Business Plan Example 1
Table of Contents
- Present Situation
- Product / Service Description
- Market Analysis
- Marketing Strategy
Pricing & Profitability
Advertising & Promotion
- Conclusions and Summary
Six-Year Income Statement
Pro Forma Balance Sheet
In 2019, the MATA School, a Your State Corporation,was created to open a martial art school in Your city, Your State. Currently, the “your style” Association, a non-profit organization has taken over running the operation for the local community.
MATA School will offer full time quality lessons in traditional karate, self-defense and the sale of martial art merchandise.
MATA School is at a point where we are taking advantage of a lack of marketing in Your State.
Our operation will produce $300,000 in annual sales by 2020. Expected revenue for fiscal year 2004 is $250,000. (One school, three clubs, and high school program) Projected average annual growth is 30% per year through 2030.
For many years people have encouraged the formation of an elite full service martial art operation and a quality organization like the “your association.”
The condition of the industry today is such that, through quality marketing and an understanding of the needs of the community MATA School will be a profitable business.
All of the managers of the MATA School have been trained personally by “your teacher” “your teacher” and have a great team spirit.
The current program offered by the main dojo was founded in 1990. Within three years of operation, the company ran four schools and was grossing nearly $1,000,000.00 in annual sales. A divorce and the sell of several dojo’s to students set the company back to its current two locations but still affiliated with 4 other locations through the association that pay licensing fees.
We have just completed an organized market plan and started the development of a detailed instruction outline for a novel and proprietary martial art organization. The change in emphasis on sales and sales training, combined with a new finance procedure will enable us to increase profits dramatically.
Compared to competitive products, our schools will provide daily classes in traditional karate, self-defense and use the latest in marketing strategies, sales techniques, and financing for martial art schools.
The ability to analyze the market and capitalize on the weakness of the competition’s lack of marketing is a capability unique to “your association”services.
Our strategy for dominating the competition is marketing our services through a unique selling proposition.
MATA School target market includes males and females between the ages of 4 and 55. Children and preteens under the age of 18 will comprise over 60% of our customers.
MATA School is rapidly moving into its unique marketing approach. This approach is based on using the economies of scale of a multiple school operation by co-op expenses while at the same time capitalizing on the inherent advantages of concentrating on one or two locations. Being a non-profit organization allows us to concentrate on marketing for free in many community forms of media including cable, and newspaper.
In addition to our outlined products and services, we plan to introduce an expanded variety of classes that will be especially useful to professionals and parents, including the National acclaimed Streetwise self-defense program and the Child Abduction Protection Program.
Revenues from the self-defense programs will help fund our High School Karate Program, which is now booming. (Currently around 300 students per semester)
Other products and services include: seminars, consulting, rank recognition, tournaments, community events, and instructional videos.
Responses from customers and even our competitors show that our current program is enjoying an excellent reputation. Relationships with leading schools, manufacturers and distributors substantiate the fitness of MATA School for considerable growth and accomplishment in our area.
At this time, our objective is to propel the company into a prominent market position. We feel that within two years MATA School will be in a suitable condition for further expansion. To accomplish this goal, we have developed a comprehensive plan to intensify and accelerate our marketing and sales activities, product development, services expansion, engineering, distribution, and customer service.
Our management team at the main dojo consists of three men and two women whose backgrounds consist of over 100 years of martial art and fitness instruction. Our affiliation with the “your association” allows us to brainstorm, network and plan with 5 other school owners locally and almost 100 clubs nation wide. They have experience in management with several companies. By sharing information via the web, we can stay on top of any changes in the market nation wide instantly.
Additionally, our outside management advisors provide tremendous support for management decisions and creativity.
“Your teacher” President, Head instructor
Next Person Vice President,
Another Person Secretary/Treasurer, Facility Manager.
Outside Management Support (hourly/project basis)
CPA Accountant (hourly)
The Sporting Goods Manufacturers Association industry report projects a nationwide market for martial art instruction to be approximately 1 to 2 1/2 % of the population by the end of YEAR. Conservative estimates suggest “your association’s market share would be about 40% of our market area population, generating $1,000,000.00 in sales by the end of fiscal year 2025.
The fundamental thrust of our marketing strategy consists of demonstrating our product through promotional strategies.
We intend to reach males and females between the ages of 4 and 55 through email marketing, social media marketing, web marketing, video marketing, referrals, open houses, gift cards, promotional giveaways, lead boxes, exhibitions and demonstrations, flyers, word of mouth, and media advertising.
Our main thrust is to excite potential customers through self-protection/self-defense workshops, public speaking, public announcements, word of mouth and introductory lessons.
Overall, our company can be characterized as a high-profile retail instruction merchant.
We currently have a positive cash flow position. In five years, we will have begun investing to insure security for all employees and should have over $500,000 invested generating over $50,000 annually in interest. As long as we keep a three month reserve, we find that investing cash outs in mutual funds and individual securities as the best security for the organization.
MATA School enjoys an established track record of excellent instruction for our customers. Team members from our school have won numerous national championships and international awards, as well as, becoming excellent role models in their community. Their expressions of satisfaction and encouragement are numerous; we intend to continue our advances in the retail marketplace with unique and instrumental marketing plans.
The marketplace is undergoing rapid changes and locally has been stagnant locally for a couple of years. MATA School is poised to take martial art instruction to a new level in Your State Springs. By falling under the non-profit status, we are now able to obtain state and federal money for our self-defense and high school programs.
