Business Plan Structure and Content

Mission Statement

What business are you in now and what business do you want to be in? This may seem like a very strange question; it should be obvious what business you are in. However, this is not necessarily the case. Some studios start out teaching family self-defense and they start doing videos and end up being half in the video business and half in the studio business. Other studios may be a full-service studio; teaching groups, privates, putting on seminars for the community and selling martial arts supplies. Others may start out as a full-service studio and end up primarily as a tournament studio. The problem is that all their advertising and promotional literature says one thing but what they actually do is something else.

By clearly defining what business you are in when you open your studio or what business you are in now and what business that you would ultimately like to be in two or three years down the line, you will give yourself a clear path toward your goals. For instance, if you plan to open up a full-service studio now but your goal in two years is to develop assistant instructors and open three more studios under your direction, put that in your mission statement.

Note: The mission statement is often included in the overview when using the plan to attract outside funding.

The Overview 

Written in a narrative form, this section is an overview of your business. Keep it brief and to the point! The first few sentences are important and should capture the reader’s attention, making him want to read further. Tell the reader in plain language:

The opportunity that exists, what market it addresses and what your initial success has been or what your research has uncovered. Show why the martial arts is a growth industry on a national and local basis.

Why your studio concept is unique and what special benefits your studio will offer and provide to attract a steady flow of potential students.

What your market potential is and how you expect to gain it and maintain or increase your share. What promotional tools will you use?

How your studio will out-perform other martial arts studios. What your competitive advantage is.

Describe the main players, i.e. yourself, instructors and management personnel. Why are they immanently quali­fied to succeed? What is their experience?

How much money has been invested to date and how much additional funds are needed. What is the expected rate of return on investment and how will it be paid back.

Summarize your business strengths and advantages and how they will contribute to your success (ensure your success).

End with the fact sheet (See Appendix A)


Key Personnel

Describe your professional background and why you are you qualified to run a martial arts studio. List your training and teaching credentials. List your educational and business background. In­clude information on any civic involvement or award. Describe your personal affiliations with charitable, social and business associations. List some of your other interests and hobbies. De­scribe your personal and business objectives. Above all blend this information to form the clear conclusion that you are amply qualified to attain success in this studio venture.

You should also include the resumes of your assistant instructor, office manager, and any other key personnel that are an integral part of running a successful studio.


A Professional Team

If you employ the services of an accountant, lawyer or professional consultant on a regular basis, in­clude a paragraph on their individual capabilities and how they fit into your management plan. By expand­ing the scope of your management team to include such people, you’ll lend a far greater air of confidence to your operation and to any potential investor.

Having honestly reviewed the skills possessed by yourself and your staff, you should immediately take steps to improve performance and skills in any area that appears to be weak. For instance, if your assistant instructor is still lacking in teaching skills, make a definite time and commitment as to when you can upgrade his skills. Failing to make this commitment will result in procrastination and the missed opportunity to immediately improve your studio’s performance.

If you, yourself, are lacking in certain business skills, face the

problem and take immediate steps to rectify them. By investing in this manual you already have taken a giant step in this direc­tion. If you still need more help, seek it out. It may come in the form of part-time college classes, seminars or additional materi­als on sales and management, i.e. audio tapes and books. Do not be afraid to ask students who may be experts in their chosen field to give you advice on specific topics such as bookkeeping, computers or marketing.

When all else fails or time constraints restrict your quest for

knowledge, invest in professional help. Although this may seem expensive, five hours with a computer expert or sales trainer can often be far more effective and ultimately less expensive than hundreds of hours of trial and error.



Who is your target market? This will depend largely on your personal philosophy and teach­ing methods. The most success­ful studios that we have found do not limit their market in any way. They target children, teen­agers and adults. They market not only to men but also to women, families and special interests groups. They segment the mar­ket to appeal individually to each of these groups and then design courses to specifically meet these individual needs. In this way, a successful studio can offer hard-core classes for some and still cater to kids, women and soft-core students by teaching classes at different times, different days and utilizing different teaching methods.

