Planning Your Martial Arts School

How to Negotiate a Lease

The Leasing Coach, Dale Willerton, Shares His Vast Experience on How to Get the Lowest Rent

Part 1 – Two Important Steps to Take in Negotiating a Lease.

Part 2 – How to Do Your Homework in Negotiating a Lease.

Part 3 – How to Build the Right Team to Negotiate Your Lease.

Part 4 – Case Study of an Aikido School in Negotiating a Lease.

Part 5 – How to Get Help in Negotiating a Lease.

For a free consultation with Dale, send an email to dale@theleasingcoach.com

Be sure to mention MATA sent you.

Extensive Video Course: How to Build a Business Plan
Sample Business Plans +

Business Graphs and Charts

Sample Business Plan to Help You Design Your Own

Sample Business Plan 1

Sample Business Plan 2

Clarity of Purpose +

The martial arts business is much like show business. There is confusion and internal conflict about money. “Serious” artists are concerned that they not sell out or become commercial. I saw an obese martial arts “master” on an A&E special. He said, “Martial arts is about changing lives. It’s not about making money.” Master Po has spoken.

That kind of easy-to-spew rhetoric creates confusion in the martial arts industry. The history of martial arts is rife with stories of master instructors teaching the arts altruistically. When you hear one of those stories, it’s usually from someone who thinks charging for martial arts is wrong. Just keep in mind that:

There is a big difference between you and the story teller or the kind master – they don’t have to pay your bills. You do!

Like sex, money is seldom discussed, other than to complain about the lack of it. If you were raised in a family that struggled financially, you may have certain beliefs drilled into your head: such as, “The rich get richer, while the poor get poorer.” “We can’t afford that!” “I’d rather be happy than rich.” “Money is the root of all evil.” “The rich put their pants on one leg at a time.” Or, my favorite of all time, "If money was so important, look at who God gave it to."

The message is that not only will you not have money but also that people who have money have sold their soul. The truth is that money is like a hammer: it’s just a tool. Money is also blind; it doesn’t care who has it or uses it. If you save your money, your wealth grows. If you spend it, your wealth shrinks. Money doesn’t care one way or the other.

When you combine that kind of negative association with money – which is very common, by the way – and throw in the so-called spiritual underpinnings of the martial arts, you get idiotic statements like the one from the chubby master guy.

Because the martial arts can be a power for good, many of us convince ourselves that we teach to help people. We feel we should sacrifice our own well-being to “help the children.” We charge too little, and we let people train for free and, when they get good enough, we hire them to teach. When they underperform we keep them on, because, well, Sally has been with me for six years. If I fire her, I don’t know what she would do.

Many of us worked hard to make all our students happy, and I don’t mean only from a student service standpoint. Our reward is that smile on little Johnny’s face, or Cindy’s improved grades, or Joe’s raise at work because we gave him the confidence to ask for it. Most professions don’t offer those rewards. In fact, that is all the reward we need, right? Wrong. Very, very wrong. Beware this dangerous trap of rationalization.

When your well-being depends on how happy your students are, doctors call that co-dependency, and it will eat you alive. There is no way you can keep all of your students happy. This approach will wear you down and burn you out, because the human experience is a balance of good and bad for all of us, including our students.

Creating a Profitable Pro-Shop +

A private golf club with a pro-shop and around 300 members will gross around 00,000 in merchandise sales in a single year. While that may not be a realistic figure for any martial arts school it does show just how much income can be generated from a small captive audience.

You have a small captive audience eager to buy. The question is do you have anything to sell? And if so does anyone in your school Know?

The main reason that merchandise sales in martial arts schools are so poor in comparison to lesson income is simply that the merchandise is usually not made available to customers. If it is it is seldom presented in such a way as to create a desire which is essential for any type of sale to happen.

Where to put the pro-shop?

The best place to locate your pro-shop is just inside the door of your school. If the office is on the left then locate your pro-shop on the right. In this way, the window display becomes a part of the pro-shop much like a mall store.

You want to put it here so that students, parents, and passers-by can easily see the merchandise that you offer. If they can see it easily and get to it easily then they can buy easily.

How to set up the pro-shop

If you need help in how to set up a pro-shop or what yours ought to look like go to the mall and look at stores like the Limited or the Gap. Better still find a Tennis pro-shop, they are very similar to what a martial arts pro-shop could be like.

They sell mainly shirts, shorts, and caps. Along with rackets, balls, books, and videos and yet despite having a smaller clientele than a successful martial arts school they sell well over 00,000 of merchandise a year. Golf shops are a more sophisticated example but the principles are the same.

The most effective way to sell merchandise is to put it on display. A good display rack is an excellent way to display uniforms and equipment. Buy a glass showcase and put it in the lobby.

Keep your eyes open in the local classified ads for stores selling their display racks. Stores go out of business all the time, so it's not expensive to pick up some used racks or displays.

Display t-shirts and patches in your lobby walls at eye level. Use a grid to hang clothes on. Set your pro-shop up with walls or grid work on three sides and the front open so that people can walk in and see and feel the merchandise.

Change your displays on a regular basis, at least every couple of months. Even if you don't change the actual merchandise, rearrange it.

You will be surprised just how many people who have gotten used to seeing a piece of merchandise in one place for two months, will suddenly notice it as a brand new item when its location is changed.

Change creates interest. Take some merchandise off the display and rotate it so that it never appears to be the same old stuff

You can have the best stock of merchandise in your state but if people don't know you have it, don't see it or can't touch it, it's not going to sell.

Daily & Weekly Reporting Procedures +

Reporting keeps score on your performance. Your reports let you know how well you and your team are performing in every area. They also helps you to see any problem areas that may be developing well in advance. It will then be easy to take corrective action early when, through your tracking efforts, you find areas of your team's performance that are not operating optimally.

Although it is vital to take the numbers down, in our business it's better to analyze your numbers at the end of the week, unless you can see that something is way off course. For example, you see that you've had six phone calls today and no appointments. You'd better check the phone skills of your Team members immediately.

Note: It is vitally important that this information be documented accurately every day. Not documenting this data accurately every day will be cause for dismissal from the team. If you don’t care about your business, who will?

Basic Admission Statistics
Every day, you need to know the admission statistics, what's happening with your school's growth.

The first statistic you need is the number of Phone Calls Received. This lets you know how well your advertising and marketing efforts are performing and what changes, if any, need to be made.

The next statistic is Walk-ins. How many people are walking into your school? This let's you know how attractive an appearance you have to the outside world.

Now we need to look at the number of guests your students are inviting to the school. This let's you know how well you're doing with your internal marketing and referral efforts.

After we have these three numbers you add them up to give you the number of inquiries for the day. If, for example, you had thee phone calls, I walk-in and two guests you would have six inquires (3 I 2). You would then add this number to the total inquires to date on yesterday's statistics report. If the total to date as of yesterday was 10, you would add 10 6 to give you 16, which would go in the total number of inquires to date box.

The next statistic is the number of appointments made that day. At the end of the week the total number of your phone calls, walk-ins and guests statistics are totaled and checked against the total number of appointments. To find out how well your staff s sales skills are you simply divide the number of appointments by the number of inquiries. For example, if you have 12-inquires and you make 10-appointments, then you have 10/12= 83%. This means you have an 83% efficiency rate for making appointments.

80% is the goal we recommend everyone set for his or her operation.

The next number you'll need is that of trial lessons performed. After the future student comes in for their appointment, how many take the trial lesson? Lets say out of the eight students who actually showed up, six took a trial lesson. This would give us 6 / 8 = 75%.

We recommend a goal of 80% for trial lessons made from actual appointments.

The final basic admissions number you'll need is that of new students enrolled. You need to know how many new students do you enroll in comparison to trial lessons. If you had 12 trial lessons and you sign up 9 new students, this gives you 9 / 12 = 75%. This tells you for every 10 students you get in the door and take a trial lesson, 7.5 sign up. This is your closing percentage. It helps you determine if the person doing the trial lessons and enrolling the students are doing their job correctly. We would recommend a closing goal of 80%.

Other Enrollment Statistics
Other statistics that are related to enrollment are the number of student/parent conferences. In order to upgrade your students you need to have conferences. After you have the conferences, how many of these students are you upgrading? If you have 20-student conferences in a month and you upgrade 16, your upgrade percentage for the month is 80%, exactly where you need to be.

Negotiation Tactics: Defer to Higher Authority +

This charade has been done to death in the car business. You make an offer to the salesman, and he says, “OK. I’ll take it to my manager.” The manager is the higher authority. It’s the good cop, bad cop scenario. 

The salesman role is the good cop. He wants to find out what you like and see how emotionally attached you or your spouse are to the car. He will take that information back to the manager, the bad cop. 

You can be sure the salesman is not saying, “They are a nice couple, and this is a fair price offer.” What he and the manager are doing is figuring how to get the highest price possible. The salesman comes back with a smile and a counter offer. 

When you are negotiating a lease, be the good cop. Tell the seller you have to run everything by your people or your association. This gives you time to figure out your next move and keeps any emotional attachment out of the game. 

It also works to remind the salesperson that you are not the final decision maker and that the deal could get shot down at any moment by the association or your business partners. 