Products And Services
MATA School is currently in the development stage.
Pricing And Profitability
Current prices are increasing and profits are increasing.
Future customers are requesting that we offer a variety of martial art instruction.
Our goal is to increase the amount of the population that is enjoying the martial arts to 5% in the next 4 years. We will be offering this through our existing schools as well as the public school system.
Management is in place.
Current cash available is $10,000.00
Our Current Ratio is: N/A
The primary objectives of our organization are to:
- Provide the finest martial art instruction in Your State Springs.
B. Have the largest martial arts organization in Your State Springs.
C. Provide stable personal income over $50,000.00 by the third year.
Profits: Profits exceeding $30,000 monthly per school this year.
Products: Including videotapes, specialty items, consulting, and national ranking Customers: 250 students per school within 12 months.
People: Hire 3 part time instructors this year
Growth: Open additional clubs this year, and control all district high schools.
Management: promote full time administration personnel this year
Community: become well known as a community oriented school
Based on our experience with martial art schools, we feel that there is a void in the local area. Through an initial investment into marketing material and an early association with consulting firms, MATA School has had an aggressive jump on the competition since our doors opened. MATA School has established an association with 5 other martial art schools locally and many more nationwide to help cut operational and training expenses. Through this association we have a reference of over 100 years of managing profitable schools at our disposal.
(Sample) Our President has an 8th degree black belt with over 34 years martial arts experience. Master Bryan is the former General Secretary of the USA National Karate-Do Federation; the official governing body for the sport of karate through the US Olympic Committee. Hard work and quick correct decision making provide MATA School with a valuable leader. His martial art background of over 34 years and his ability to lead will put MATA School ahead of the competition and allow them to market as the elite school with no competition.
(Note: The policy of this company is to not cash out more than 25% of the students but to indeed work on monthly cash flow. The following scenario is for your thinking process only)
We currently offer monthly tuition at $100 per month for one person with no contracts for a basic program and $150 per month for Masters club. We do offer a discount if the customer wants to sign an agreement to train with us longer and we use a billing company to track all students and payments. We currently employ a billing company to do our collections for us and they charge around $.25 per student for their services. Our monthly overhead for all programs is around $10,000.
Three main avenues – monthly tuition, special events and cash outs, generate our income stream. We must maintain our monthly tuition income above $10,000 with a 3-month reserve of cash in savings.
Additional income streams – cash outs and special events will be invested in the market since our President is a financial planner and stockbroker. We are currently exploring the option for using a bank to give us cash up front for these contracts (80cents on a dollar). This would be more effective due to the collection rate of bank loans under $5000 are over 90%. We are currently averaging 10 Black Belt Contracts per month at a base price of $3000. That would be on average $60,000 per month contract amount and leave $48,000 after the bank takes its cut. By investing the money in real estate and other businesses, we will be able to make up the 20% discount by floating the money and paying the school over the course of 30 months.
On those contracts that we don’t send to the bank we will charge a high finance fee to entice 90 days same as cash:
Tuition 20 new students per month @ $350 x 4 Months
Month 1 $7000
Month 2 $14000
Month 3 $21000
Month 4 $28000
At high Orange belt, about 4 months we will entice them into black belt or masters club at an average of $3500. Although we are anticipating a 75% renewal rate, we will conservatively figure 50%.
We will offer 6 months same as cash for BBC and MC. Average of $3500 divided by 6 payments at no interest would be $580 for six months.
Month 2 $11,600
Month 3 $17,400
Month 4 $23,200
Month 5 $29,000
Month 6 $34,800
By combining the renewals with the 90-day intro program we would generate approximately $63,000 per month. Retail sales, special events, belt test fees will grow as the student base grows to approximately $7000 per month which would take total gross to around $70,000 per month or $840,000 per year.
We recognize that we have about a 50% drop out rate, but will attempt to collect as much as we can before they lose interest. Worst-case scenario would still equate to over $500,000 per year with the above scenario. With our investment strategy, we should be having enough resources to plan for retirement income for all our senior instructors.
Position for Growth
Other objectives we have set for ourselves include:
- Understand customers, competition and industry.
- Product/service/channel/customer congruence top in the area.
- Adjust for the growth by fields of interest.
- Balance people/management/business goals.
- Develop values and culture.
6. Hire the best people.
We plan to add one club by fall of 200 and several more high schools this fall (2000) Through corporate funding and grants we will be able to offer some students scholarships at no expense to the students karate in the school system this year.
Through our affiliations, we are now able to offer evening classes in specific areas using school gyms at a discounted rate. As the program grows we would like to see over 100 students in each club or over 300 students total. This should generate over $50,000 additional annual income plus belt test fees and seminars.
How We Started
“Your teacher” founded MATA School in 1973. Instructor determined through market surveys that your town martial art schools were not marketing their product properly. He also determined there was a lack of dedicated self-protection/self-defense classes. Mr. Bryan learned that a well-marketed product with the proper management and consulting team would allow for a very profitable business.
The legal form of MATA School is a Your State Corporation being run by the “your style” Association, a ___ entity.
Of the 5 people who make up the staff, there is the founder who holds the following positions:
“Your teacher”, President
XXXXXX, Vice President
The MATA School owns the national trademark and licenses it to the “your style” Association – a non-profit organization.
The founder and key managers of MATA School have combined experience exceeding 100 years in the martial art industry.
