Jeff Smith: Champion Fighter, Master Businessman

But Mr. Smith is best known for his accomplishments as a full contact fighter. He was the seven-time light heavyweight karate champion of the world and one of the most respected martial arts fighters to ever step into the ring. His title defense against Don King’s heavyweight fighter, Karina Allah, was seen by over 50 million viewers as a preview to the Ali vs. Frazier world boxing title fight known as the Thrilla in Manila. No doubt, this fight resulted in tremendous exposure for Jeff Smith and the martial arts in general. With many years of competitive experience under his belt, Mr. Smith changed roles and became the U.S. coach for WACO. In fact, he was the coach of both the world champion United States karate team and the junior national team. It was during this stage that he traveled the world coaching and training many of the top fighters the United States has ever produced.

People like Linda Dinley, Steve Nasty Anderson, Troy Dorsey, Charlie Lee, John Chung, Ray McCallum, John Longstreet, Tommy Williams, and way too many other greats to mention here. Jeff Smith is a member of the Black Belt Hall of Fame, the first recipient of the Bruce Lee Award, and he’s listed in the Who’s Who of martial arts. He’s made appearances on ABC’s Wide World of Entertainment, the Champions TV series, Showtime, ESPN, numerous pay-per-view events, and he’s even performed for several U.S. presidents right on the White House lawn. In 8th degree Black Belt in Taekwondo, Mr. Smith currently owns and operates two schools in Virginia with approximately 1,200 active students. What’s interesting is that his business system generates an average student value of $3,200, and he’ll tell you a lot more about that in our interview. And yes, he is a martial arts millionaire.

Ladies and gentlemen, few people in our industry understand both the physical and business side of the martial arts as well as Jeff Smith. This month and next, you’re going to find that out as you listen to this exclusive interview right here on the Sounds of Success. So, NAPMA members, let’s begin this great interview, a champion fighter, a master businessman with fellow NAPMA member, my good friend, Mr. Jeff Smith. Jeff Smith, welcome to the Sounds of Success. Thanks, Rob. Nice being here this morning. It’s a pleasure to have you as our guest here today on the show. Let’s go ahead and get started. First off, Jeff, what year did you begin your martial arts training?

Rob, I started in 1964 in Texas, in Kingsville, Texas. That was my hometown. I started with one of Grand Master Jhoon Rhee’s Black Belts from the University of Texas. As I’m sure a lot of the viewers know about Grand Master Jhoon Rhee’s being the first Korean to teach Taekwondo in America. And he came back in 1956 and started a program at the University of Texas in Austin. And trained a lot of black belts, who then started training other people throughout the southern and middle part of Texas. And that expanded eventually all over the country. But it was through one of his black belts, his name was Bruce Turner. And that’s where I started in 1964, along with Johnny Woolley and his brother Jeff Woolley. And for those folks out there who don’t know who John Woolley is, Jeff and I and Stephen Oliver had the opportunity to dinner with him recently.

[04:33] And he is the founder of Schlotzky’s Deli, correct?

Not only Schlotzky’s Deli model in school, because I was kind of like the kid who was always getting in trouble, and not doing the things I was supposed to, and not necessarily the best grades in school and everything when I was coming up. And he was always the role model kid. He was class president, he made straight A’s, he was in the band. He was probably the perfect child anybody would want to have. But not only that, he was a great karate student also, and a good black belt. And I actually got him started in karate, which is a funny story, because then he eventually got me back in karate, because when he… When I started karate in 1964, I saw a sign that said karate demonstration. It was up at the university there in my hometown, Texas A&I.

And I saw a sign they were going to have a big karate demonstration, and Bruce Turner, who was a second degree black belt of June raised, was going to put on a demonstration while he was there for summer school. So I told Jeff and his brother John, both of them, they were two years apart, about the karate demonstration. Did you want to go? And so they said, sure. Well, this was like two weeks later when the demonstration was going to be, and I forgot all about it really. And they went and they started in the program, and then I started about four months later after the program, because they never told me that they got into it until they had already gotten their green belt. Then they told me that they had gotten their green belt, and I said, you didn’t even tell me you went to the demonstration.

So he got me into it then, after they had already started, and I was one of your typical karate dropouts. I actually took it for about two months, and was so busy with other school. I was playing other sports and had a part-time job after school and things like that, and actually dropped out. And then Johnny and his brother Jeff stayed with it and got their black belt. And he kept, every time I would see him, he would say, when are you going to get back in karate? You’d be good. And when Johnny got his black belt, he competed in Juneau nationals in Washington, D.C. And this was in the mid-60s, and I think it was 1966, was the actual year that he actually competed in it. And he won the lightweight division, and Joe Lewis won the heavyweight division, and Joe Lewis beat him by half a point.

In fact, there’s a famous shot of Bruce Lee, I believe, handing the flag to Joe Lewis, and Johnny Woolley is in that picture. He’s standing right next to him, and back then, they used to give it. It was a real close match. And after Johnny won that, he came back to Kingsville, and he was getting ready to go to the University of Texas. And he talked me into finally starting back, and I said, well, I’m going to get back into it this time, and I’m not going to quit. And I started then again in 1966 for the second time, and stuck with it all the way after that. But if it hadn’t been for him constantly bugging me about getting back into it, I probably would have never done a thing with it. Well, thank goodness for the Woolley brothers. Now, I know that Grand Master Jhoon Rhee promoted you to Black Belt in 1967.