Five Steps to Successful Crowdfunding for Martial Arts +

Choose the Right Site

1. Match your needs with the right Crowdfunding site. Some sites are focused on creative funding for arts and entertainment. Others are for people in crisis. Many are for businesses, and that’s probably where you want to be.

2. Produce a Killer Video

Video sells. Period. You have to make a strong emotional connection, along with a strong financial connection. People do business with people they like, so make a video that puts your best foot forward with testimonials, plans, and any other exciting elements you can share with your potential investor.

3. Do Your Homework and Set a Conservative Goal

Study other successful Crowdfunding projects and analyze them to see what worked. Studies show that many projects fail to meet their objective and the ones that do tend to squeak past the goal.

Also, 30-days seems to be the best performing timeline.

4. Market, Market, Market

Once you pull the trigger on your Crowdfunding project, spend as much time as you can promoting it online and off.

5. Build Up Day One and Create Great Offers

Build up to a big Day One of the project with media releases, demos, flyers, email blasts, etc... to get your project off to a good start and gain some momentum.

Reward contributors with special memberships and awards. For instance, 5 gets a school shirt. 00 gets three months of classes. 0,000 gets a lifetime membership.

Have you already Crowdfunded a project? If so, let know about it. We’d love to share your story.

Location Evaluation Form +

How good is your location?

This is an excellent way to take the emotion out of choosing a location. 

Circle the answer that applies to your situation, and then add your total score at the end. 

1) Do you have a Best Buy, Target, or well-known food or drug store in the same center as your studio? 

 a) Yes –10 

 b) No – 0 

2) Is your studio in the main body of the center? 

 a) Close to the busiest store in the center. – 10 

 b) On the same side, but not close. – 5 

 c) Not on the same side. – 2 

 d) Not applicable, or no store that is busy. – 0 

3) Does your studio face a street? 

 a) Major street. – 10 

 b) Minor street. – 5 

 c) Does not face street. – 0 

4) Can your window be seen from the street?

 a) Easy to see all of it. – 10 

 b) Can see some of it. – 5 

 c) Can see none of it. – 0 

5) Is there another business that draws a large amount of parents and other people from your main target markets into your center, such as a dance studio, bank, or deli? 

 a) Yes – 10 

 b) No – 5

6) Does the center have access from both sides of the street? 

 a) Yes – 10 

 b) No – 0

7) Is there always lots of parking available? 

 a) Always lots. – 10 

 b) Usually lots. – 5 

 c) Sometimes not much. – 2 

 d) Very little. – 0 

8) Is there a major fast food chain in your center? 

 a) McDonalds, Burger King, KFC, etc. – 10 

 b) Denny's, Perkins, Shoney's. – 5 

 c) Local chain, not national. – 2 

 d) None. – 0 

9) Are there any other full-time commercial martial arts studios with in a two-mile circle from your location? 

 a) None. – 10 

 b) One. – 5 

 c) Two. – 2 

 d) Three. – 0 

10) Do you have a large marquee-type sign on the street? 

 a) Large marquee sign with great visibility. – 10 

 b) Good-sized sign with good visibility. – 5 

 c) OK sign and visibility. – 2 

 d) No sign, or very poor visibility. – 0 

11) Are there lots of people within a three-mile radius of your studio? (Go – 5-7 miles if your area is very rural.) 

 a) 40,000 – 10 

 b) 30,000 – 5 

 c) 20,000 – 2 

 d) Less than – 10,000 – 0 

12) Is your studio location surrounded by houses? 

 a) Houses on all four sides. – 10 

 b) Houses on three sides. – 5 

 c) Houses on two sides. – 2 

 d) No houses around the studio. – 0 

13) Is there a major draw directly opposite your studio that would be a benefit to you in terms of visibility? 

 a) Yes – they must see my studio as they leave. – 10 

 b) Yes – they may see my studio. – 5 

 c) No – 0

14) Is there a school close to your studio?

 a) Half a mile to a mile. – 10 

 b) A mile to two miles. – 5 

 c) No – 2

15) What is the makeup of your center? 

 a) Retail only. – 10 

 b) Retail plus offices. – 5 

 c) Industrial area. – 2

16) What is the income of your market area? 

 a) Middle income. – 10 

 b) High income. – 5 

 c) Low income. – 2 

 d) Poor. – 0 

17) What is the average age of adults in your area? 

 a) Young adults 20-35. – 10 

 b) Middle aged adults 36- 55. – 5 

 c) Older adults – 56 . – 2

18) What is your total rent amount per sq. foot? 

 a) Under one dollar per sq. foot. – 10 

 b) Under two dollars per sq. foot. – 5 

 c) Under three dollars per sq. foot. – 2 

 d) Over three dollars per sq. foot. – 0

Your total score:

140 . Your location is excellent. You can spend much less on advertising, because so much traffic comes by each day.

Score 120-139. Your location is good. You may have to spend an average amount of money on advertising. That is typically 10% of gross.

Score 95-119. Your location is average. You must spend a little extra on advertising to attract more students to your studio. Keep on the lookout for a better location, should one become available.

Score 89 or less. Your location is poor. Start looking for another location now.

This is an excellent evaluation of a location's potential. However, there some schools that fail this test miserably still do well. That is the X Factor, and the X factor is you and your teaching skills.

Besides, entrepreneurship exists in varying shades of gray. If it were just black and white, we'd all be on Easy Street. Still, there is no doubt that having a school in a densely populated area will give you more potential students than in a sparsely populated area.

Your Potential Ratio +

Your potential ratio is the percentage of the population that has a realistic potential of joining your school. The number used for decades has been 1.5%. Due to the explosion of exposure and credibility the martial arts gained from the fitness kickboxing boom in the mid-1990s, I personally feel the number is larger than that. But, to be safe, let’s say two percent of the population may join your school. This applies mostly to medium and larger cities and metro areas. Smaller cities and towns can draw a much higher percentage of the population, depending on the demographics and the type of program being offered.

Let’s say you are in a 100,000-population area, which means you have a potential ratio of 2,000 students. Sounds great, right? Well, slow down. First, those 2,000 are the potential for all of the martial arts classes combined. Your job, of course, is to get more than your competitors. Second, what if they live on the other side of town?

Your pull radius is the area surrounding your school, from which your students will come. Typically, a student will not drive more than 10-15 minutes to your school. Yes, yes, yes, I know you have students who drive an hour and walk uphill both ways to get to your classes, but unless you are going to charge those three people ,000 per class, you can’t build a school around them.

The real question is, how much of my potential ratio is within my pull radius? Here is just a sample of the factors that will influence the answer:

1. Regardless of the population of your area, what is the population within your pull radius? Multiply that by .02 to get your potential ratio.

2. Is your school near a natural barrier? Where I live, there is a subtle bridge north of us. While there is nothing stopping us from crossing it, we rarely do. We turn south on the main roads to travel to shops, restaurants, and parks. I’m sure there are good restaurants and shops across the bridge, but we don’t go there, and I’m sure people on the other side don’t come south to our area. Other barriers include railroad tracks, rivers, bridges, busy highways, and tunnels.

3. What are the real demographics of your pull radius? Do you have the area’s largest trailer park or retired person’s community inside your pull radius? You’re not going to get two percent of those markets.

The demographics within your pull radius will make you or break you. Your job is to match your pull-radius demographic with your school.

For our purposes, we will narrow your demographic focus to those people within your pull radius. Imagine setting a ring with the radius of a 15-minute drive on a map of your area and then moving it around. Wherever you move the ring the demographics will change. Our goal is to find the best demographics within that ring. Keep in mind that a 15-minute drive ring will be much smaller for a densely populated area with lots of traffic than a more rural area. A 15 minute drive in Orlando or London could be two miles, while it could be 15 miles or more in smaller, less congested areas, so be realistic in your ring size. You have to know the size of your pull radius.

Once you zero in on a location, drive from the location at different times that your students would be going to class, so you can experience and time the drive, to see how far you get in 15-minutes.

If two percent of your ring is your potential ratio, a population of 15,000 within the ring equates to a potential market of 300 students. Keep in mind that a good school in a smaller market can pull much more than two percent. Still, that is a sobering thought.

Lease Negotiations +

Lease Negotiations

In the process of planning and starting up your school, few decisions will have as much impact on your prospects for success as choosing a good location and negotiating a favorable lease. Be careful not to get emotionally tied to any one location.  Keep running the numbers to keep you focused on the potential upside and downside throughout the process. Stay cool, and most of all, don’t be afraid to just ask. The basic rule of thumb is that, if you can buy for the same monthly price as your rent, it makes sense to buy. 

Even if the mortgage payment is a little higher (less than 25 percent higher), the additional expense is offset by the tax advantages and wealth building that owning the building gives you.

Even if you are leasing, it’s often a good idea to include an option to purchase the property.  Personally, I am debt adverse so entering into a mortgage for my business would be very uncomfortable for me. I would probably try to save as much as I could so I could purchase a building in full and then run the business rent free. 

If you end up selling your school, be sure you are not restricted from assigning that lease to the new owners at the same terms.  Also, you may want to sub-let the space for certain classes during off hours. For instance, you may want to sub-let the space to a yoga instructor from 9 a.m. to 2 p.m., Monday to Friday, to offset your expenses and keep money flowing during down hours. 