The strength of the MATA School management team stems from the combined expertise in both management and technical areas. This has produced outstanding results over the past 6 years.
The leadership and alignment characteristics of MATA School management team have resulted in broad and flexible goal setting. This will allow us to meet the ever-changing demands of the quickly moving marketplace requiring our services. This is evident when the team responds to situations requiring new and innovative capabilities.
Oversees and manages operations
Manage market planning, advertising, public relations, sales promotion, merchandising, and facilitating staff services.
Identify new markets, corporate scope and market research.
Manage field sales organization. Manage sales office activities including customer/product support/service.
Manage working capital, including receivable, inventory cash and marketable securities. Perform financial forecasting, including capital budget, cash budget, pro forma financial statements, external financing requirements, and financial condition requirements.
Research and development.
Staying up with new trends, developing better teaching methods, attending seminars, and searching out ways to improve the business.
Perform service, manufacturing, and raw materials’ management and allocation functions.
Outside consultants, including highly qualified business and industry professionals/experts, will help our management team to make appropriate decisions and take the most effective action; however, they will not be responsible for management decisions. They include International Martial Arts Management Systems.
Board of Directors
“Your teacher”: President
XXXXXX Vice President
“Your teacher”, President
“Your teacher’s professional experience includes many different areas in the martial art industry including business consulting for the past 6 years.
He has been involved in the instruction, financial management, and marketing aspects of the martial arts. “Your teacher’s personal experiences cover many diverse areas including a financial planner and stock broker.
People/Talent We Require
MATA School development team recognizes that additional staff is required to properly support marketing, sales, research, and support functions.
Currently, the MATA School is composed of 10 people; within the next couple of years that number will increase to 20 people to meet the demands of the projected market. We currently provide instructors and sales staff to other schools in the association.
Management: We will evaluate an increase in management personnel when we open another commercial location.
Sales: We are currently trying to hire and train additional sales staff for our affiliated locations. We will be compensated 5% of the gross sales for this service.
Marketing: Additional marketing staff may be hired in the future but currently the program directors are handling all marketing in conjunction with the school owners.
Instruction: We have added 2 part time instructors to handle increased student load. When we open another club we will hire another part time instructor and a full time administration person.
MATA School is operating in the martial art industry under no regulation.
Product and Service Description
Proprietary information is available to investors upon signing of Non-disclosure Agreement.
Martial art instruction, our principal service, consists of daily classes in Karate and self-defense/self-protection. These classes will take place in our school at a variety of times. MATA School will offer monthly seminars to discuss topics related to martial arts. We will also utilize local daycare centers to instruct Karate to children on site. This is an untapped resource in the Your State Springs area.
We are also currently teaching in the local high schools during PE classes. This unique approach to instructing martial arts will give our customers every opportunity to participate.
MATA School will offer martial art instruction and martial art equipment. Development of other services is in progress. All services from MATA School have personal care and dedication to students.
This capability for personal care and dedication is a unique feature enjoyed by MATA School and our customers.
Current Products and Services
Traditional Karate instruction
- Other instruction
- Self-defense instruction
- Instructional videotapes
- Martial art equipment
- Day care center Karate instruction
- Monthly seminars
Through advanced marketing features including a wide variety of class times and monthly seminars, MATA School will provide instruction to fit into all of our customers’ schedules. A unique approach in daycare instruction will provide an added advantage over our competition and an increased convenience for our customers. Self-defense/self-protection classes will also be unique to MATA School.
Our products that are locally produced (e.g., video tapes) are protected under the general copyright laws. The name MATA School is a national trademarked name.
For most customers, martial art instruction will pay for itself in terms of increased confidence, increased stamina and flexibility, reduced stress and tension, improved coordination and balance, and the ability to develop self-discipline to achieve their goals in every aspect of life within six months.
Regarding cost savings, MATA School instruction will save our customer’s money in terms of availability of classes and improved convenience by establishing our dominance on the north side of town. Some non-monetary benefits of our product and service include: entertainment, improved appearance, betters health, overload reduction, self-confidence, and self-esteem and stress relief.
Useful Purpose and Benefits
Martial art instruction provides physical benefits: improved reflexes and coordination, increased energy level, improved appearance and muscle tone, increased strength and stamina, better balance and body awareness, weight loss and control, and better health and longevity.
Martial art instruction provides mental benefits: improved self-image and self-esteem, increased self-confidence and positive attitude, greater self-discipline and a “can do” attitude, improved concentration, work and study habits, reduced stress and increased levels of relaxation.
These combined capabilities provide the student with the most well rounded approach to physical activity known.
In addition to the benefits stated above, MATA School instructors have a proven instruction background brought from around the world. This will allow us to display a proven track record to our customers. Our commitment to our community and students will display an ethical and moral martial art school.
Martial art instruction is an extremely beneficial fitness program, requiring dedication to master. For example:
One of the features of martial arts is the ability to defend oneself and family.
Martial art instruction allows students to reduce stress.
Flexibility is another powerful advantage. This includes the ability to reduce injuries.
One very strong capability is martial art instruction’s ability to increase one’s self-confidence.
Compared to traditional fitness programs, martial art instruction will develop a skill along with better fitness.
In addition, martial art instruction does not require expensive equipment or a long period to gain benefits.
Key Benefits of All Products and Services
The major benefits of the combination of all products and services are improved self worth in the ability to control all situations personal and professional.
