When I opened my first school, I grossed $5,800 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.