Make sure your lease allows you to assign and sub-let the lease if needed. This usually requires landlord approval, but make sure your lease allows the possibility and specifies it will not be at a higher rate. 

Who’s Going to Build your Martial Arts School? +

Who’s Going to Build your Martial Arts School? 

When you are negotiating a build-out, be sure the lease specifies how the credit is going to be paid. Will the landlord pay the builders, so you have no out-of-pocket expense? Will you pay, and then get a credit in free rent? That might mean less cash for start-up expenses but, as with everything in negotiations, it depends on your situation and on that of the landlord. 

Also, make sure the free-rent period starts as late as possible and lasts for a specific number of days after obtaining your construction permits. If your build-out gets held up for a month because of permit delays, you will essentially lose the value of that month. 

The great thing about a martial arts school is it requires little in the way of build-out. Unlike a restaurant or pub, you don’t have strict regulations for equipment and food storage. 

Schools usually require little more than a padded open space, an office, changing rooms, and mirrors. 

When entering into a negotiation, it’s important to have a sound understanding of how the law of supply-and-demand applies to your situation. 

This will be the most influential condition of most negotiations for a lease. If you are looking at a strip mall with a lot of vacancies, it’s clear the demand is not there, so these spaces will be less expensive and negotiations far more flexible than a busy, vibrant strip mall with only one vacancy. 

The opening number offered by the landlord is usually the base rent amount. Because base rent doesn’t include triple net expenses, it’s a lower number, but it’s not the real number you will pay each month. 

Usually, base rent does not include insurance, taxes, and common area maintenance (CAM). These additional charges are called triple net. The base rent plus triple net equals your gross rent. Your gross rent is the check you will write each month. 

Most leases, especially in larger plazas, are triple net. This means the tenants share in the expense of insurance, property taxes, and CAM. 

Many people confuse CAM with triple net. CAM is one third of the triple in triple net. It does not include the other two thirds, which are insurance and taxes. 

When you are projecting your gross-to-rent ratio, you must include the triple net into the equation. 

You don’t want to believe you are going to pay ,000 per month rent, only to discover the bill is actually ,500, because of 00 per month in insurance, taxes, and CAM. 

Length of your lease can get a little tricky. On one hand, you may want a long lease, so you can lock in a low rent and spread your start-up costs over a longer period of time. On the other hand, the longer the rent, the longer you are obligated to pay your landlord. 

Often the solution is to negotiate a shorter lease, but include an option of first refusal on the space when the lease expires. This means that if the lease runs its full course, you have the first right to either renew the space or abandon it. If it’s a really good space, you will want multiple options to renew. 

For instance, you may sign an initial lease of three years with three more options to renew at three years each. This way, if the school is doing well at this location, you know you will be there for at least the next 12 years. 

This works best if you combine the Option to Renew with a three percent cap on any rent increase. Your lease might specify that you have the right of first refusal, and that if you opt to renew, your rent will not increase any more than the Consumer Price Index (CPI) for the previous year. 

The CPI works well, because it’s universally accepted for determining rent increases and is published by the U.S. government annually, so it’s easy to access. 

This way, a landlord can’t pressure you to leave by saying, “You have the option of staying, but your rent will double.” The rent will not increase any more than the inflation index, which has been in the low double digits since the early 1980s. 

This is not always easy, but try to avoid putting a personal guarantee on the lease. If the school doesn’t work, you would be personally responsible for paying the school’s rent. 

In most cases, you would be on the hook until a new tenant took the space but, in a bad market, that could be years. Furthermore, if the new tenant has a lower rent than you paid, the landlord could come after you for the difference. Worse yet, if the new tenant fails, the landlord may be able to go back to you to start paying again! 

Try to limit any personal guarantee to the period of time that would cover the landlord for any out-of-pocket build-out expenses he or she incurred. This way, if the landlord pays 0,000 for your build-out, you will personally guarantee that amount, nothing more. 

If you can’t limit it to that amount, try to limit it to one year. Then say you will pay the rent in full for 30 days after you leave the space, to give the landlord time to find a new tenant. 

You do not want a kung fu school opening next to your karate school. Protect your market from competition with a clause that states the landlord will not rent to another martial arts school or a health club that offers martial arts classes. 

Try to get the restriction to apply to all of the landlord’s properties within a five-mile radius. If the landlord balks, you can concede to the restriction just for the plaza you are in. But always get something in return for any concession. 

A Timeline For Opening a Martial Arts School +

This is a compiled timeline based upon a variety of schools, all with slightly or significantly different timelines. Based upon the information from those schools, here is a pretty solid chronology of events relating to preparation and planning for your martial arts school.

180 Days Out

Begin to Develop Your Business Plan

Use the Search Engine on The Martial Arts Teachers’ Association to find information and examples of good business plans. Work on this every day all the way through opening and refer to it often afterwards. This is your map.

Choose a School Name

A good name is short and easy to remember and understand. Resist using your style in the name. Instead, consider using your name, city, or region and maybe one word that describes your focus.

Examples of good names:

World Champion Jeff Smith Karate

Palm Harbor Kickboxing

John Graden’s USA Karate

Family Martial Arts

Martial Arts Fitness Center

Fitness Kickboxing

Kickboxing for Fun and Fitness

Florida Karate Academy

Secure The Domain Name For Your School

If you can’t get the domain name to match your school, try to get one that can promote it. For instance, if you have a kung fu school, but can’t get a domain to match your school name, another great choice would be www.DiscoverKungFu.com or www.TakeKungFu.com. Visit HYPERLINK "http://www.godaddy.com/"GoDaddy.com to see what domains are available and also HYPERLINK "http://www.MartialArtsWebsites.com/"MartialArtsWebsites.com for great domain names.

Forget About the Yellow Pages

You get a free listing in the yellow pages and that is all that you need. Spend your resources on a great website instead.

170 Days Out

Choose an Accountant and Attorney/Solicitor

Be sure to ask around. All accountants and attorney/solicitors are not equal. Make sure they specialize in small business owners.

Choose Your Business Structure – Sole Proprietor, Partnership, S or C Corp, or LLC. Helping you decide is the first task of your account and attorney/solicitor. Be sure the articles of incorporation include a hold harmless for you and an indemnity clause that will reimburse you for any expenses you incur that arise out of any action against the company.

File for Tax IDs

Have your attorney/solicitor file for your Federal Employment Tax ID as part of your business structure plan, and have your accountant apply for your State, Province, VAT Tax ID, and any others required in your state. Note, you may only have to pay taxes such as VAT on merchandise sold over a certain level. Check with your accountant to make sure you are not paying taxes you don’t have to.

Apply for an American Express Credit Card, Blue Card and/or a High Reward Visa

Use these strictly as business-only cards that are to be paid off each month.

Open General Bank Account

Use this to pay rent, phone, and utility deposits, and clear your credit card statement in full each month.

Obtain a Merchant Account to Take Credit Cards

You don’t want someone to walk in during construction that wants to enroll and not be able to take his or her credit card. You can sell intros, merchandise, and programs in person and online at a discount long before the doors open. Get your merchant account right away.

Open a PayPal.com account to take online orders.

PayPal is more of a convenience than a need. You will find some people who spend easier and faster with a PayPal account than a credit card or check. There is something about the quickness of a click that works in our favor.

160 Days Out

Complete Your Business Plan

Use the Examples in the Planning Section of MATA

The missing elements of business structure, name, location, etc., can be finalized now, along with the impact they may have on the Plan.

Create a Marketing Plan

Your marketing over the next year will emphasize Low Risk Marketing, as opposed to High Risk Marketing. What’s the difference? Low Risk costs little or nothing. You risk your time, not your money. Let the competition write checks for High Risk Marketing. You’ll write a media release instead.

Begin to Develop Your Curriculum and Belt Ranks

This can change up to the end, but it’s helpful to have this important element of your success worked on way in advance of opening.

Hire a Logo Artist

For about 50 you can have a professional logo developed for your school by our artists. This is an important step, so don’t play artist and do it yourself.

150 Days Out (At the latest)

Start Location Shopping 

Use the Location Evaluator in this section to help you pick a good location.

120 Days Out

Prepare Emergency Financing

We suggest you never go into debt to fund a start-up, but it’s a good idea to make sure your credit is clean and make requests for increases in your credit line just in case.

Shop for a Good Sign Maker

You don’t have a place to put it yet, but have the creation process rolling along, so all you have to do is determine the dimensions and mounting. Get various quotes based upon the restrictions placed on the sign by your lease or local regulations.

90 Days Out

Sign Lease (Make sure your attorney/solicitor reviews every step of this process)

Review the section on Lease Negotiations. You will need at least 90 days to have the school built out to your specs, so this is the latest in the process you want this done. Hold off on setting any kind of opening date until this step is complete.

Begin Build-Out as Soon as You Can.

Review Lease Negotiations for build-out negotiation strategies and school layout examples.

Order Telephone and Utilities

You may need to forward the phone to your home or cell phone until you open, but get that number established. Try to make it easy to remember, such as 341-1000.

Order Business Cards and Stationary

Order as soon as you know your address, phone, web site, and e-mail. You will want to have cards ready and use letterhead in your communications to show you are professional.