Over a period of time, you should observe, collect and record any data that you can to help build a picture of whom your typical student really is. This can be done by:


  1. Personal observation

If it is obvious that the great majority of students who attend your classes are children between the ages of five and nine, make a note of it. If students consistently talk about things that they read in a specific newspaper, make a note of it. In short, take note of anything that might be useful.


  1. Hard-core data

You can receive a wealth of information on which your market really is through your application process when you initially enroll each student. Your form should provide you with their address, age, and reasons for study. Other questions can be added to this form in order to obtain additional pertinent information. See Appen­dix B.


  1. Student surveys

Student surveys can be utilized at various times to obtain specific marketing information such as which publications people read, which radio stations they listen to and what other activities they participate in. See Appendix B.


  1. The point blank ask them the method

When all else fails, gain market information from your students through casual conversation and questioning. By learning more about their personal habits and activ­ities, you can greatly increase your knowledge and marketing effectiveness.


Define Your Target Market

Define how large your target market is by drawing a three to five-mile radius around your location. (The actual size of the circle that you draw depends upon the density of your population. The circle will be larger in a rural area and smaller in a metropolitan area.) Next, find out how many potential students are encompassed within. You can obtain this information from maps, realtors, city hail, the census bureau or your local library.

Your target area should include at least twenty to thirty thousand people to ensure success. This figure should also include a healthy amount of 5 to 55-year-old people, your prime market.


Growth Potential Of Your Market

Are you located in an area where people are fleeing to the Sun Belt where the imminent closure of a military installation could have a devastating effect on the regional economy? If this is the case, consider relocating to a high growth area. Many areas of the United States such as Nevada, Florida, California, and Texas are enjoying unprecedented population growth. Examine your chosen area and plain in detail how the growth or continued stability can improve your chances of success. Factors of importance include the long in the commitment of major employers such as Campbell Soup Company, IBM or Xerox to the local economy. An area that offers this type of stable economic environment with a middle-income e will often produce the optimal balance of interest and ability to purchase martial arts lessons.


Seasonal Factors

Another major factor in considering your potential market is the availability of access to this market on a year-round basis. In places such as Arizona and Florida, the population swells dramatically during the winter months, thus creating an increased need for services. In the summer, when temperatures soar into the hundreds, the number of people that you will be able to attract will be far less. These factors must be considered and addressed in the business plan. Your business plan should discuss the methods by which you will optimize business in the winter and minimize your student loss during the summer. Identify any seasonal influences in your area and discuss how you will minimize or maximize the effects in your favor.

Major benefits of your service

In this section, you must list all of the benefits that you can think of as to why someone should study the martial arts. Do not just list reasons that appeal to you but try to cover every possible angle. Refer to the Sales section, for further insight into this topic.

Clearly define why your studio is unique and better than competing studios in your area. For instance, are your teaching credentials stronger? Does your style have a broader market appeal? Are your teaching methods sounder? Whatever reasons you come up with that make your studio unique will become your image state­ment. Be sure that it accurately reflects how you want people to perceive your studio, as you will be stuck with it for a long time.(see marketing quick tips on positioning and defining students)



Advertising And Marketing Strategy


Clearly, state your income goals and how each individual marketing tool that you use will help you attain them.


What advertising media will you use to attract people within your defined market area into your studio? Check out local papers, radio stations and magazines and match their market profiles with the customer profiles that you have developed. See which ones most closely resemble that of your market.


Accurately define how much money you must spend on each advertising and promotional vehicle that you will use to reach your market. Specifically outline not only how you intend to gain Market share through advertising but also, how you intend to maintain this market share through newsletters, sales letters, and their promotional tools at your disposal.


Outline plans for your print display advertising; yellow pages, newspapers, coupon mailers, etc. Include an expense report to stimulate the cost of promotions, events, tournaments, public demo­nstrations and seminars that you plan to do to increase your studio income. Show in the different ways in which these promotions will benefit your business. Clearly outline the expected response from each marketing campaign that you plan to undertake.