Planned Products and Services
MATA School plans to continually develop new products and enhance existing ones. New products and services to be developed in the future include: organized martial art camp outs, nationally recognized seminars, and the manufacturing of martial art equipment.
Key points in defining the market segment for martial art instruction are: who will be students, what percentage are women, what percentage are children, what percentage are adult men, what types of jobs do they have, what do they read, what percentage are teenagers, where do they live, are the majority of students coming from one, three, six or more miles away?
MATA School’s market area is the entire city of Your State Springs but will concentrate on the north side of town as its immediate concern but through its association work on the market share of the entire area. The current population of this market area is around 500,000. Of the total population 1 to 2 1/2 % will be involved in the martial arts. This equates to around 5000 current potential customers.
Our goal is to increase the potential customers to 5% in 5 years. This would mean over 30,000 students. If each of the existing schools double to two commercial locations and control all of the public schools within a three mile radius of these locations, we should be able to control over 50% of that market or 15,000 students. With the student value of about $1000 per student, this would mean a gross potential of $75,000,000.
Martial Arts Market
The future of the martial art business throughout the nineties and into the twenty-first century is excellent. Martial arts clubs have increased from 4,665 in 1987 to more than 7,000 in 1992 to over 20,000 in 2003. The martial arts industry is over $3.1 billion a year.
Students of martial arts are looking for quality, personal improvements, convenience, and high value.
Current development and marketing of martial art instruction has resulted in the need to advance marketing skills to reach the potential students.
The abilities to reach daycare’s/ public schools and provide dedicated self-defense/self-protection classes is unique to MATA School products and services.
Market research suggests that there are currently only 1% of the potential customers in the local area involved in the martial arts. The martial art industry, as a whole, is looking toward 2 1/2% of the population for the expansion of existing products and services.
The stability of this market segment is certain, based on competition’s product category performance over the past two years.
Referenced sources agree that the major trend is for advanced marketing. The trend has been toward the development of passive marketing. Therefore, the latest development of advanced martial art marketing drastically increases the enrollment of martial art schools.
The area of greatest growth in the martial art market is in the area of youth instruction.
The major market segments are:
Males and Females between the ages of 3 – 55
living on the area ofYour State Springs.
This segment of the market is generally based on martial art instruction as averaged from the United States. Retail prices average between $40.00 to $100.00 per month. MATA School representatives will handle the vast majority of sales in this category. The minority of sales will be through outside sales channels.
Of the total population of Your State Springs(500,000 potential customers), approximately 1 to 2 1/2% will participate in martial art classes, of which 44% to 60% will drop out.
The market potential for a martial art school in these quantities, we find that most people are willing to spend around $5000 for lessons. We will offer an introductory program for $1600 and a Black Belt Club for $3000 and a Masters Club for $4200.
In terms of product and services strength, MATA School has several distinct advantages over the competition.
First, is its marked advancement in marketing over all other competition.
MATA School will provide a wide range of classes six days a week. This will be one of the only schools that are open full time in the area.
Daycare programs offer added convenience to the parents and start an early association with customers. Our high school programs will offer additional income steams during the day and will be a great marketing stream for the rest of the family.
MATA School dedicated self-defense/self-protection class allows for the introduction to martial arts at an inexpensive level.
Through our association with the leading marketing and consulting companies, which other schools do not use, we will be able to dominate the market within two years.
Our most powerful assets are value and service. MATA School will aggressively recruit students by our unique advertising approach utilizing its unique advertising and marketing concepts.
The corporate strengths are personal resources. We have established our financial resources so that we will be able to provide a sound product and quality marketing.
MATA School instructors enjoy an excellent reputation in the community, having been involved with the association for over 6 years.
There are martial arts schools in the area that don’t teach the same values and ethics that we do. This could indeed give the martial arts a bad name and hurt the industry in general. In addition, there are many activities and events that don’t always display the martial arts in a positive light. We need to compensate by reaching more people than are touched by negative ideology. Your State Springs is a highly conservative and heavily Christian oriented community and we will need to make sure that we don’t unintentionally offend any groups with our Japanese/Okinawan karate. By emphasizing our American karate style and not mediating in class should help.
The upside potential for martial art instruction and self-defense training in Your State Springsis increasing.
Based on existing conditions introduced in the Present Situation and Strengths/Weaknesses analysis, apparently over 1000 active students per school will be available within the next five years.
An altogether new application for this product and service would be tapping the daycare markets.
Further opportunity for our product exists in the business markets by providing self-protection workshops and teaching in the school systems.
The estimated cost of entry into these two fields is small and only involves time.
Still another possibility for development involves the production of self-protection and martial arts videotapes.
Lastly will be having special events twice a year in a resort area. (Seminar, tournament, act) and use our existing travel agency to get great group discounts. This will enable us to charge an extra $50 per person and still be able to be way below what an individual could get the same package for. Imagine a 4-day all-inclusive trip to a great resort for a couple of hundred dollars. With our existing student base we could take over 100 students to an event like that from Your State Springs alone.
With few exceptions, the basic martial art population falls into one of the following groups:
1 Fitness Seekers
2 Fear Motivated
3 Fun Seekers
5 Fad Seekers
Each of these personality groups will comprise the student make-up of our school.
The fitness industry is growing rapidly and martial arts offers nationwide appeal. This is by far the largest percent of students. People are always looking for an activity to lose weight and increase their fitness level.
Our research suggests that adult’s are looking for an intensive cardiovascular workout by way of kicking and punching.
