Whether you currently own a martial arts school or you’ve been dreaming of opening one your entire life, the best way to start is by figuring out what other schools before you have done successfully. While success is defined differently from school to school, one thing is true across the board: if you want to continue serving your students for years to come, you need to have a strong grasp on your school’s finances.
Zen Planner recently launched its second-annual Martial Arts Benchmark Report with the goal of helping school owners easily see what top-performing schools, or Champions, are doing to create financial success for themselves. This report also highlights commonalities among Contenders, or schools that are losing money each month. Here are the three things you must do in order to become a Champion school.
1). Build a Large Student Base
It’s simple, you can afford to do so much more when you have more students. Champions have an average of 235 students compared to only 50 for Contenders. One way Champions maintain their large student base by retaining 97% of their students. The key here is not to go out and gather as many new students as possible. Rather you need to find students who will be a great fit for your school, and remain loyal for years to come.
When opening a martial arts school: Create a targeted marketing plan to find relevant prospective students that will be a great fit for your community. When selling agreements, be sure to ask the prospect questions to determine their goals and help you better align if your training can help them achieve those goals. Keep retention top of mind, as it costs 10 times more to acquire a new student than it does to keep a current one.
Thinking of opening up your own martial arts school? Download our free Martial Arts Benchmark Report for some great insights.
2). Manage Your Expenses
Personnel and facility costs are two of the largest expenses for school owners. Champions spend far less on their facility as a percent of revenue than Contenders do (14% compared to 53%). Champions also spend around 18% compared to 23% on personnel as a percent of revenue. These two expenses only account for 32% of the Champion’s revenue, while Contenders spend 76% of their income on facility and personnel costs.
When opening a martial arts school: Managing facility costs is much easier than personnel, as it isn’t an emotional decision. Pick a school that’s big enough to grow into, however make sure it isn’t too big, as it will quickly eat into your revenue (remember, a bigger space not only means more in rent, but also more in utilities, cleaning fees and so on). Aim to have enough square feet per student so your students can comfortably practice their art without being on top of each other. If you have a smaller space, look for opportunities to add new classes to your schedule before making the leap into a bigger space.
3). Don’t Discount
Discounting is a slippery slope. While it can be an easy way to persuade a new student who’s on the fence about joining your school, it can actually end up doing more harm than good in the long run. Discounts are dangerous because they:
- Devalue the training you offer: It’s difficult to get someone who’s paid a discounted price to pay full price for your services in the future. It can also leave students who pay full-price questioning why they’re paying that much.
- Impact your community: You’ve worked hard to build a community of dedicated students who support one another. Running deals on discount sites like Groupon and LivingSocial can bring an influx of bargain seekers into your school, which can negatively impact your community.
- Reduce your revenue: Discounts start adding up over time. Champions on average charge about $160 per month for an unlimited agreement, where Contenders only charge $99. When you examine discounts, Champions generate an average of $146 per month from each student while Contenders only bring in $53. This means Champions get $93 more a month from each student, which equates to $1,116 in additional income per year per student. That’s a lot of money.
When opening a martial arts school: Believe in the quality of training you provide and have your prices reflect that. Avoid running promotions on discount sites to increase your initial student base, as these students will be much less sticky and it will be impossible to charge them full-price later on.
Interested in learning more about what Champions are doing to built world-class schools? Download your free copy of our 2017 Martial Arts Benchmark Report today!