Order and Mount Your Sign

As soon as you sign the lease, get your sign up with banners and window art that keeps people up-to-date on the progress of the school and directs them to your web site and phone to get info and enroll for pre-opening discounts.

Obtain Your Permits, plus Occupational, Merchant License or Equivalent 

Depending on your build-out, you may be responsible for getting the building permits, etc., for the construction. Make sure you meet all the requirements for access, etc.

Also, be sure to get whatever licensing your community requires to operate a business.

60 Days Out

Write Your Sound Bites – Memorize It Cold!

Develop one 30-second sound bite that answers the question, “What do you do?” What is the most powerful, compelling answer you can come up with for that question? Compare, “I teach martial arts” to “I help adults who want to improve their lives by learning to take care of themselves, create great focus, and get in the best shape ever.” Or, “I help parents who want to see their children become more confident, focused, and fit.”

Join Chamber of Commerce (and maybe a charity organization)

This is a free way to get the word out among the community leaders that you are going to open a martial arts center. Business cards are a must here.

Get Professional Liability Insurance for Your School

45 Days Out

Finalize Belt Requirements

Since you may be the only instructor, don’t require everything you teach. As you plan your exam programs, make sure it is realistic and manageable. You can always modify it later.

Create The First Class Schedule

Since you may be the only instructor, resist the common mistake of scheduling too many classes at first. Focus on two or three classes per night for beginners and a martial arts fitness class on Saturday morning. This will keep you from burning out early and leave you with time to market each day.

Create a Media List

All local editors, TV, and radio producers go on this list. You will want to list their:

Name

Title

Station/paper

Contact info

Department/angle (Sports, Human Interest, Business)

Create a Demo/Speech Target List

Like the Media List, research all the potential organizations that might be interested in your presenting a speech on martial arts, teaching a self-defense workshop, or doing a full blown demo.

You will want to list their:

Name

Title

Station/paper

Contact info

Department/angle (Sports, Human Interest, Business)

30 Days Out

Order Logo Items

Patches, T-shirts, sweatshirts, etc. Take time to create. Don’t over-order, but do make sure you will have enough that you can give some away as premiums when you open.

Start Researching Office Equipment

What computer, desk, copier, phone system, etc., would be best for you? How can you get them as inexpensively as possible? Check the local classifieds and research on Ebay.com to find the lowest prices possible.

Review Your Marketing Plan

Rule One: Get one qualified lead per day. Every single day must be spent on filling your classes. Put on your uniform, and visit the stores in your strip mall. Find ways to co-op market. Become a marketing machine. Research the Low Risk Marketing Department at www.MartialArtsTeachers.com.

Rule Two: Write down your scripts for the phone call, walk in, school tour, intro, and enrollment. Then practice them as you drive or in front of a video camera.

Rule Three: Write down and memorize how to describe the benefits of training at your school.

Rule Four: Create copy and paste email responses to inquiries.

Make sure you are spending time each day “Attracting new students.” That means writing emails, meeting people, “shaking hands and kissing babies.”

Don’t let yourself get so distracted by the demands of building the school that you neglect building your student body.

Get Credit Card with Generous Reward Program for Equipment, and Open Retail Bank Account

Use one credit card for all merchandise purchases. Pay it off each month in full. Let the rewards grow. Deposit all receipts for equipment into your Retail Account. When the credit card bill comes in, pay it in full from this account. Your credit score will increase, as will your frequent flyer miles. Best of all, this account should grow each month.

20 Days Out

Write First Media Release

This will be an announcement of your school, what you offer, when you will open, and how to contact you.

Write Sales Presentation Materials

Create your tuition sheets, program descriptions, Black Belt Club info, school brochures, and copy for your window (find a good window artist who works in temporary paint to rework your window every month or so).

Create a List of Daily, Weekly, and Monthly Maintenance Processes

This list is for everything NOT related to marketing and retention. This is cleaning, admin, filing, organizing, supply ordering, etc. There are Monday–Friday action lists in the MATA download area.

Establish a Wholesale Account with an Equipment Distributor

Student uniforms are top of the list along with training equipment. This is a great way to expand your retail sales into a significant profit center.

10 Days Out

Mail First Media Release

7 Days Out

Call Media to Follow Up on Releases.

Call Prospects and Start Scheduling Appointments for Intros

Each Day, Make Yourself Visible in Uniform to Your School’s Neighborhood

1-3 Days Out

Practice and Role-Play

Do as many role-plays as you can. With a friend or spouse, role-play the phone call, the intro, the school tour, the enrollment conference. Practice your sound bite over and over again.

Opening Day

Relax

You are more prepared than 95% of any other school owner on opening day. You’ll do great.

What Is A Good Size For Your School? +

Determining a good size for your school depends on the area and the rent. Remember, you want to build a profitable school, not your ego. Other considerations for the size of your school are: What segment of the market are you going for?

Will you be able to schedule and support two classes per night, or five? If you only have two, you may need more room to fit all the stu¬dents into just two classes.

If you can support five classes a night, you will have smaller classes, which allows you to make a smaller space profitable much faster. 

Kids take up less space than adults. It’s better to lease a smaller space that offers the opportunity to expand than take a double space and regret it later. Always look for a space that has an empty space next to it, which gives you two benefits: 

1) It makes your space more negotiable. Empty spaces mean lost money to a landlord. Also, it’s harder to rent a strip of stores if some are empty. Traffic is the key, and empty spaces don’t create traffic. 

Landlords are highly receptive to negotiation just to start filling some spaces. Keep in mind that the spaces may be empty for a reason. Make sure the space is in the right area and talk to all of the other stores in the plaza to see how the landlord is to work with and “how business is” at this site. 

Also, if you can, track down who was in the space before. Ask them why they left and if they would rent there again. 

2) It may provide you with a good expansion space when you are ready. The key is to include a clause that requires the landlord to give you first right of refusal at the same rent rate or lower as your current space. This way, if someone wants to rent the space, the landlord has to give you the chance to rent it first. 

Sometimes, the landlord will receive an offer that is significantly higher than your rent, and he will be motivated to rent it to the new client rather than you despite the agreement. 

In that case, you may be able to negotiate that you will allow him to rent the space, but only if he lowers your rent. If the numbers are right, he may be able to rent the space, lower your rent, and still come out ahead. Just make sure you won’t need to expand before your current lease expires.

 

At the top of the size for new schools, my experience indicates about 4,000 square feet gives a new school plenty of room for a large training area, an office, and some changing rooms. 

On the other end of the spectrum, there are schools that do very well that have never expanded beyond 1,500 square feet. Any smaller than 1,500 square feet, and you may have to support a schedule with so many classes each day you will burn out quickly. Any larger than 4,000 square feet, your rent may strangle your cash flow. 

Tuition Pricing Strategies +

Tuition Pricing Strategies

Few areas of running a school are as confusing and daunting as deciding how much to charge for lessons and then how to collect that tuition. This section will help you get answers to the questions of how much to charge; what your tuition really means to your school; strategies for balancing paid in fulls with monthly; whether or not to use contracts; and other critical topics related to tuition pricing.

That's Too Much For This Area

At the start of many of my seminars, I ask the audience of owners if they would be willing to sell me their black belt for 0,000. For 0,000 they erase martial arts from their life. It would be as though never joined a school. Of course, this is an imaginary bet, but no one has ever said, “I would if I could.”

This is often the same owner who claims his area can't support a higher tuition. He says his martial arts is worth more than 0,000 to him, but he is afraid to charge 00 per month for the same experience in his town. The common response is, “That's too much for this area.” What he is really saying higher tuition might rub the poor people the wrong way in his community. He is also saying I don't have the confidence yet in the value of what I'm doing to ask for that much money.

There are a lot of excuses owners will give for why they charge so little, but there is not one good reason.

Don't Let Competition Set Your Prices

Most owners set their tuition by finding out what everyone else in town is charging and then under-cutting them by 0 or so in hopes students will stampede to them. However, our observation through the years is that the largest school in town usually has the highest tuition, so the evidence seems to be that undercutting with tuition can actually reduce your response.

Setting tuition based upon competitors is off target. We think it's a mistake to base your tuition on the competition rather than how you want to position your school in the market. It's important to know who your customer is and/or who you want it to be. It's natural to want to have a price that everyone feels is fair and will enroll. That price doesn't exist.

Certainly, there are situations where the instructor simply is not that good yet or you are teaching out of a community center where pricing is set by others. However, for commercial storefront schools setting tuition is a critically process that has to be driven from an understanding of:

  1. How you want to position your school
  2. The demographics you want to reach
  3. Your expenses on a month-to-month basis
  4. How much you want to make as a school owner

Nowhere in that list is, “What your competitor is charging.”

Choosing Your Market

Step one in the Black Belt Management System is Image Control. Setting your tuition is a factor of your image control. Set it too low and your school will attract lower income students who may make the school less attractive for the more affluent markets.

Next time you are driving, take a look at the cars on the road. Are they all cheap older models or are there some mid-priced and some luxury cars, mini-vans and SUVs too. The Mercedes Benz dealer doesn't look at the Ford dealer to determine his pricing. He is not selling to the Ford customer. He is selling to a demographic that can and will spend the money required for a Mercedes.