The students who sign up due to fear include men and women who have been the victims of assault. Some might know a family member or friend who was recently attacked. A rise in crime or a widely covered news story could contribute to an increase in the interest for self-defense training.
A solid self-defense program will put these students at ease. Delivering quality training will earn us a reputation that will carry on long after the students acquire the basic knowledge of self-defense.
MATA School has taken a position that students do take martial arts for fun. Children make up the largest percent of fun seekers. However, adults will need to enjoy the program to stay active. Adults that want to have fun are difficult to spot at times. They are often not willing to admit that they are in the program for enjoyment
Friends that sign up for the martial arts might not have any idea of the benefits gained through the martial arts. They are here because a friend joined, and they just want to go along for the ride. The friend is a perfect way to increase student numbers. If one student is having fun, it is easy to have them bring in another friend to experience martial arts.
THE FAD MARKET
The fad markets are very hit and miss. Certain years this can be a large market. This market will follow in line with the current trends in the movies or on TV. The movies seem to raise the most interest in the martial arts. Other large and noteworthy events in can cause an influx of students. For example, when the martial arts were introduced into the Olympic games there was a dramatic increase into the martial arts arena. It is important to recognize the potential and target market to this group.
They demand to be seen as special, to feed an appetite for prominence and social recognition. Once the realities of training are realized, they often leave. However, fad seekers are very welcome in the school, and they will provide a school with a wealth of friends and acquaintances, of which some will become dedicated martial artists.
The fanatic martial artist is eager to train in any type of martial arts. Most will be aware of karate of martial arts and have knowledge of other types. There are many reasons why the fanatic is attracted to your school. They might have heard that your school produces top tournament fighters. There might have been a recent encounter that your student performed well.
The fanatic becomes enthralled into the martial arts. Living and training continuously in the martial arts. It is important to handle these students with an understanding that they are not dedicated to the instructor but to the art. The instructor must work hard to keep these students very happy and challenged.
The statements made about the various personalities outlined in the preceding six target groups are the main group of customers. The goal is to know what each customer wants and what motivates them to study. In this way MATA School will know in which direction to take each student.
MATA School will attract the majority of students from a six-mile area, ages between 3-55. Most of our students, 50%, will be under the age of 14 both male and female. The students will enjoy sporting activity and parents will have discretionary income.
Most will be first time buyers of martial art instruction.
Competitive threats today come from outside the martial arts industry. Indeed if a potential customer joins a non-affiliated school it is lost revenue, but with only 1% of the population currently involved in the martial arts, anyone joining a good school should work towards building the industry. The only time we look at another school, as competition is when they are performing less than appropriate standards, which will bring about negative word of mouth. The MATA School will try and build upon its association to develop a business association where everyone can gain more through teamwork. The MATA School products and services perform in virtually all aspects that students are looking for.
By offering the opportunity to study martial arts full time and the unique daycare, high school programs and self-defense/self-protection classes, our research suggests that our performance will be superior to other schools in our area.
In all comparisons, MATA School products and services provide more features and have superior performance over the competition’s products and services. In most cases, the number of differences is substantial.
Martial Arts Products and Service
Companies that compete in this market are numerous but it is our opinion none have the same credentials and reputation that we do. Some of the best competitors are black belts that Your Teacher has personally trained. It is the intention of this company to try and work together with the other school owners so that we can all achieve more.
The competitive schools in the area have fallen into the trap of going month to month in an industry where we have a 50% drop out rate. The leading martial art centers have found that you can get around $5000 out of a student the first year, either through incentive for cash or long term contracts. We now have the ability to take contracts to the bank and get cash, which helps our cash flow capability. Our Master Instructor is a legitimate 8th degree black belt, the only one in the region. A combination of outstanding customer service, great sales strategies and tactics, principle based leadership, and a quality product indicates there is really no competition for our product and services.
Many of the schools charge around $70 a month for lessons. We intend to charge around $100 a month or better for our services. We will offer our services through the school systems for $189 per semester, which will include uniform, manual, and association fees. If we can get 30 students per class, it will generate over $4000 per school or around $20,000 per 4 schools per semester. (One instructor should be able to test for schools a day) The after school program and in school programs will be a constant stream of leads for new students at the main school.
Observations and Conclusions
From the above information, it appears that the competition has overlooked market niche opportunities on which MATA School will capitalize.
Industry: Company must stay competitive as business matures.
Maturity: In the mature stages there are likely to be competing companies.
Competitive Position: The market is open. Competitors have not taken the same approach, as MATA School will.
Strategy: Product/service, price distribution, promotion strategies are straightforward.
Assumptions: Sales forecasts for new products/services are difficult to predict. Product/service acceptance is good, and sales estimates are considered conservative.
Management: Careful planning and clear objectives will lower the risk.
Past Performance: NA
MATA School marketing strategy is to enhance, promote and support the fact that our products and services will offer a full time opportunity for the study of martial arts.
The overall marketing plan for our product and services is based on the following fundamentals:
Martial art instruction is offered to all ages enhancing their personal and professional lives.
MATA School will reach both male and female customers from the ages 3-55.
Over a five-year period, we expect to capture 5% of the area population.
To prove the value of our martial art product and services we can inform our specific target market as to the benefits of the martial arts. MATA School will accomplish this through: media advertising, word of mouth, yellow page ads, referrals, open houses, gift cards, charity events, daycare programs, high school program, promotional giveaways, lead boxes, movie premieres, exhibitions and demonstrations, flyers, brochures, newsletters, press releases, direct mail, and telemarketing.
