I opened five schools in 18 months, and I do not recommend you try it. What I do recommend is the sequence underneath it: put your start-up capital into marketing, get 100 enrollments in six weeks, renew those students by the second or third month, collect cash, and use that cash to fund the next location. Every school I opened had positive cash flow in month one, and that is the part most new owners get wrong.
Key Takeaways
- The same lessons that drove five openings in 18 months work for opening one school or growing the school you already have.
- Do the market research and negotiate build-out dollars and free rent into the lease before you open the doors.
- Positive cash flow comes from big down payments, cash enrollments and cash renewals. Nothing else.
- Growing slowly as a start-up means either burning through lots of cash or going out of business.
- Facilities are important to support a large student body but almost irrelevant to building one in the first place.
- Referral-only growth is fine at 300 active students, but it will not take you from 1, 25 or 50 to 100 in six weeks.
Should You Open Five Schools in 18 Months?
Do I recommend that you open five schools in 18 months as I did when I was 23?
No way!
However, these lessons working for opening one school or dramatically growing your existing school.
Prior to opening, get extensive training on business operations. Do extensive market research to locate a good market with adequate income levels, population densities and proper age breakdowns. Negotiate a lease with build-out dollars and free rent early in the deal. Then open the doors.
The Six Steps That I Followed
The six steps that I followed:
- Put all start-up capital into marketing.
- Get 100 enrollments in 6 weeks.
- Renew everyone on the 2nd or 3rd month.
- Get them to pay cash.
- Use that cash to improve facilities and to open location #2.
- Continue to repeat this cycle.
Key Ingredients That Most New Schools Miss
Here are key ingredients that I believe most new schools miss:
First, growing slowly as start-up means either burning through lots of cash or going out of business. Often times in our industry, it also means you support your hobby of running a school with your day job. I had very little money when I was 23, and no other source of income for my wife, myself, and my full-time instructor. This thing had to create cash, and in a hurry.
Second, “If you build it they will come” may work in Kevin Costner movies but no where else. It’s more like: you build, advertise, promote, beta the bushes, knock down doors, hone your sales skills, close everyone who comes within three feet of you – and hustle, hustle, hustle they will come.
Facilities Matter Less Than You Think
Facilities are important to properly support a large student body but almost irrelevant in growing one to begin with. I’ve seen way too many schools rent a huge space, spend every last cent on mats, bags, mirrors, inventory, and state of the art training gear – then wait and hope for someone to come and train.
Enrollments and Cash Flow Come First
Third, get enrollments, a good first impression is important. To create prospects, good demographics are essential, and a highly trafficked center or high visibility doesn’t hurt. However, you grow your school by generating prospects, having strong closing ratio to enrollments and good student retention. These are affected by marketing, sales, and teaching skills. Nothing much else matters.
Fourth, create cash flow in a hurry. The model of a low down payment – long monthly payments – no cash enrollments of renewals means you are going to either burn through lots of cash or go out of business. Every school I opened had positive cash flow in month one. How do you create positive cash flow? Big down payments, cash enrollments, cash renewals. Nothing else.
Be Good Before You Open, and Control Your Expenses
Fifth, be good at what you do before opening the doors. You’ve got to know how to market your school, how to handle the introduction and the enrollment process, and how to flip them quickly into renewals. One-the-job training means you are going to either burn through lots of cash or go out of business very quickly.
Sixth, control your expenses. Many start-up schools (and even more established schools) ramp their expenses up way beyond what is reasonable for their revenue and their active student count. Someone needs to do the selling, and someone needs to teach the classes. It is very difficult for that to be one person. Beyond that, you don’t need much staff early on. And when you add staff, they should be inexpensive (i.e. someone to answer the phones or clean the bathrooms).
Reach Out to Your Community
Seventh, reach out to your community. There is an excellent trend in our industry to grow through referrals alone. Now that’s great if you have 300 active, but if you had 1, or 25, or 50, that’s not going to get you to 100 in 6 weeks, or 300 in 5 or 6 months.
Plunge Ahead Boldly
Finally, plunge ahead boldly. Tentative efforts lead to tentative results. Make a decision to be committed to success. Then apply 100% of your energies to accomplishing that goal.
Frequently Asked Questions
How many students should a new martial arts school enroll in its first six weeks?
One hundred. That was step two of the six-step sequence I followed, and it is the number that makes the rest of the model work.
How do you get a new martial arts school cash flow positive in month one?
Big down payments, cash enrollments and cash renewals. Nothing else. A low down payment with long monthly payments and no cash enrollments or renewals means you either burn through lots of cash or go out of business.
Do you need a big facility to open a martial arts school?
No. Facilities are important to properly support a large student body but almost irrelevant in growing one to begin with. Too many schools spend every last cent on mats, bags, mirrors and gear, then wait and hope for someone to come and train.
Can a new school grow on referrals alone?
Not at the start. Referral-only growth works well once you have 300 active students. At 1, 25 or 50 students it will not get you to 100 in six weeks or 300 in five or six months.
How much staff does a new martial arts school need?
Someone to do the selling and someone to teach the classes, which is very difficult for one person to cover. Beyond that you do not need much staff early on, and the staff you add should be inexpensive, such as someone to answer the phones or clean the bathrooms.