A key point here is that he knows who he is selling to. For the martial artist, this is not, on the surface, as easy to determine your market. Many of us are stuck in that altruistic implied wisdom myth that their mission is to save the community from the dangers of a world without self-confidence, respect and self-defense. This is the owner who doesn't want to turn anyone away because he wants to help, “everyone.” The truth, “everyone” doesn't want help and “everyone” will not use the help if it's offered for free.

If you are basing your success on how well you help your students improve their lives then you are choosing to live a life of tremendous frustration and long-term stress.

“We can't help the poor by becoming one of them.” Abraham Lincoln

In order for you to be able to help “anyone” your doors have to be open. If you are at another job because your school can't support your family then your doors are not open. It takes money to keep the doors open. The vast majority of the money will be in tuition.

It makes sense then that if we need money from our students then let's look at our student market using money as a guide.

If we were to take 100% of the potential market for your school and divide them by income into five categories:

The Top Third – High Income Earners

The Middle Third – Average Income Earners

The Lower Third – Low Income Earners

Our market is in the top two thirds, not the bottom one third. Once our school is stable and we have a strong cash flow, we may be able to extend scholarships and outreach programs to include the lower third, but if we let the lower third drive our tuition pricing, we will always struggle.

Lets' compare two schools in the same town, each with 100 students. One school charges 0 per month and the other charges 50 per month. They are in the same town. Why is the 2 nd school earning three times the tuition as the first school? Is it three times better? Is it three times bigger? The difference is the 2 nd school determined that it was going to market to the upper two thirds of the market and then built a program to support that goal. While this school may not be three times bigger or better, it is probably three times cleaner. It's probably three times easier to work with and three times more professional and safe in its presentation. I can assure you owner spends far more than three times on his own professional education and at least two hours a week on his staff's. If this school created an outreach program for the lower third market, I bet they could help more than three times the number of people than the school charging 0 per month.

Just using rough figures, lets say each school collects 80% of the tuition it is owed each month. Rarely do 100% of our students pay each month.

School A @ 100 students x 0 per month x .75 = ,000 per month in tuition.

School B @ 100 students x 50 per month x .75 = 2,000 per month in tuition.

That is an ,000 per month difference in gross tuition, which equals 6,000 per year!

Health Care Alternative for Martial Arts School Owners +

First, a disclaimer. I am not an expert on this subject nor do I get any affiliate fee or commission. This is just something I think all school owners should know about. 

If you’re like most school owners, health insurance has become more of a financial burden than a security blanket. There are alternatives to the government forcing Americans to buy health insurance. They're called Christian Healthcare Ministries (CHM). A CHM is not an insurance company. It is a nonprofit “health care sharing ministry.

A CHM is an organization where members contribute an agreed upon amount each month to a central pool of funds. These funds are used to pay member’s medical bills when they arise. It’s not health care, but health share and members are exempt from the Obamacare taxation penalty.

It's estimated that over 1-million people are now opting out of Obamacare in favor of CHMs.

There are many CHMs, so do your research. For the past three years, I’ve been using Liberty Health Share.

I pay 57 a month for 70% coverage. So if I have a ,000 bill, 00 is funded by the members, and I pay 00. Other plans cover up to 100%. I’ve never had a claim, but a friend of mine who runs a school has been a member for two years. When a family member recently had a heart attack, Liberty paid the 0,000 bill.

As good as that is, and it’s been really good for me, it may not be for everyone. Do your research.

For me, CHMs are a gateway to a time when the relationship with your doctor was one-on-one, not held hostage by the goverment imposing a ransom. 

I have a doctor that I pay 0 a month. That’s it. I can see him once a year or once a week. When I pay his bill, I forward the invoice to Liberty, and they reimburse me for the payment out of my 57. So, it’s not 57 0. It’s 57. Period.

If I need a chiropractor, there is one nearby who charges a flat 5 per month. There is a world of self-pay or direct-pay providers that typically are much less expensive and work on a membership model like we do.

CHMs have been around for decades. Sharing the needs of your community VOLUNTARILY is a staple of the Christian lifestyle as opposed to a king taxing the peasants for not buying health insurance plans that have skyrocketed.

If you’re so inclined, check the program out at LibertyHealthShare.com.

What Demographics are Best for Martial Arts? +

A lot has been written about which demographics are best for a martial arts school. In virtually every case, the answer has been presented as though all schools are the same, so the answer has been a “one size fits all” answer. If you know anything about me, it’s that I don’t believe in “one size fits all.” 

The truth is that the best demographics for your school depend on what kind of school you are planning. You have to think through who your students are going to be, then study every resource in your area to find out their income, where they live, and how often they move. 

Single-Family Homes 

These have always been touted as the best location for a school, and that may be correct, depending on the school. For kids-oriented, family-type martial arts schools, being nestled within a community of single-family homes with a few elementary schools may be ideal. 

Elementary schools are packed (overpacked usually) with your target market, and they attract additional families to the area. 

Multi-Family Homes 

Multi-family homes are condos, townhouses, and apartments. Who typically lives there? Young adults, that’s who. If your school offers adult-oriented mixed martial arts, self-defense, kickboxing, fitness martial arts, sport, or just wants to pull more adults than kids, then you want to be in this kind of area. Bonus! What do multi-family home renters tend to do more than single-family homeowners? Move! This means there is always a stream of new potential students unloading their moving vans every day. 

Large High-Income Homes 

Because high-income families have large homes, there are far less of them in a given pull radius than single family or multi-family homes. Plus, wealthy kids have the resources to do almost any activity and often do. Your school may or may not be at the top of their list, even if they do join. Middle-and upper-middle-class students tend to focus on one activity.

The Importance of Multiple Streams of Income +

One of the best pieces of business advice I’ve ever received turned into one of the worst. Around 1990, a wealthy dad of a student took me golfing. We talked business for most of the afternoon. It was the best way I knew how to take his mind off my awful golf play.

He enjoyed pontificating and teaching me his world of high finance. One point he made stuck with me. He said to focus on one business,  build it and avoid anything else. Single-minded growth was his mantra. That was great advice at the time. I was coming on strong as a local business owner and as many of you know, the more successful you become, the larger the target on your chest grows. People come to you from all angles trying to get you to invest here, buy there, build this with me, etc... 

Thanks to his advice, I was able to say “No” to many offers that would have distracted from single-minded growth.  Eventually, I “outgrew” my two schools. They were not as large of a platform as I thought I needed so I sold the schools and created NAPMA and Martial Arts Professional magazine. They were the first widely respected professional association and trade journal for the martial arts school business.  Over the course of the next decade, I grew NAPMA into a multi-million dollar business and helped thousands of schools.

My influence grew and, as many of you know, I’m not shy in my assessments of the martial arts business.  My vision for the martial arts flew directly in the face of some people with much deeper pockets and far more experience in litigation than I.  Through a long series of expensive lawsuits over three years, I lost my company, my car, my marriage, and my platform. Little Ninjas, MAPro magazine, Fast Defense, Cardio-Karate and many other programs were assets I created that were removed from life. I still have five figures in legal fees due. Part of the reason I was wiped out was that the guys’ advice backfired on me. I was single-mindedly focused on one revenue stream; NAPMA. When that was decimated, so was my income. 

I use that story because it’s a great illustration of the importance of creating multiple streams of income. Like legs supporting a table, your income streams are supporting your life. The danger in creating multiple streams of income is if you start chasing every shiny object that comes your way. You have to be picky. You still have to say “No!” to most every offer, especially those in the MLM, network marketing arena. Yet, it makes sense to create supportive streams of income that are independent of each other but related in theme so that you are still within your area of expertise.

I am forever grateful to my Martial Arts Teachers’ Association (MATA) members for their valuable support. Many have been with me from day one. It’s with that support I’ve been able to expand, so I’m not in that same situation again. Empower Boxing™, MartialArtsWebsites / Marketing360, and Cobra-Defense have all been profitable, parallel projects each with their own stream of income.  While they share a common thread of the martial arts and MATA, they are radically different. Teaching a Real Estate Self Defense seminar is completely removed from an Empower Boxing™ class, though they complement each other like a hand in glove.

How Billy Joel Can Help Your Retention +

How Billy Joel Can Help Your Retention

This is an update to the article at the bottom of this page.

I know a guy, Steve Harrison, who is a huge Billy Joel fan. He wanted to learn how to play the piano just so he could play along with The Piano Man. Steve went to a music school and told the instructor that he wanted to learn how to play piano like Billy Joel. The instructor told him, "No problem. Just enroll and we'll get started." For the next four weeks, the instructor tutored this guy on the classical piano. It was hard. It was not fun. Most of all, it was not Billy Joel. Steve figured that learning piano was just too hard, so he quit.

Almost three years later, he was speaking with a client of his when he noticed a keyboard in his office. Steve told the client about his frustrating experience with the piano school. The client laughed and said, "Steve, Billy Joel is super easy to play. It's just three chords. Watch..." Steve said his jaw dropped and within 60-seconds he was playing Billy Joel. This is the experience for too many students in martial arts schools. There is a tight set of benefits they are seeking yet, like the piano instructor, we create all kinds of hoops for the students to jump through in order to reach them.