Estimating Student Value


Estimate the amount of money that you expect to make from each initial sign up, how long you expect each student to stay and how much income you expect to gain from each. It is helpful to es­timate the lifetime val­ue of your average stu­dent because then you will clearly see how much money it is worth spending to get a new student. Take into ac­count average drop out rate, lessons, testing fees, seminars and equipment purchases. You could also limit this estimation to a one-year period or any other pe­riod of time that makes sense to you. Below is an example of a one-year period.

Your sign up fee is . ………………………………………………………………………………………………75.00

Lessons ($65/month x 12)………………………780.00
Seminars (average 1/yr.)………………………………35.00
Testing fees (3/yr. $25 ea.)……………………….75.00
Equipment purchase…………………………….190.00
Total for one year…………………………….$1155.00


This is the worth of each new student if he stays for one year. If you estimate that you will enroll 250 new students each year and determine that only 40% of those students will last the year (this results in a 60% attrition rate), your figures will look like this:

Worth of each student (1 yr.)………………….1155.00

Times 250 new students/year………………288,750.00

Less 60% attrition rate……………………..173,250.00

Total net worth for year……………………115,500.00
Divide by 250 total sign-ups………………115,500/250
The adjusted worth of each new student…………$ 462.00

The total adjusted worth of each new student after factoring in the drop out rate is $462.00, not the original figure of $1155.00. (This value could be further refined but should give you an idea on how to proceed.) You now have a figure from which you can determine the net gain if you boosted enrollment figures, how much you will spend to acquire new students, project sales, project what percent­age of your income will come from new student enrollment, determine the value of an ad campaign, etc. Note that you can also see how much more could be had if you could lower your attrition rate!


Competitive Analysis

Analyze your competitors carefully. Check out each and every studio in and around your market area. Look not only for weakness­es that you can capitalize on but also strengths that you can learn from. Write up a profile of the most successful of these studios and try to answer as accurately as possible the following questions:


  1. How long have they been in business? A long time would suggest stability and a strong market awareness. Is the location a good one? If the studio has been there a long time, the rents may be considerably lower than the market average, allowing him a competitive advantage in the crucial area of operating expenses.
  2. Determine how many students they have or least note if their classes appear full. Drive by at different times of the day and personally observe these things for yourself.
  1. Does the instructor have a good or poor reputation?
  2. Does the instructor carry high rank? Does he teach classes himself or assign duty to a lesser ranking stu­dent?
  3. What type of marketing and advertising do they em­ploy? Is it high quality and professional like the meth­ods and ads in this manual or are they poor and amateur­ish allowing you to capitalize on their ineffectiveness?
  4. What do they charge? Is it higher or lower than what you would charge?

Upon gathering as much data as you can, begin to develop a marketing plan which outlines ways in which you can capitalize on your competition’s weaknesses and combat his strengths. Armed with this manual, you already have an advantage in advertising, use it and any other tools at your disposal to further your studio’s position in the marketplace.

Note:   It is very easy when embarking on a new venture or revitalizing an old one to brush off your compet­itors with casual statements and false bravado. “I’m not worried about the guy up the street, he’s a phony.” It is imperative when performing these tasks that you be brutally honest and objective. If for emotional or personal reasons, you cannot perform this task objectively, find someone un­tainted by your bias that can. The results of this analysis are too important to your success to let your personal feelings influence the results.


Operations And Procedures

Before you begin to outline your operational procedures, you should first set some goals. What needs to be done in order to start or re-energize your studio. Set timelines for the completion of each task. Make sure that your goals are obtainable within the time frame that you set. Setup provisional measures for what you will do if you do riot reach these goals.

Outline in detail the physical, management, marketing, financial and other steps that will be necessary to actualize these goals. As you define each task, assign the duties of completion to a specific person.

If your studio employs more than one instructor or you plan to expand in the near future, set up a channel of command. Keep good accounting records and outline your procedures in your business plan. Clearly define your administrative policies. How you will handle billings, payments, banking, etc.

Clearly define your operational hours, prices, bad check policy, and day-to-day business activities. Spell out clearly how you want these to be handled. Do this in such a way that someone totally unfamiliar with your business could read them and follow them implicitly. Set up a discount schedule for students who want to pay three, six and twelve months in advance; there’s nothing worse than charging students different amounts. The key word in day-to-day operations is consistency. If the sign says you open at noon, open at noon; if you close at 9 pm, don’t go home at 8:45 pm.