Martial art instruction should be treated as a long-term product and service based business.
As such, the target market segments to focus on are six target groups. Because of martial art instruction’s special market characteristics, seasonal and geographic, our strategy includes timely promotions and capitalization on the change in activities associated with the seasons.
Consumers see our martial art instruction as a punching and kicking type of self-defense.
Martial arts offer unique benefits other than self-defense and can be exploited to arrive at a winning position in the consumer’s mind.
In terms of market segmentation advantages, we can use marketing to attract customers to the school to inform them of the many advantages offered. With these strategies, MATA School will achieve a winning position.
Reposition martial art instruction as a way to escape from daily stress and better yourself and your children.
Equipment, instructional material, and monthly seminars depend on the presence of our daily instructional activities to be effective.
Reposition the Competition
We can reposition our competitors by capitalizing on their inability to provide full-time instruction, and a variety of training styles.
MATA School will offer a wide variety of class times each day of the week. MATA School will offer Karate lessons, as well as weapons and Jujitsu, and dedicated self-defense instruction, as well.
Our competitors’ schools hours are only part-time, 3-4 days a week. MATA School will offer class six days a week. The competition has also very limited activities for the students. MATA School will offer seminars and tournaments to increase students’ enjoyment. The lack of marketing and advertising is the largest weakness for the competition.
The resulting Selling Basis for our product, then, will be increasing services to the student by making them aware of the benefits that come from involvement in the martial arts.
Therefore, our fundamental strategy for all of the advertising is to increase the potential customers’ awareness of the benefits of the martial arts and offer one on one introductory lesson.
Direct Mailers To be determined
Mailing House To be determined
Sales Material Printers To be determined
Direct Response Firm To be determined
Marketing/Planning Consultant IMAMS/ Program director
Telemarketer Hired at 5% of Contract
“Your teacher” as President will be responsible for the following. Within two years, these duties will be reassigned:
New business development
Sales generation tools
Corporate graphics standard
XXXXXX as Vice President will handle the following:
Direct response promotion
Telemarketing – scripts/training
Product position and identification
Sales and training
XXXXXX as Secretary/Treasurer will handle the following:
Financing and collecting contracts
We will offer an introductory course for around $1500 and will entice the customer to pay 90 days same as cash. (After monthly billing check is over the operational expense amount). After about 4 months, we will try and sell the Black Belt Club or Master Club for an average of $3500 additional tuition. We will again entice them to do 6 months same as cash but will also be able to cash these contract to the bank for financing or use IMAMS for monthly payments. All advance payments must be invested or put into savings for future expense.
Advertising and Promotion
MATA School will position the company as a full service martial art school within the market identified.
Equipment Catalogs supplies by Century Martial Art Supply
Student rank pamphlets
Media Selection and Strategy
Distributor and Retailer Support Packages
Representative support (sales tools)
Lead Referral and Follow-up systems
Information gathering & dissemination
By capitalizing on daycare operation and self-defense/self-protection
Gain acceptance in the community as the only full service martial art school in the area. Increase the awareness and name recognition among customers located on the north side of Your State Springs. As a non-profit we will attend many events including Chamber of Commerce, better business lunches, and all non-profit events. We will offer public service announcements on TV and “your teacher” will attend public speaking engagements to obtain recognition for the Association.
All strategies are held to the following tests.
The strategies define means for achieving the objectives set.
The strategies are consistent with the evaluation of the marketplace and our capabilities.
The return on investment is sufficient to justify the risks.
The chances of a competitor executing a similar strategy are nil.
The strategies are consistent with the political environment within the company.
The bases of our strategies are factual, and not assumptions.
The overall strategy will not leave us critically vulnerable to a shift in market behavior.
The appraisal of the competition is open-minded and honest.
Our strategy is legal.
Decisions on the conception of the school will follow the basis of the strategic plan.
Key decisions to be made in the near term (next year) are the location of the second school.
The information needed to make both of these decisions with confidence include:
Availability of retail space.
Pricing and Profitability
MATA School prices on lessons are determined by local established prices and by the relative cost of industry standard profitable schools. Prices on equipment are the suggested retail price as determined by our wholesale supplier Dragon International.
Sign up fees are $1500 per student and $750 for each additional family member. Standard market prices range from $60 to $80 per month.
Karate, lesson prices per student will be as follows:
$1500 for brown belt, about $5000 all the way to second degree
50% deduction in price for each additional family member
Private lessons will be $25 per 1/2 hour, “your teacher” will charge $50 Per 1/2 hour. .
High school Karate lessons will be $189 per student per semester.
Self-defense lessons are based on a 4-6 week course and will vary between $45 -$85.
Testing fees will be $30 per test, white belt through Black. Black belt testing will be $150. These prices will include a certificate and a belt of the appropriate rank.
Seminar prices will vary from $20 to $50 depending on the speaker and any equipment issued.
Our prices are above that of our competition. We feel that this will give us an advantage and gain popularity in the industry as being the elite quality organization. Our testing fees are average.
Once our student number increases to 300 we will begin to increase our prices to maintain a student number between 300 and 500. An increase in student numbers above 400 will require us to hire additional staff.
The prices for our products and services are determined primarily by what the market will bare, and the cost of supplies.
It is important to know that perceived value pricing is inherent to our market profile.
