In the previous installment of our Martial Arts Business Framework, we covered how to calculate expected revenue in a perfect world where every student paid the listed membership price and didn’t have any past due bills.
Unfortunately, the world isn’t perfect, and chances are the amount of revenue that your business actually brings in is much lower than the potential. There are several factors that can widen that gap, but figuring out where the business needs to improve can be a nightmare if there isn’t clear organization. When it comes to managing your revenue and figuring out how to improve it, remember the quote from Peter Drucker, “You can’t manage what you don’t measure”.
To figure out the gap between your potential and actual revenue each month, you need to start by making sure your business and revenue streams are organized.
Start by segmenting out all of your revenue streams to see how much each one is producing month over month. For a martial arts school, one of the easiest ways to do this is separating revenue each month by the packages that are sold.
Again, in an ideal world, the number of active memberships multiplied by the monthly price would equal your total revenue brought in each month. But as most have experienced, that isn’t the case. From the data points analyzed in our most recent Benchmark Report, there are two major factors that impact this difference in revenue.
Moving all your students to autopay is a huge factor in making sure your school receives funds on time. Aside from that, it cuts down the amount of time spent manually processing payments or chasing down students who haven’t paid.
In our benchmark reports, we found the implementation of autopay across the hundreds of martial arts schools surveyed varied significantly. Some schools had everyone on autopay, while others didn’t even offer it. If you’re trying to grow your school, getting as many students as possible on autopay is a no-brainer.
The Dangers of Discounting
The second key factor that impacts your revenue is discounting. Discounts often start from good intentions but end up being the silent killer of revenue. While most business do have several discount offerings, the reality is they can get out of control. Before the owner knows it, revenue is drastically cut down due to a large percentage of the student base having a discount applied.
When it comes to discounting, make sure there are only a limited number of circumstances that qualify a student to have a discounted membership. Make sure those rules are followed for everyone and students aren’t getting discounts that they don’t qualify for.
Download the Revenue Tracker workbook below, part two of our Martial Arts Business Framework, to calculate your revenue and find out the potential revenue your school could be making if you apply some discounting discipline.