Quitting Your Day Job to Start a Martial Art School

Gary wrote in last week to ask:

Q: “I currently earn $45,000 a year… So, at $99/month per student, I could replace my income and pay for my school expenses at about 45 students. Is this a reachable goal in, 1 year, two years?”

A: The following is my answer to Gary –

Yes, it is a very reasonable goal, but you aren’t going to be able to pay your expenses on a studio and pay yourself $45K a year with only 45 students.

That may cover your rent in an area where lease space is cheap, but you have to consider how much your utilities, advertising, and miscellaneous costs (supplies, cash flow to stock your Pro Shop, etc.) will be each month and factor that in as well.

Expenses

Let’s look at the typical expenses a full-time martial art school owner has:

• Rent – 2,000 square feet @ $1.50/sq. ft. a month plus triple nets; $3,300 a month.
• Utilities – Figure $350 a month for a 2,000 square foot space.
• Phone – If you use a cell phone for your business line, you can keep this to $50 a month or less if you use a service like Ting.
• Insurance – Figure $100 a month.
• Marketing – You need to budget at least $1,000 a month; yes, you can market on less, much less in fact, but only when you get really good at marketing. To get the ball rolling, you are going to need to spend some money. Also, all the successful full-time school owners I know spend at least $1,000 a month on marketing; many spend more.

I currently spend about $800 a month on advertising to generate approximately 20 leads a month, and we typically convert about half of those into memberships each month. (Update: We now spend only 25% of this amount on advertising and marketing due to stepping up our online marketing efforts. – MM)

So, we haven’t even gotten around to paying ourselves yet, and we’re already looking at $4,800 a month in expenses… All of a sudden, $4,500 a month doesn’t seem like a lot of money.

At the time I’m writing this drop out rates are climbing due to the economy. So while we’re still doing fine, we are planning to spend more money on our marketing this fall to make up for the students who have decided that their other luxuries are more important.

How To Figure Out If You’re Ready To Make The Leap

I suggest you use the worksheets that are packaged with my martial arts business manual to determine realistically what your monthly expenses will be. Then, you’ll know where you need to be, enrollment-wise, before you can quit your job.

The good news is, if you teach “X” martial arts you are offering a popular program that tends to do well with adults. However, I would advise you to look at teaching fitness classes as well, such as kickboxing bag classes and other fitness classes.

Every “X” school I know makes over half their income marketing fitness martial arts and teaching fitness kick boxing. It’s a much broader audience to market to than self-defense, so be sure to include it in your class offerings.

Update 08/2014:

I don’t know how Gary did, but recently one of my coaching clients got laid off from his job and was forced to take the leap from part-time martial arts instructor to full-time instructor. Thankfully, we’d been working on building up his classes and his marketing systems for the last eight months or so, and he was able to replace the income from his day job within the first week by signing up private students.

Granted, this has a lot to do with the fact that he’d spent the previous eight months building a foundation, with the intention of moving into a full-time location once he reached a certain level of enrollments and income.

My point in sharing this second story with you is that you never know what’s going to happen to you in today’s economy. I’ve seen many would be school owners who became impatient and opened schools prematurely, who then went out of business because they lost their day job and couldn’t pay the bills on their school… all because they opened a location before their business income could support it.

Don’t make this mistake! Instead, do what my client did and take plenty of time to build up your numbers before you quite your day job. You can refer to Small Dojo Big Profits or the 100-level courses on the MAbizU.com website for more details on how exactly you should do this.

Sure, it might take you longer to get your school open this way… but when you do your business will be debt-free and your school will be much more profitable and stable for it.

– Mike Massie