How will you protect the business against lawsuits due to contract disputes or on-premise injuries? Do you plan to carry liability! accident coverage? Outline the cost of premiums, the amount of the coverage you will carry, terms and limitations, and the name of your insurance company and sales agent.

List items that you will carry in inventory to satisfy supplementary retail sales. Provide a list of the suppliers, persons to contact and the individual procedures for ordering and billing Decide now how you will cope with fifty extra students, what your personal requirements will be and how you will train such person­nel. The goal of this section is simple; cover every possible procedure now and it will save time, confusion and embarrassment later.

Financial Statements & Projections

This section is especially crucial if you are apply­ing for funding. How much money do you need to start up and operate your business? When will you need these funds? How will the money be used, over what time pe­riod and with what posi­tive effects? How do you pose to raise these funds; personal funds, investor capital, bank loan, etc? What will you offer as security? Detail an item-by-item cost of your new or revitalized studio’s startup costs.

List any existing investment in your business and the source. When and how do you propose to pay back the funds? What is the rate of return that you are offering? Why is it a good investment?

You must be realistic in your projections. Consider the amount of detail that you will want in your financial statements. These statements should allow you to clearly see the current financial state of your business and allow you to accurately predict future cash needs slow periods, busy periods and places where you could be more profitable. See Appendix A for the necessary forms.

As you do your financial projections, you must also provide an explanation of your data and any assumptions made.


If you make the projection in your pro forma Profit and loss statement that your second month will produce an income of $3600 dollars, you must explain how you arrived at that assumption. “Due to a strong advertising campaign, it is quite reasonable to expect a minimum of twenty people to sign up at $100 each, producing $2000 in income the first month. The following month sixteen of the original twenty will remain enrolled and twenty new people will sign up, producing a second-month income of $3600 dollars.

Financial information should start with past and a current profit and loss statements for your studio and in some cases your prior two years tax returns as well. If none exist you must create an estimated profit and loss based on your best estimates of income and expenses. This is called a pro forma. You accomplish this by detailing a month-by-month expense report and a month-by-month income report.

The Pro Forma Statements

The pro forma are estimated statements based on certain assump­tions that you make about your business, i.e. number of new sign-ups per month, estimated advertising and operating costs, the longevity of each enrollment, etc. It also may contain known facts, for instance, a lease payment that will remain constant for the next two years.

The pro forma can also provide you with a goal to shoot for. When making a pro forma, it is best to do three different ones showing a worst, best and probable scenario. Prepare statements for your immediate year and for your next two years. Your current year should be broken down by the month and the second and third year by the quarter. Pro forma are best handled by a personal computer if you have one. Several good programs are available on the market.

The pro forma statements that you will be interested in are found in Appendix A. They include:

Profit and loss statement

Measures how profitable you are now or expect to be. It is a detailed account of your various sources of income and expense categories. Your income minus your ex­penses gives you your pre-income tax profit. A pro forma profit and loss statement is simply a prediction of future sales and expenses and can be used to determine at what point in time a new business will break even.


  1. What price will you charge for your programs, for your merchandise?
  2. How do you determine these prices?
  3. Is your price suited to the economic status of your target audience? (Hopefully, you chose your location based on accurate demographics.)
  4. Is your pricing in line with that of your competition or do you have unique circumstances that will allow you to charge more?….or less?
  5. Have you set your price too low? Example: It would take 200 students at $25 each to reach a break-even of $5000. It’s unlikely that such a low price would be made up for in volume
  6. How many students can be taught per class? How many classes will be needed? Will this require another in­structor, which would affect the expense figure?

By using the forms contained in Appendix A and playing with the figures back and forth, you should be able to arrive at a reasonable starting point.

However, whatever blend is needed to attain this figure is not important; achieving it fast is. Reaching your break-even point should command every once of effort that you can muster. Until this point is reached, you must put in longer hours, give out more flyers, push for more referrals and generally perform over and above the call of duty.

Careful planning in combination with your own teaching skills and the sales and advertising ideas in this manual should go a long way towards helping you succeed.