Though we've taught this way for decades, it's failing. People are more educated about what's involved in martial arts than ever before and they are choosing other activities. When I start working with a new coaching client, one of the first places I go is to their curriculum. Your curriculum is like the recipe book for your restaurant. Do your recipes have your students asking for more? Or, are they choking them down for a few months before excusing themselves from the table? Take a good look at your curriculum. Odds are it is bloated and boring.

There are way too many requirements and most of them only remotely related to the benefits a student is seeking when enrolling in a martial arts school. If you'd like some help, email me and/or join MATA, which has a ton of curriculum content.

The Old School on After-School +

One of the best pieces of business advice I’ve ever received turned into one of the worst. Around 1990, a wealthy dad of a student took me golfing. We talked business for most of the afternoon. It was the best way I knew how to take his mind off my awful golf play.

He enjoyed pontificating and teaching me his world of high finance. One point he made stuck with me. He said to focus on one business,  build it and avoid anything else. Single-minded growth was his mantra. That was great advice at the time. I was coming on strong as a local business owner and as many of you know, the more successful you become, the larger the target on your chest grows. People come to you from all angles trying to get you to invest here, buy there, build this with me, etc... 

Thanks to his advice, I was able to say “No” to many offers that would have distracted from single-minded growth.  Eventually, I “outgrew” my two schools. They were not as large of a platform as I thought I needed so I sold the schools and created NAPMA and Martial Arts Professional magazine. They were the first widely respected professional association and trade journal for the martial arts school business.  Over the course of the next decade, I grew NAPMA into a multi-million dollar business and helped thousands of schools.

My influence grew and, as many of you know, I’m not shy in my assessments of the martial arts business.  My vision for the martial arts flew directly in the face of some people with much deeper pockets and far more experience in litigation than I.  Through a long series of expensive lawsuits over three years, I lost my company, my car, my marriage, and my platform. Little Ninjas, MAPro magazine, Fast Defense, Cardio-Karate and many other programs were assets I created that were removed from life. I still have five figures in legal fees due. Part of the reason I was wiped out was that the guys’ advice backfired on me. I was single-mindedly focused on one revenue stream; NAPMA. When that was decimated, so was my income. 

I use that story because it’s a great illustration of the importance of creating multiple streams of income. Like legs supporting a table, your income streams are supporting your life. The danger in creating multiple streams of income is if you start chasing every shiny object that comes your way. You have to be picky. You still have to say “No!” to most every offer, especially those in the MLM, network marketing arena. Yet, it makes sense to create supportive streams of income that are independent of each other but related in theme so that you are still within your area of expertise.

I am forever grateful to my Martial Arts Teachers’ Association (MATA) members for their valuable support. Many have been with me from day one. It’s with that support I’ve been able to expand, so I’m not in that same situation again. Empower Boxing™, MartialArtsWebsites / Marketing360, and Cobra-Defense have all been profitable, parallel projects each with their own stream of income.  While they share a common thread of the martial arts and MATA, they are radically different. Teaching a Real Estate Self Defense seminar is completely removed from an Empower Boxing™ class, though they complement each other like a hand in glove.

What is Your Professional Brand? +

A classic branding story involves a letter being mailed and successfully delivered to the Playboy mansion in Chicago in the early 1960s. The envelope had no address on it; the only thing on the envelope was the iconic Playboy bunny logo. That is branding.

Hugh Hefner is a master of branding personally and professionally. While Donald Trump, Steve Jobs, and Richard Branson all have powerful professional brands, Hefner effectively wove his personal and professional brands together.

Professional branding is the communication of what a client or customer will experience when interacting and, hopefully, doing business with your company.

Branding is not about pleasing everyone in every case. Wal-Mart has a brand that is totally different than Nordstrom’s. They sell plenty of the same items, but the experience in each is totally different. Apple’s OS X and Microsoft’s Windows operating systems are both successful, but they have completely different brands and fans.

• Professionally designed marketing materials (logo, stationery, ads, etc.)

  • Professional Website with Mobile
  • Cleanliness of your facility
  • Level of client or customer service
  • The consistency of your marketing on and offline
  • The consistency of colors and look on and offline
  • The consistency in how your staff treats clients
  • Updated bio
  • Updated professionally shot headshot

As with personal branding, your professional brand is loud and clear every day. Take control of that message and build a brand you can be proud of.

Why Schools Fail #4: Flying Blind +

When I opened my first school, I grossed ,800 in the first month. I thought I was a martial arts millionaire! Within six months, the gross was so low it was actually less than the bottom line of my wire-bound ledger. I remember drawing an explosion where the graph went off the bottom of the page.

I called a friend of mine who was running a successful school. When I told him I was in trouble, his first question was, “How many calls did you get last month?” I replied, “Probably 10 or 20.” He said, “Probably? Probably doesn’t run a business. Probably kills a business.” I’ll spare you the rest of the verbal spanking, but the lesson was that “What gets measured, gets done.”

If your school was a public company and you were going to sell stock, how would people know if it was a good investment? When I buy stock, I look at debt ratios, positions in the marketplace, earnings and their relationship to the current stock price. Another very big indicator is earnings growth. In other words, is the company growing? Are sales and profits increasing each year? Usually, a 20 percent earnings growth is one sign of a good business to invest in. In fact, once I learned the value of keeping statistics, I made 20% my minimum annual growth goal.

Granted you're not selling stock in your school. You've already bought it all. How's your investment doing? How was business last month? How did it compare to last year or three years ago? How many phone calls/emails does it take to get a student? How much money does it take to generate that many contacts?

Most schools can’t answer these questions because they are flying blind and not keeping statistics on their school's performance.

Statistics are the heart monitor of the school. When the heart is beating slower, statistics scream it out at you. When things are cooking along, it is immediately reflected in your statistics.

Unfortunately, the vast majority of schools wouldn't know the school is dying until it’s too late. Even after they realize the school is ill, they have no way of diagnosing the root cause of the problem and curing it. Consequently, the slowly beating heart has gone to a straight line and another for rent sign goes up in the window of another dead karate school.

Your Zones of Influence +

The New First Impression

The first impression you give to a prospect most likely will be your website. We know that over 70% of people search locally online and half of those searches are on Smartphone’s. If your regular site and your mobile site do not look good, then you’ve blown the critical first impression.

In many cases, the prospect has formed an impression based upon the online experience, so it’s important that both the online and brick-and-mortar locations are congruent and reflect each other well. If your site looks great and your office is a mess or the business needs remodeling, you’re creating barriers rather than eliminating them.

Studies show men form an opinion based on the first impression within 20 seconds, while women get there in 15. Those impressions speak to your prospects whether you know it or not. Make sure the message is the one you want them to receive.

On your own turf, you should have no problem setting yourself apart from the competitors in your city. From the prospects’ perspective, you and your competitors are the same unless something clearly sets one apart.

One of the most effective ways to win the perception battle is to look at the space inside and near your business as being made up of marketing ‘zones.’

Zone maximization is the planned, strategic use of the physical areas in and around your business. We will spend some time on these zones to increase business and revenues by influencing your business’ impression and using specific promotional messages or visuals in each zone.

School Layout To Minimize Risk +

Many Instructors and owners have no control over school layout. If your school is already operational, or if your budget for remodeling is limited in a new school, there may be nothing you can do to change the fundamental layout of your school. That’s okay. This isn’t a command to spend enormous sums of money to change everything, but, rather, suggestions to consider when you do have control over the layout of your school.

Offices for View of Door and Floor

When you’re busy at work in your office and the front door swings quietly open, can you see who it is? When students are training before or after classes and you’ve gone to do paperwork in the office, can you see the floor? When you’re on the floor and someone steps into your office, can you see them?

(Designer: Please use a red-box outline for this anecdote.)

A school owner stepped out briefly to patronize a nearby business. He was only going to be gone for a few minutes, but there was a small problem with the customer in front of him and he was gone for nearly ten minutes. When he returned, he found two boys, both preteens, in his school playing with the weapons. They were startled, dropped the weapons and ran. Had they injured themselves, the owner would have been liable.

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In the above case, the lack of supervision was due to a momentary absence, but had he been in his office and the same thing happened, he would also have been liable. (Note: Always lock up if you are leaving, even for a few minutes.) Also, if you are working in your office, what’s to stop someone from doing a snatch and run -- coming inside, grabbing an expensive weapon or piece of equipment, and running off with it? 

Even for pure business considerations, you want to be able to see your front door from your office. If a prospect wanders by and they can’t see anyone, most won’t come inside. If you can’t see them at your front door, you can wave hello and go talk to them. That’s one more student you may never sign up just because you couldn’t see them. 

Imagine making an appointment to meet an excited potential student, but he/she shows up, peers through the door glass, and sees no one. Assuming you're not there, your potential student leaves. What happens then?  Because you could not be seen from the window, you lose a student.

Also, when students are on the floor, you want to be able to see them. For risk management, it is more important to see student activity than it is to see people coming and going. If students are performing skills or drills improperly, and you don’t see it, they may get hurt. If students are violating school rules and they hurt someone, the owner may be held liable. If a visitor who has not signed any paperwork is working out (or just playing) and get hurts, the owner may be held responsible.

You want your office in view from the floor. Keep in mind that the office may be used improperly if you can’t see in your office from the floor. 

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A school owner’s son raped a young girl in the school office, and no one saw it. The office interior was not in view from the floor, and an innocent young student suffered for it. While you might have a policy that forbids students from going into your office, this case involved the son, someone the owner presumably trusted.

