Investing In Your Martial Art School
The Importance of Investing In Your Martial Arts Business
When we talk about investments, we typically think of investing in stocks, bonds, and certificates of deposit… a subject that can cause no end of stress during these uncertain financial times.
But, what if I told you there was a much safer investment; one that could easily produce returns of 500% or more per year?
You’ve probably already guessed that I’m talking about investing in your own business, specifically, your martial art studio.
But if you think I’m only referring to investing to start a business, you’re missing a very important point that relates to the successful management of a thriving studio. And that point is, reinvesting a portion of your profits back into your school.
The High Profitability of Martial Art Schools
Although many unsuccessful school owners would disagree with me, martial art studios have the potential to be incredibly profitable businesses. In fact, I would rate martial art schools as being one of the most profitable small businesses you can operate, based on the relatively low overhead costs (all you need is an empty room to teach in), relatively low start-up costs (again, all you really need is an empty room to open a school), and high perceived value of the service we provide.
In addition, our business is relatively scalable on a local level. Meaning, operations can be expanded to accommodate more customers relatively easily by simply expanding a class schedule. Once you are renting your own space, this requires nothing more than an increase in labor outputs, and perhaps a minuscule increase in overhead for additional utility usage.
I don’t know of a single other business model that offers such a high profit potential in exchange for such a small initial investment and relatively low monthly overhead costs (if you follow the Small Dojo Big Profits approach to starting a martial art school, that is). It’s also the perfect “mom and pop” business, because the market is evergreen (fitness, family recreation, and kids activities) and it takes very little in the way of labor outputs to operate.
However, it is exactly this potential for high profits with low overhead that causes many a studio owner to get “stupid greedy” by attempting to remove every last bit of profit from their studio, without ever reinvesting that money back into the business. Thinking you can suck every last bit of profit out of your business is like thinking you can plant the same crops in the same field year after year without fertilizing the soil or giving the land a rest. And, this is a mistake that will absolutely tank your business over time.
Q: How Much Are You Investing BACK Into Your Martial Arts School?
If your answer to the above question is “nothing” then I can tell you for a certainty your school is dying a slow death. Think about it; if you get a new car and never spend any money on maintenance and repair, how long will that car last? Any dad who has ever bought a first car for a teen knows the answer to this question, which is “Not very long!”
Yet, if you invest into proper maintenance and upkeep, a quality vehicle can last decades. However, unlike an automobile (which is a very poor investment vehicle, no pun intended), a properly operated small business can provide a significant return on investment for many, many years. In fact, I personally know of martial art school owners who have run successful and profitable studios for decades.
However, some schools seem to grow to a certain point and then slowly dwindle away to nothing as if they contracted a wasting disease of indeterminate origins. Why is it that this happens to some studios and not others?
There could be many causes for this, but one sure cause I can share with you is a failure by the owner to reinvest profits back into:
- Advertising –
- Facility maintenance and upkeep –
- Upgrading crucial equipment –
- And, keeping curriculum relevant to the needs and wants of the market –
Let’s look at each one of these areas and examine just what makes it so critical to reinvest your profits back into them on a regular basis.
The Importance of Reinvesting Profits Into Advertising and Marketing
No business can survive without maintaining some sort of advertising and marketing budget. As any smart and successful business owner will tell you, you should treat your marketing budget just like a fixed cost in your business, even though it is usually considered to be a variable cost. That means you should just assume you will spend “X” dollars per month on marketing, and then do exactly that each month.
Failing to reinvest profits into marketing can have disastrous consequences for a business. Sure, you might have tons of students right now, but what happens if a competitor moves in and blitzes the area with marketing? Suddenly, your phone isn’t ringing and your email isn’t dinging… but that’s not the worst part.
See, in our business much of our marketing is about building awareness and trust in your local community. It takes time and ongoing efforts to maintain a presence in the mental forefront of the local consumer; that’s something you just can’t turn on and turn off like a light switch. Sure, some methods of marketing can provide an immediate return, but maintaining that positive presence long-term requires consistency in your marketing.
So, plan to spend some money on marketing each and every month.
Maintaining Facilities and Equipment
Ever walk into a studio that just looked like it hadn’t been updated since the first Karate Kid movie came out? Yeah, we’ve all seen it. Threadbare carpet and mats, dented and marked up walls, chipped and peeling bathrooms tiles, and decorations that could make an appearance on American Pickers.
Guess what? Your studio interior is a huge part of your business image. Additionally, right after your website it’s the first thing people will see of your school, and they will base a large part of their initial assessment of the value of your services on that appearance.
The most successful schools are clean, neat, dirt and odor free, are regularly painted and regularly update their decor. I don’t care if your school is a traditional Okinawan karate school or a modern mixed martial arts gym; if you don’t keep up your facilities, eventually it will cost you students.
So, take a look around your studio today and try to look at it with fresh eyes. Daily cleaning is, of course, a no-brainer. If the walls are marked up, plan a painting day soon. If the floors and mats are in poor repair, get new carpet and/or mats. And if you spot anything that is worn out or run down, replace it ASAP.
Updating and Upgrading Your Skills and Curriculum
Die-hard traditionalists are going to fight me on this one, because you think if it’s not broke don’t fix it, and if it’s lasted this long, it doesn’t need anything added to it. Look, I’m not telling you to alter your art, all I’m saying is that you need to get outside your school and your organization every so often and see what other people are doing. If you do, chances are you are going to find some ways of doing things that will have zero impact on what you teach, but a 100% positive impact on how you teach it.
For those who teach MMA, eclectic systems, and modern self-defense methods, this goes without saying. You’re probably at seminars learning new material all the time. However, how much time do you spend learning different methods of instruction? How much time do you spend on learning about related subjects like psychology, nutrition, and exercise science?
So, no matter your style, you need to reinvest in yourself in order to always have something fresh to bring back to your students.
Your school is perhaps the best investment vehicle you will ever know. Budget some money out of your profits each month in order to maintain and grow that investment over the long haul. It will be the best investment you ever make.
Questions? Comments? Totally disagree with me? I want to hear it! So, be sure to post all your questions and comments below.
Great post indeed. This will really help people. Also, thanks for sharing the importance of investing in your martial arts business.
I have a question. A friend is selling his mixed martial arts business, $125000. For two locations , both these locations are considered on a “main” street. My husband and student of his prior to go into the army. We were thinking about buying the business and the building. How good of an investment would this be?
It depends on the current cash flow and profit margins of the studios, and the ability of your husband to maintain the daily operations and financials of the business. Without speaking with your husband or seeing the financials, I couldn’t say. If you need more advice, you’d do well to secure that information and have someone who is experienced in buying and selling martial arts schools to go over it with you. I’ve built and sold studios in the past, so if you are serious you can always schedule an appointment with me here.