacher got a raise because they're not paying half. The school got a raise because they're not discounting half. in other states, do they even know that that's a possibility? And if they did, would they understand the impact of that? So even though we are super busy in our in our world, to be able to take the time to develop relationships with the decision makers and help them understand some of the opportunities that are going on.

Kathy 00:23:06  And that's just one there are there are a lot. So, I think that's a good call out. I also love the idea that we would watch other countries and help them understand what we're doing here as well. So those collaborations could be really strong as well.

Kate 00:23:23  I mean, advocacy, we all talk about it, but it's interesting. So we talk about it on a national level. We talk about it on state levels, but we don't talk about it on interstate levels. So that and I'm good. This is my you know, we live in Texas. So those East Coast folks that are all really close to each other, I'm like, y'all are only like 30 minutes away. Go, go check what that state's doing. Because, you know, yeah, we've got 16 hours to the next state. So we we don't have that same luxury. however, I really wish that more Texans knew exactly how New Mexico funds their, early child care subsidy. Because we have land grants, we have oil money.

Kate 00:24:03  We could absolutely be doing that in Texas. And in Texas, it only goes to the collegiate programs. And in New Mexico it goes 0 to 16. And so, you know, and I got to say.

Carrie 00:24:17  And Texas legislators don't get mad about saying, why don't you try to do something like they do in New Mexico the way they would if it was here. Let's do what they do in Oklahoma.

Kate 00:24:27  Oh, let's not do that because Oklahoma's work anyway.

Carrie 00:24:31  But this is another one of those conversations that we're having a hard time staying to our usual 20 minutes, because we have a lot to say to each other. And, you know, we want to have a long conversation. And even at conferences when we see each other, we don't even get then to have as long a conversation as we want to. But I think we'll probably talk to Kathy again, or maybe we'll go hang out with her at a conference and and videotape it for you guys. I don't know, we'll see.

Kathy 00:25:01  Anytime, my friends.

Kathy 00:25:03  Anytime.

Carrie 00:25:05  So if you learned something from today's show, and I know you did share this show with someone else who needs to know. And if you're one of our listeners from Germany or France or Canada or, North.

Carrie 00:25:20  Korea.

Carrie 00:25:20  Or any of those places someplace other than the US, Australia, we've got a lot of Australian listeners and you'd like to be on the show. Reach out to Kate and Kerry at Childcare conversations.com, and we'll try to get you on, because we want to hear from you a little bit more about all the wonderful things you're doing in your programs as well. Talk to you next week.

Marie 00:25:45  Thanks for tuning in. We love bringing you real talk and fresh insight from the world of early childhood education. Be sure to follow us on social media to stay connected and catch all of the latest episodes. And if you're planning a conference, training, or special event, Kate and Kerry would love to speak to your audience. You can learn more about their keynote sessions and workshops at Kate and Kerry.

Marie 00:26:11  If you learned something today. Share the show and leave us a review below. We'll see you next time on Child Care Conversations.