In another matter, senior students were often used to supervise the class when the instructor staff was occupied. One of the instructor staff was graduating from high school, so the senior staff attended the commencement exercise. A trusted high-ranking student ran the class that evening and, that night, calls to phone sex services occurred, using the credit card numbers of students gained from the financial records of the school. The senior student had used the office, unseen by the others in the school.

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You need to be able to see your front door, and you absolutely must be able to see your workout floor. If you cannot see the floor from the office, then some responsible instructor or staff person should be in view of the door and the floor at all times when the school is open and the floor is available.

You should be able to see in your office from the floor, and others should be able to see you if you are in a meeting. While some privacy might be preferred, total privacy can lead to any number of problems, such as those above. Some judgment is required here, since to err on the side of privacy can lead to sufficient privacy to commit crimes or sexual misconduct (or the appearance of one or the other, even if never done). And erring on the side of openness can lead to others overhearing what you are doing and seeing what you have in your office.

Training Area Apart from Traffic Area

Keeping your training area apart from the traffic area is critical. If someone walks into your school, and they are immediately in the line of fire for punches, kicks, weapon attacks, even grappling partners toppling into them, then you are asking for a lawsuit. Sooner or later a visitor is going to get hurt.

If the path to the bathroom takes visitors through a workout area and subjects them to danger, you are asking for a problem. If students have to walk through others practicing to get to the dressing rooms, or to the water fountain, or to anything else they need, you are as much as asking for someone to get hurt -- and when they do, you will be found negligent.

Important Point: Even if students sign forms assuming the risk of harm, you could be found liable. If the layout of your school gives them no choice but to be in harm’s way during ordinary, necessary activities, then the form may be invalidated because you rendered it impossible for students to see to their own safety.

Either the visitors lounge, bathrooms, water and dressing rooms have to be accessible without entering the floor, or the training floor must have a clear, safe walkway through it. On a tight budget, this can be accomplished by a task as simple as putting cloth tape on the floor about two-and-one-half feet from the wall and designating that area as walkway. Students should then be forbidden to have their training exercises pass over the tape, with punches and kicks stopping short of the tape at all times.

Since a solution is so simple, the Courts may actually find you negligent if you fail to take even these elementary precautions and someone is injured as a result.

Weapons Out of Reach of Visitors

Visitors, especially children, are often enthralled by weapons. They often want to see the weapons up close, to handle the sword, to check the weight of the staff, or to play with the nunchaku. If the weapon’s rack is within easy reach of the visitor’s area, they are likely to do so.

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In one school in a single week, this became plain. While the visitor’s lounge was apart from the weapon’s rack, the bathroom was not. Three separate visitors that week stopped by the rack, picked up one weapon or another, and started playing with it. The instructor saw this in seconds and asked them to put the weapons back, but even in those brief moments, an injury could have resulted in a lawsuit. 

They were guests, not students, and there was no paperwork. They were only supposed to use the restroom and get some water. Instead, they played skillessly with some of the most dangerous objects in the school.

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Not only should the weapon’s rack be out of reach for visitors, it should be in view of the instructors at all times, whether on the floor or in the office. Weapons are dangerous. Even an exceptional martial arts instructor, an undisputed master of many weapons, managed in a freak accident to seriously injure himself practicing with weapons. So severe was his injury that he required hospitalization.

With one so skilled finding himself in the hospital, imagine what damage someone with no control over the weapon might do. Think not only of harm to himself, but the harm to other visitors and guests when the hotshot teen grabs the nunchaku and swings them right into the face of another visitor! 

Avoid this problem. Keep them out of reach. Only students should even have access, and only students trained in the weapons should have permission to use them. In the case of very dangerous weapons, all sharp-edged or pointed weapons that can easily cut or pierce -- and perhaps even nunchaku, three-section staves and other difficult-to-control weapons -- should be locked up or stored in "instructor-only" areas such as the office.

Allowing students with no training in a weapon to play with them may eliminate the effectiveness of the assumption of risk forms (see Chapter 28: A Proper Release Form), since a student cannot adequately provide for his safety or the safety of others if he has no idea what he is doing.

Mirrors

Many schools have mirrors. It should go without saying that mirrors should be professionally secured to the wall. In one studio, the large mirrors were essentially leaning up against the wall, with small screws holding them in place. In another, a large, heavy mirror was affixed to the wall with mounting tape. Fortunately, it didn't land on anyone when it fell.

Sparring, and certainly weapons practice, must be carefully monitored when there are mirrors adjacent to or near the training area.  One slip with the nunchaku or sai, a moment's thoughtlessness with a bo, or an aggressive match that sends a student toppling toward the mirror can spell disaster.  When mirrors break, they have a tendency to rain glass shards on anyone in close proximity.

If the mirrors are glued to the wall (professionals will often glue the mirrors with industrial adhesive in addition to any mounting brackets that are used), then a shattered mirror will probably still be held to the wall and only a little glass will fall. You should request this type of mounting from your mirror vendor.    

Naturally, in the event of a broken mirror, the class should be stopped, all students should be instructed to put on shoes or train well away from the broken mirror, and the instructor or staff should see to an immediate and very thorough clean-up. Remember that small splinters of glass can cause extreme discomfort. If you conduct workouts on the ground, the danger is multiplied.  

Imagine a young student who unknowingly gets a few glass splinters on his hand, and later uses that hand to rub his eyes. Blindness could result. Imagine the sheer foolishness of blinding a student, losing the school, losing your home, car and all other assets just because a clean-up job after an accident was not done properly. 

Don't take chances with broken glass!

Dressing Rooms

Locker rooms are often the preferred changing areas in many schools, but there are some potential problems that may arise. Who supervises the activity in the locker rooms? If young boys and older men are changing together, what security is there that the child will be safe? Imagine the temptation for a molester to find a martial arts school where young boys routinely undress in a locker room, especially a locker room with some privacy. If he signed up for classes, he could gain access to the boys.

If you have locker rooms, people should come and go through them with such frequency that no one can expect to have even a few minutes of certain privacy to do anything to anyone. If students are not constantly moving in and out, instructors or staff ought to.

For legal and security considerations, the type of one-person dressing rooms found at most clothing stores is ideal. The door should be low enough so a small child can change with sufficient privacy, and high enough to afford similar privacy to very tall adults. This is the NAPMA (National Association of Professional Martial Artists) recommendation, and it solves many potential problems, including molestation concerns, theft of student belongings, staff knowing who is in the school at all times, and slip-and-fall accidents in tiled locker rooms. 

Naturally, students will need some place to put their clothes, and near-floor cubbies or lockers are ideal. An inexpensive alternative is simply designating a place on the floor for students to put their equipment bags. Be certain to keep it away from the workout area so students do not trip or stumble over them during the workouts.

Some students will be too shy to change in these changing rooms, just as some will be too shy to change in locker rooms with others around. These students should be invited to arrive and leave in their training clothes, or they should use the restroom or restroom stalls for changing rooms.

Shelves, Bookcases, Display Cases and Pictures

Some schools have shelves mounted on the wall well above head level to display trophies (at least, those short enough to fit). Bookcases with pictures, and display cases with more trophies and awards, often adorn schools. Certificates and photographs often hang on walls.

All these things must be carefully secured if they will be anywhere near visitors, students or staff. Imagine a visitor leaning back against a wall and bringing down half-a-dozen certificates and photos, with glass shattering on the floor. Imagine a student losing his balance during a workout and falling against a wall, and two or three trophies with marble bases topple down on top of him. Imagine a kid climbing on a shelf to get at some interesting object higher up, and the whole bookcase tumbles down on top of him.

High shelves must be securely mounted, and objects perched on them should also be secured. Mounting tape or adhesive should help. Bookcases must be secured against a wall, possibly bolted to the wall, or kept where young students and guests do not have access to them, such as the office. 

Display cases must likewise be secure, and any sharp edges from cracked glass must be repaired or covered in some manner to prevent cuts. Pictures must be firmly secured on the wall so that they will not fall down even with a sharp impact to the wall, or, if you live in California, an earthquake.

Care of School

Another layout consideration is your ability to care for your school. The layout must make simple tasks such as cleaning, vacuuming and other mundane activities possible. Some have managed an artistic layout, but they cannot get a vacuum cleaner into their crowded lounge, and they cannot get to parts of their floor. Keep in mind what you need to do for maintenance when designing or remodeling a school.

Control

We don't always have control over the layout of our school. Often, the existing layout is all we have, like it or not. Money will often be the determining factor in most layout decisions. However, sometimes we have a choice. When we move a school, when we open a school, and when we remodel, we have a chance to do something different. When we can control school layout, isn't it prudent to consider all the issues?

Questions to Ask Before Buying into a Martial Arts After-School Program +

If you spend any time on social media, you would think that the hottest scheme now to becoming a martial arts millionaire is with an after-school program.

There are certainly proven and profitable after-school programs that have been successfully helping schools for decades. 

An after-school program is like a separate business, so you have to do your due diligence. Here are some obvious questions.

