During the course of the week, various people cancelled or rescheduled their private classes, allowing 30 minute time slots to do two intro classes. Over time, we also decided on specific days where we left the prime time of 5 pm – 6pm open for the sole purpose of teaching intro classes. Also, we put some time slots in on Saturday.
Our sign up ratio was over 80% using this method. On top of that, the fact that we did not charge for the trial lesson in the first place, greatly increased the number of initial calls, and easily brought us in more income than the old fashioned way.
Instead of getting lazy, and hiring more and more staff as some of my friends did, we stayed lean, mean, and profitable. They worked less, hired more, and soon found out that while their enrollment up, their income went down, since they had to hire more staff to teach. There is a point of diminishing return that must be weathered once a school grows to a certain enrollment point.
Another question I’m often asked about keeping a lean staff is ‘How can you teach 30 people in a class with just one instructor?’ To maximize your school, you have to have a low overhead and lots of classes. For example, I tried to keep my kids classes to around 20 kids. I did this by having a PeeWee class every day, since I had more of them – over 100 – than any other age.
That gave me an average class size of around 20 students, which I could easily handle on my own. You need to be in tune with the demographics of your school in order to schedule the right number of classes for any particular age group or belt rank. Over the course of a year, these will often change, and you will have to add or delete classes to accommodate the changing makeup of your school.
For example, in January, you might have an influx of adult white belts, necessitating the need for extra beginners classes. They may drop out, or will certainly will have moved up by September, when you experience an influx of back to school PeeWees. At this point you can phase out the extra adult white belt class, if you haven’t already done so, and add new PeeWee classes instead.
It’s very, very important that you stay up on these changing demographics to maximize your time and efforts. You don’t want classes with 50 students in it – nor do you want classes with 2 or 3. You have to encourage, prod, and schedule people to come to the classes that allow you to maximize your time, effort, and space.
I’m often asked by instructors who call me for the first time how many students I had. Usually they ask me with a great deal of skepticism and a great deal of anticipation. Once I answer that I only had around 250, they jump in and tell me that they already have 250, or 300, or 400, or even more. Although some say the next line, some, and many more think, “What can you teach me when I have more students than you did?”
These people overlook two very important points. Firstly, how big the school is in terms of enrollment means nothing to your bottom line. There are schools in Korea and China with 2,000 active students, and the instructor might not make in a lifetime what an average school here makes in a year.
The bottom line is now how big your school is, but how good your service is to your students, and how much money you get to keep at the end of the year. This is very important when it comes to strategic planning. You have to know where you want to be in terms of net income. Nothing else matters.
A lot of instructors get lost in this fact by talking about, “If I just had this many students,” or, “My goal is to get to this many students.” The amount of students really doesn’t matter. What matters, is what you keep.
I talked to an instructor today who had over 700 active students, and does not make $50,000 a year in income. Recently, I visited another school that looked like IBM headquarters. It was white marble and glass, with three separate training areas, a pro shop, conference room, Program Director’s office, instructor’s office, and changing rooms. With well over 400 students and a rent just under $10,000 per month and four full time employees to service it, what do you think is left over at the end of the day?
Another school I know of in California has over 500 students, and the instructor has never made $50,000 in his life. At a seminar this weekend, an instructor who I thought to be financially sound, met with me after the seminar to show me his accounts. After a gross monthly income of over $15,000, he took home an average of $400 per week – less than his 20 year old assistant, and less than he was paying his two office managers.
Based on his expenses, he should have been taking home $2,000 a week, but with 40% of his gross income going to staff, that just wasn’t possible. Are you in business to be big, or are you in business to be profitable? Are you in business to make your landlord rich, or yourself? Do you want to have the largest and best-paid staff in the country? Or do you want to reach your own personal level of financial security? These are all questions that must be asked before going forward with hiring paid employees.
My philosophy has always been one of maximization, not large enrollment. Firstly, I want to provide the greatest service I can to my students in the form of excellent instruction, curriculum, and motivation. Secondly, I want the maximum amount of students, paying the most money the market will bear, with the least amount of capital and time outlaid
Now, I’m not saying you should not want your enrollment to grow as much as possible. But just make sure, as it grows, you make more money – not less. A well run martial arts school should produce a net income somewhere between 40-60% of gross income. If you’re not including your own pay in the overhead – that is to say if you gross around $200,000 – you should be netting $100,000 as your profit at the end of the year.
Now that depends, to some degree, on the overhead of the area. For example, a studio in Texas should net more money than one in California or New York, since the overheads are much lower, whereas the amount students will pay is about the same. Happiness is all about having a positive cash flow.