Compared to the competition, our prices are average. Furthermore, we plan to offer greater advantages to our customers.
Different seasonal aspects of our market will not affect our pricing. In the martial art market we do expect seasonal increases and decreases in sales. During the summer months we expect that the sales will be lower due to more outside activities and during the fall and winter months, sales will increase as the weather changes.
We feel that our customers will pay between $4000 – $5000 for training all the way to Black Belt. Since the student is the most motivated during the first few months, we will offer a discount if they sign up to Black Belt or Master Club before green belt. Extra added value services will be added to motivate the customers to make this commitment.
The average student spends between $50.00 and $200.00 on equipment each year. Retention will increase due to an increase in tuition being paid up front. This will make retail, belt test fees and seminars more lucrative.
Each student will have a worth of:
Seminars (av. 2 yr.) $50.00
Testing Fees (6 yr. $25.00) $150.00
Equipment purchases $100.00
Worth of each student (1 yr.) $4300
Time 200 new student/year $860000
Less 50% attrition rate $430000
Total net worth for year $430000
Divide by 200 total sign ups $2150
Adjusted worth of each new student per year $2150
Each sign-up will provide the school with $2150 in sales.
We can take advantage of volume purchases by reducing the amount of additional family members. Paying for lessons all up front will increase the savings to the customer. We will offer added discounts to local youth groups from time to time.
Cooperative advertising sponsor pays 2-10% of purchases toward your advertising of their product or working with their group.
MATA School plans to review our pricing, products, and services margin every three months.
Should a new pricing policy be investigated, our potential profits will be increased.
Estimated cost of manufacturing product (i.e., video tapes) will require rental of video equipment at a current rate of $50.00/hr plus the cost of editing.
Current Selling Methods
We currently offer an introductory course in order to establish the value of the program and then sign them up for brown belt at that time. Up grades to the Black Belt Club occurs at about four months.
MATA School marketing strategy incorporates plans to sell our line of products and services through several channels:
Direct Sales Force
Joint Marketing Relationships
Lead generation will be primarily from referrals and lead boxes.
Lead referral and follow-up systems are being designed.
The majority of sales will be through direct sales by the MATA School sales staff. MATA School anticipates hiring 2 additional sales representatives to cover additional markets.
We have chosen to use a direct sales force because our products and services require considerable customer education and post sales support directly from the company. Our price point, pricing structure, and profits are such that our costs of sales warrants a sale to be handled on an individual basis.
Outside sales support
* Literature mailing
* Follow-up calls
* Order entry
* Order entry
* Literature mailing
* Marketing research
New Business Development
* Contact distributors, retailers, customers
* Schedule appointments.
Advertising and Promotion
MATA School recognizes the key to success at this time requires extensive promotion. This must be done aggressively and on a wide scale. To accomplish our sales goals, we require an extremely capable advertising and public relations team. Upon funding, we will draft a comprehensive advertising and promotion plan. We will advertise independently and cooperatively with distributors, retailers, and companies with whom MATA School has joint marketing/sales relationships.
Advertising and Promotion Objectives
Position MATA School as the leading martial art school in the area.
Increase company awareness and name recognition among businesses, and customers.
Generate qualified sales leads for field sales organization action.
Develop, through market research, significant information for immediate and long-term marketing plans.
Create product-advertising programs supporting the “benefits” position.
Coordinate sales literature, demonstration materials, telemarketing programs, and direct response promotions to capitalize on all opportunities.
Gain awareness of company among customers.
Establish an image of MATA School as a traditional and ethical martial art school; an organization that is very professional, completely reliable, and offers the highest quality training available for students.
Maximize efficiency in selection and scheduling of publications to cover 3 to 55 year old customers with discretionary income.
Position MATA School in a quality editorial environment consistent with creative objectives.
Select primary business publications with high specific market penetration.
Schedule adequate frequency to impact market with corporate image and product and service messages.
Where possible, MATA School will position advertising in or near health and sports related information and appropriate editorials.
Employ special high-interest issues of major publications when possible.
Maximize ad life with monthly and weekly publications.
To get the most out of our promotional budget, our media coverage will be to focus on an active audience.
We will develop an advertising campaign built around the many advantages of training in the martial arts. We will begin with a “who we are” position and support it with ads that reinforce the benefits of training with MATA School. Most importantly, we will develop a consistent reach and frequency throughout the year.
Due to the nature of our product and service, it is necessary to run varying sizes of black and white ads.
The best way to reach our potential customers is to develop an intense advertising campaign promoting our basic premise “what the martial arts will do for you.”
To establish a professional company image, the delivery and tone of our statements will convey that anyone can do martial arts, that the benefits are lasting and will help in all facets of life.
Ads will convey the look and feel of a professional and enjoyable company.
Our primary focus will be on social media, email marketing, word of mouth and our website.
The consumer mindset, as described in “Marketing Strategies” is conservative.
Ideally, after becoming familiar with our product and service, the consumer will automatically think of MATA School when they think of martial arts. They will pick up the phone or stop by our school for a free lesson.
To eliminate the biggest objections to immediate action, our advertisements must address that there is nothing to lose and the services are available immediately.
Because martial arts are so unique, it is important to develop a promotional campaign that is consistent and easy to understand.
Accordingly, MATA School has created a system of research and response to insure the maximum benefit of our advertising dollars.
Preliminary Media Schedule
See appendix for media schedule.