  1. Can we come and spend time at your after-school facility?
  2. Have you ever been served a cease and desist order?
  3. If so, how did you deal with it and what was the outcome?
  4. How many of your clients have been served a cease and desist order?
  5. How have you been able to help them?
  6. Can I contact them to find out what triggered it?
  7. What will you do for me if I get served with a cease and desist order?
Know Your Revenue Streams +

To maximize your revenue from martial arts school, you must have a clear understanding of your revenue streams.

Read these carefully. Not all will apply to you, but wouldn’t it be nice if they did? One clear requirement for successfully utilizing most of these is that you will have to use agreements rather than month-to-month programs.

Revenue Stream 1 

Down Payments on New Student Agreements

Also known as a registration fee, this is the initial investment a student makes to join your school. Typically, this is at least two months’ tuition. For instance, a program is 99 down payment/registration and 9 per month for 12 months or ongoing.

Revenue Stream 2 

Down Payments on Renewing Agreements

This is the initial investment a student makes in order to renew or upgrade in your school. The best strategy for this has been the Black Belt Club. If you do not have a solid system for upgrades and renewals, this stream is dry for you.

Revenue Stream 3 

Monthly Tuition

This is the lifeblood of your school. As you grow your school, your monthly tuition should grow as well. Ideally, your monthly tuition would cover your base operating expenses each month. For instance, if all the monthly expenses, including your salary, totaled 2,000, your monthly tuition collections from your billing company would cover that amount. In that very healthy scenario, these other streams are 100 percent profit. Mind you, this is not easy to accomplish, but even 75% of expenses paid from your billing check would be good.

Revenue Stream 4 

Product Sales

Consider your retail shop as though it were a separate business. Open a separate business checking account for your retail, and deposit all gear sales revenue into that account. Use an American Express card or any other credit card that requires pay-off each month to pay for equipment purchases. When you place an order, pay for it with your credit card. This gives you up to 30 days to sell the equipment to your students. As they pay for the equipment, deposit the funds into the retail account.

When the credit card bill for the equipment is due, pay for it with a check from the retail account. Since you are usually doubling your money, this retail account will grow fast. Your credit rating will grow, as well as your rewards for using the card. Ideally, you will build a large cash reserve and save money on plane tickets and vacations, too.

Sell thousands of martial arts products and supplies directly from your website. You choose which products to sell, set the retail price, and still only pay wholesale. Veteran schools have reported that they have tripled their retail sales using this valuable service.

Best of all, student payments go straight into your bank account and you are billed your wholesale rate, allowing you to better manage your cash flow and not have to wait for your referral check to arrive.

Revenue Stream 5 

Special Events

Even if you don’t charge for testing, you will want to host at least one special event each month for your student body. These can range from nunchaku seminars to board-breaking, "Fear Into Power" seminars. These are not only pretty easy to manage, but they are a lot of fun. My nunchaku seminars were always packed with 30 to 50 students and would generate around 00-,000 per event. The fee of 5 included two rubber nunchaku to use in the class, so it was almost pure profit.

Birthday parties would also go under this category. A two-hour 50 birthday party is not only a revenue generator, but also a lead generator. Some schools have at least one birthday party per week, so it’s a proven winner.

Revenue Stream 6 

Testing/Grading Fees

I didn’t include these with Special Events, because exam fees are a little different from special events. Most exams for stripes occur in class, and they usually don’t require a fee. The main graduations on the weekends require additional work and staff, so it’s reasonable to charge for these events.

Typically, exam fees range from 0 to 0 and increase with rank. Black belt exams can be as much as 00 to 00 but, to justify this higher fee, you should provide additional prep classes for the black belt candidates.

Some schools are large enough that they rent auditoriums to showcase their graduating black belts or to conduct the exam. The exam fee should cover these additional expenses.

Revenue Stream 7 

Fast Track Testing

This is a touchy subject and has to be handled carefully. The idea is simply that some people are willing to invest more money to get through your belt system faster.

Revenue Stream 8 

Paid in Fulls

In recent years, Paid In Fulls (PIFs) have made a huge comeback. MASS and other such organizations have championed the cash out as a way of getting maximum revenue from a student base that will more than likely drop out anyway. As much as I dislike the idea of treating all students like potential dropouts, smart use of Paid in Fulls can significantly boost your bottom line.

Revenue Stream 9 

Renewals and Upgrades

Black Belt Club and Masters’ Club are the most popular and proven renewal programs.  For now, we want to focus on the renewal as a revenue generator.

Common practice has been to upgrade someone to a BBC or MC and replace his New Student agreement or program with the more expensive BBC or MC program. In most cases, the renewal had a registration of 99 or so, and tuition increased 0 per month.

Another popular strategy is to keep the student on their current tuition plan, but charge them a one-time or annual fee to upgrade to BBC or MC. For instance, a student is paying 10 per month for her current program. A BBC or Masters' Club upgrade is presented as an annual upgrade for 00.

Revenue Stream 10 

Discounting a Past-Due Contract

When I was a publisher for Martial Arts Professional magazine, we sold advertising to clients who wanted to reach and sell to our readers. On occasion, an advertiser would want to cancel the contract. In the world or publishing, the process for doing this is called “shorting the contract.”

In exchange for committing to a set number of ads, the advertiser would be given a discount for each ad they placed.  “Shorting the contract” meant that the ads the client ran would be re-billed at the one-time rate and, if he paid the difference, we’d  release him from the contract.

Revenue Stream 11 

Career Training Programs

For years, I’ve taught the importance of creating a Leadership Team of assistant instructors to help you provide a higher level of service to your students. Typically, the Leadership Team is a “by invitation only” program for Black Belt Club members.

More and more schools are expanding Leadership Team programs into a precursor to a full-blown Career Development program that trains students to become martial arts school owners and instructors. Students pay for the right to attend staff meetings, practice role playing, and venture "into the kitchen" of the school.

Tuition for these programs are as high as ,900 for a two-year course. Keep in mind that, in order to offer this, you really have to know this business cold and create a solid curriculum on par with a vocational school, because, in a sense, that’s what you are offering.

Student Audit

This is not so much a revenue stream as a way of plugging leaks in your cash flow. The Student Program Audit is a single sheet of paper with three columns and 11 rows. The columns are for a student’s first, second, and third programs within a school. Typically, these are New Student, Black Belt Club, and Masters' Club, but any program will work.

The first six rows are the various payment options a student might use in your school. The next two are the start and end date for the program, which are followed by a check mark to make sure the Party Responsible for Paying is noted in the agreement and that the injury waiver has been signed. Your job is to audit each and every student’s file to make sure you have each of these important items in the student’s folder.

The first few times you do a Student Audit, it is like found money. You will be amazed at how much important paperwork is missing. More than that, you will be stunned at how many students are training who have expired or have no record of payments.

Staple one Student Audit to the outside of each student file.

Build Around Your Core

Not all of these revenue streams will be for you. That’s why the Core Dynamic of Finding Your Own Voice is so important. I personally helped create many popular trends in this industry. I also made it clear what programs I would never teach, even though I developed and sold them. What is good for me may not be good for you. Know what you like, and why you are doing this for a living, and then build strong revenue streams around those core programs.

Is Owning a Martial Arts School Right For You? +

I knew from my first night in white belt class on February 12, 1974, at age 13, that I was going to do martial arts for the rest of my life. I was teaching professionally by age 16 and have been teaching ever since. However, I never wanted to own a school, at least until the mid-1980s when I was in my twenties. 

For one thing, I had no business experience. For that matter, I hadn’t even finished high school. 

Second, I was not money directed. I was far more focused on quality of life, and in your twenties, it doesn’t take much money to have the lifestyle you want. I slept until 10 a.m., ran three to five miles on the beach, lifted weights at the gym, took a nap, and then taught for a few hours. It was the life of a karate bum and I loved it. 

Mike Anderson, the co-founder of the PKA (Professional Karate Association) and WAKO (World Association of KickBoxing Organizations) and publisher of Professional Karate magazine, tried to persuade me to open a school in the early 1980s.

He, along with Fred Wren, had operated some very successful schools in the St. Louis area. He tried to tell me I could do the same thing, but I had no clue of how to run a school. I knew I could teach well, but that was about it. 

In 1984, Joe Lewis convinced me to open my first school. Before that, we trained and sparred together at the various locations around town where I taught my classes. One day we were on a basketball court, the next day in a college fitness facility, and another at a boxing club. 

Joe noticed that I was building a solid core of excellent students who would follow me from location to location to take afternoon and evening classes. Kathy Marlor, Phil Beatty, Kevin Walker, Kim Cox, my brother Mark, and eventually even action movie star Gary Daniels (who came to me already as an excellent black belt) all were training hard in my classes almost daily. 

The day Joe called me on the phone it was a seminal moment in my life. I was in the kitchen of my rented house when I heard him say, “You need to give your students a home. You need to give them a place they can take pride in.” That hit home. 

Mike Anderson’s promise of making good money never struck a chord with me, but I certainly could relate to having pride in your school. Since I had often slept at my school when I was a kid, I understood totally the idea of creating a home for my students. I started looking for a location the next day. 

Martial arts is not an ordinary business. Because there is no educational requisite to open a school, schools are opened by people on many levels of experience and skill.

You can come out of college with an MBA and open a school. You can also come right out of prison and open a school.

There are no hard standards or requirements. Some have what it takes and some do not, regardless of what system they study.