Angel and Regina Gonzales ran one of the most financially successful schools in the world with just two of them, and one assistant instructor. They’re only open from 4-9 pm and have less than 2500 square feet. Yet, their income is huge. That’s maximization. Angel and Regina became millionaires in their early 30’s because they knew how to maximize.
A good friend of mine was netting $2,000-$3,000 a week in a 1200 square foot school with around 300 students, when he was just 19 years old – and his retention was great. He worked from 7am until 10pm and only had one other instructor to help. Now, I know that’s not for everyone, but you can find a happy medium between breaking your neck and working just to make your staff and landlord happy.
Another client of mine has an active enrollment of over 200 in just 1300 square feet. He has owned his own condo on the beach since he was 24, and buys a new Corvette every other year. On top of that, he has a substantial retirement plan. He has a full time staff of one instructor and one part time office person.
The bottom line is this – who do you want to get the money from your efforts? You only have x amount of time, space, energy, resources, and money. Make sure you get the maximum return on all of them.
Before we look at how to hire staff and how to get maximum performance from your paid staff, look at how you might tide yourself over until that point. On way is to make use of temporary help. For about $8-$12 an hour, you can get help from any temporary agency in the country. This is money well spent when you have to enter names in a database, type letters, stuff envelopes, create a newsletter, or answer the phone at peak hours. Your time is too valuable to waste. So, let people do what they are good at, and you stick to what you are good at.
When you need extra help at peak times, pick up the Yellow Pages and call a temporary service. By using temps, you save money in several ways – even though they get paid more per hour than you would pay a student to help you. One reason – if you don’t like the person they send you, you can get another one – no hassle.
You use them only for the time you need them, and send them home when you don’t need them – removing wasted time, and paying only for what you need. The temp service takes care of all the paperwork, and pays payroll taxes – so you have no hassle.
On top of that, people who work for temp agencies go through an extensive screening process, to make sure they are experts in the area of expertise in which they are placed. Because they are trained to type or work on computers, they also get far more work done in far less time. So, temps are a great way to pick up the slack that 2 or 3 busy hours a day.
Another way is to get help from coaches. I suggested that many schools start a coaching program, and get the parents who usually sit around in class swapping recipes, to put on a track suit, and actually get in to help – especially with the kids’ classes. That’s not to say that they’re going to be teaching classes, but they can help maintain discipline, if the instructor has to leave the class in order to answer some questions, or talk to someone about a renewal.
Think about it – parents all over the country are involved in coaching little, soccer, football, baseball, and swimming. Why not get some of your parents involved in coaching martial arts? The parents don’t actually teach classes, but they can hold shields, oversee classes, and help keep order. They do it for free, and it’s valuable help to you as an instructor.
At my school, we even organized special coach’s meetings and training sessions. You can use the Kaizen Club to help you with this. As an added benefit of setting up a coaching system in your school, here’s the great part. Many of the parents who got involved in the coaching program quickly decided to sign up for lessons themselves. It’s really worth a look.
I’ve said many times previously that I am against having people teach, then not get paid, and I still am. However, I am not opposed to receiving some help from people enrolled in an instructor’s program, provided that it is also of benefit to them. Once an instructor has completed your instructor’s management course, you could extend the program by, say, an additional 3-6 months of on the job training – in which he would get the practical experience of running the school.
He would work, maybe twice a week, for 3 or 4 hours. During this training program, you would schedule regular meetings with them, and suggest ways in which their teaching methods or performance might be improved. After the session was up, the instructor would graduate, and then would start getting paid for his services – more or less like the old-fashioned apprentice system.
This approach provides you with extra help on the days you need it most, at no cost – and provides the trainee instructor with valuable feedback on his performance. While many people have set up arrangements like this, they often forget their end of the bargain. If someone is working on a training program for you, make sure you do provide the training and coaching necessary.
Also, don’t try to extend this type of arrangement for very long. The instructor you are teaching will only come to resent you if you do not pay him for his time. Treat his time just as valuably as you would yours.
A third way to get extra help is through scholarships. Occasionally, when an older teenager runs into financial difficulties, I would set up a meeting with his parents, and offer him or her a scholarship program. In the program I continue to provide him or her with scholarship training, in return for 6-8 hours per week of part time help – either with classes, or by going out and passing out flyers, handing out surveys, and generally becoming an asset to the school.
Let’s sum up this segment in this way: Before you hire great staff, look for other ways to expand your reach and maximize your income by making use of all the resources you have. Also, remember when planning your strategic expansions, that big is not always better. Profitable is better.