In addition to standard advertising practices, we will gain considerable recognition through flyers, ads before martial art movies, lead boxes at youth activity stores, movie theaters, and cooperative advertising with youth activities. MATA School will become very active in the local chamber of commerce, promote attractive brochures, and have professional student information packets and handbooks. We will issue press releases for our grand opening and when the school is involved with certain activities. We will produce a newsletter every month and send it to local media agencies, students, and prospective students.
MATA School will publish reports and papers for trade journals and technical conferences.
Ideal consumer actions would be to call or stop by the school for a free introductory lesson concentrating on the benefits of the martial arts.
MATA School will provide free information packets to prospective customers and will offer free uniforms as an incentive to sign up quickly for lessons. In addition, free private lessons are also available as incentives.
MATA School will also acquire advertising specialties like coffee mugs, T-shirts, imprinted gifts and gadgets.
MATA School will employ the use of direct mail. We will also distribute flyers in the local neighborhoods to announce the grand opening. Distributions will also follow a special promotion.
Corporate Capabilities Brochure
Will portray MATA School as the leading martial art school.
Front panel will contain name, address, phone number, and a pleasing graphic or picture.
Inside flap will have testimonials by students and parents.
Main body will contain a brief description of Karate, a brief description of the instructors’ qualifications, and reasons to study at this school.
Back will have standard questions answered.
Schedules and prices will be an insert to the brochure.
Will be a more detailed brochure. Each specific market will be addressed: adults, parents, and children. They will include information for the Karatestudent, the Other Style student, and the self-defense student. We also are planning on a DVD info kit.
Sales Support Collateral Materials
Prepare a form to fill out when a potential customer calls.
An informative letter will be sent after contact with a potential customer.
Sales follow up matrix.
List items that will help the communications process
Brochures Business Cards
Price Lists Catalogs
Direct Mail Stationery
Handouts Telephone Scripts
Investment In Advertising And Promotion
For the first 12 months of our project, advertising and promotion required more but on an ongoing basis, we feel that we can budget our advertising investment as 10% of total sales. We will allocate 5% of gross sales to the telemarketing department of those people that join the school.
This figure is necessary because of the specific goals we have set.
Compared to the martial art industry, we are investing the average in promotion. As compared to our competition, we will invest above average. This is necessary to achieve a dominant position in the local area.
Position MATA School at the leading edge in providing martial art instruction.
Increase MATA School awareness and name recognition among customers in the YourState Springsarea.
Develop a sustaining public relations effort, with ongoing contact between key editors and top-level personnel.
Develop a regular and consistent product and services update program for major target media. Keep key editors abreast of martial arts enhancements and innovative products and services.
Develop a minimum of one technical article written by key instructors to be placed in martial art publications within the next 12 months.
Establish contact with editorial staffs for the purpose of being included in media fitness “round-ups,” or where competing products and services are compared. This exposure builds credibility and market acceptance.
Produce a complete company background on MATA School to be used as the primary public relations tool for all target media editorial contact. This is also effective for inclusion in press kits, dealer kits and sales packages. The background would include sections on the following broad subjects:
Overview of the Market: size; characteristics.
The Market need in 1997, present & future.
Brief sketches of Top Executives
The Products and Services
Develop a series of press releases on the entire product service area. Prepare press releases for each new product and service introduction, technical development, participation in a major event, awards and recognition for product and personnel excellence and performance, etc.
Over the next 12 months, invite the most influential reporters and editors from the local area for a visit to MATA School. During the visit, each editor would receive a complete facility tour, product briefing, and an opportunity to interview the chairman, president, instructors, or students. If logistics or timing is a problem with the interviews, then these could possibly be arranged later.
Produce a four-page, black-and-white newsletter to serve as an informational piece for internal personnel and customers. The newsletter would highlight major developments, such as key stories, successful students, significant events, and product development news. Internally, the newsletter would be targeted to all students and instructors. Externally, the piece would be targeted to key customers and prospects.
MATA School has formed some very important relationships with major companies in the industry. The following is a list of existing relationships:
MATA School has established a long relationship with the various supply companies.
Joint Development Efforts
MATA School has been involved with joint development efforts with several companies including International Martial Arts Management Systems.
Conclusions and Summary
MATA School’s approach to operation is aggressive. By attacking the market and applying the procedures outlined, we will launch MATA School into a very profitable position. Initial outlay in comparison to competition is large. However, MATA School will return a larger than average profit in long run.
Total Capital Required:
1 Months expenses $10,000
Goal of 6 month safety $60,000 in reserve
Retirement Goals $500,000
Total $560,000 in reserve
We expect profits this year and will attempt to put into savings 2000-3000 per month within 4 months.
Financial Projections and Goals
Currently the schools are collecting dues on a monthly basis and with our new financing proposed we are going to be looking at $70,000 – $80,000 per month in contract amount. By giving the bank 20% discount off the top to collect the money, we will still have available $60,000 per month to invest. We will pay the schools $100 to $200 per month until the principle is paid in full but that will allow us to make up the difference by investing the money. Our overhead is around $20,000 per month and we would like to have over $200,000 invested at a rate over 10%, which would enable us to never touch the remainder of the principle as we make more deposits. (Current real estate investments are making over 50% annual ROI!) In addition, we have contacted several schools in town (over 6) that would be willing to finance their contracts, which could generate a nice cash flow for the investment company.
Notice: Currently our monthly billing check has dropped so until we get that back up to $30,000 per month, no cash outs will be solicited. Investments are doing great and growing.