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.

Today I fly to Santa Clara, CA to speak as a featured panelist for the Evolution Sports and Fitness Expo. This event will also be the launch of our new partnership with the Ten Institute. 

Ten is an excellent fit for MATA and promises to be a significant source of income for any martial arts or fitness professional. If an additional stream of income with a minimal investment of time and money would be a good move, I invite you to check out the Ten page at MartialArtsTeachers.com/ten.

As an instructor, when you make a recommendation for a nutritional supplement from Ten, you get paid 40% of the revenue that sale creates. You get paid every 30-days. 

Even if your student quits training with you, you’ll continue to receive those monthly checks for as long as the person purchases the product.

I love the idea of a revenue stream that keeps on paying you long after the student stops paying tuition. It’s a great way to create additional, secure streams of income to avoid having your legs chopped off in one fell swoop.

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Know Your Revenue Streams

Check out our Management Section for More Revenue Stream related files and info.

 

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 $199 down payment/registration and $99 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 $12,000, 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 $500-$1,000 per event. The fee of $25 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 $250 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 $30 to $50 and increase with rank. Black belt exams can be as much as $200 to $300 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 $299 or so, and tuition increased $10 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 $110 per month for her current program. A BBC or Masters’ Club upgrade is presented as an annual upgrade for $500.

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 $7,900 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.

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