[08:34] Just curious, what was your exam like, and how have the Black Belt exams changed with the times?

The main difference I would see in the Black Belts now than when I was coming up is they’ve become a lot more diversified. They’re actually able to study a lot more curriculum, a lot more variety, a blend of other styles, and what I call modern karate or modern taekwondo, which has to me a more practical application. But back then, our exam was doing all of the forms and doing a few basic combinations, and then doing a lot of sparring. And back then, you not only sparred round after round, but you also did double sparring, where you had to spar two brown belts at the same time to see if you could beat two guys on two-on-one. And sometimes we even trained doing three-on-one.

And of course back then, there was no safety equipment. So the people that were doing it were mainly teenagers and adults. There was no real kids doing karate back then. And it’s interesting to see it evolve through the decades, from the 60s to the 70s, the 80s, 90s, all the way to the year 2000. How… how slowly over the years that age group has been going down and down and down so we allow a younger and younger kid to do it. And I think it’s mainly because we’ve came upon the realization that it’s never too young to start as long as the child is ready. And some three-year-olds are ready and some aren’t. There’s a lot of schools that won’t accept them to six or seven even now. When we look at it as a developmental program for kids, not that these kids are going to be able to go out and beat up an adult mugger, that’s not why they’re starting at that age.

It’s so they can develop their confidence, their discipline, their respect, their concentration, and then start developing those physical skills of balance, coordination, reflexes, developing the cardiovascular and strengthening up their muscles to allow them to excel at other sports. So we’ve taken the point of view now that karate is a developmental, after looking at the overall values of the program, we like to say that it’s probably the most important developmental program that your child can ever get into going along with their education. Well, there’s certainly no question about that. And I think that’s one of the reasons why about 70% of our industry is comprised of children. Now, at some point, Jeff, you became an employee of the Jhoon Rhee Institute, and I assume that that must have been a pivotal point in your career. I mean, guys like Niko Kinos were in the fold.

How long did you work for the JRI? And what were some of the different hats you wore?

After I got my black belt in Texas, Jhoon Rhee would come down. I was going to Texas, saying, I University there in Kingsville. And I was actually teaching at the University. The program kept passing down from one person to the next. After Johnny Woolley left, there was a black belt named Carlton Morris, who was actually teaching there. And he had just gotten his black belt. And he was winning a lot of the tournaments also right along with Johnny. And he was the one that probably, Johnny left. So I didn’t get to train as much with Johnny, but Carlton had come all the way up through with Johnny. And Carlton was a real good fighter and won a lot of the tournaments in Texas. And he was probably my main mentor in the sparring department. And when I got my black belt there and Carlton left, then I was actually running the school.

[12:50] It just kept passing down to kind of like the senior students. And so I got to know Jhoon Rhee real well then, because when he would come down, then he would discuss with me what the students needed to work on and what he liked that they were doing and what they didn’t like and what he didn’t like. And so we had a chance to refocus our training for the next semester. And he had quite a few of these satellite schools throughout Texas where he had developing a little market of black belts. So every time he came down, he was trying to convince me to come back to Washington, D.C. and teach for him. And I was trying to finish up my degree at Texas A&I, so I told him after I graduated I would come up.

Well, when he came back the next semester, I was just starting my senior year, he said that all of his instructors had left. One of the school owners had left and taken all the instructors and opened a school in competition with him. It’s amazing how times haven’t changed. Yeah, I was thinking the same thing. And now he was in desperate need of instructors and he needed me to come up there. And of course, this was back during Vietnam and all of that. So if you weren’t in college, you were actually in the military. You had no option that they gave you a college deferment. So I told him, I said, well, if I’m not in college, I really can’t teach anyway. I have to be in college and it’s probably too late to get into a school.

He actually got me into a school up in Washington, D.C. and moved up there and was going to school and teaching for him. And of course, when I got up there, he needed other instructors. So I called some of my Texas buddies and the first one I called was Pat Worley, who I had fought on several competitions for U.S. Championships at Dallas and some of the other tournaments. And he was one of the top fighters and form competitors back in Texas. So I asked him if he wanted to come up and he was very excited about it, so excited that he told his brother about it. And his brother’s name was John. It’s very close. A lot of people still confuse Johnny and Jeff Woolley with Pat and John Worley. So one was a W-O-R-L-E-Y and the other one was a W-O-O-L-E-Y.

And Pat and John Worley then came up to Washington, D.C. And after John came up and Pat came up, then they brought up Gary Hestalo. And Gary Hestalo brought up Larry Carnahan. We kept this little chain of Texas connections. I brought up Billy McCoy from Kingsville. And Mike whereas some of these other guys from my school in Kingsville. So we had these training centers like in Texas lined up to bring up our instructors and we’re expanding very quickly. And probably the biggest developmental change in the martial arts was that there was different parts of the country and each one was noted for a certain style of fighting. And Texas back then was known for what was called its blood and guts era of karate fighting because in the finals of all the black belt tournaments nobody wore equipment.

[16:25] And you could always tell the winners they were the ones with the least amount of stitches. They would literally sew people up and then put them back in and let them fight. And these are in point tournaments and not knockout tournaments and it was almost impossible to ever get disqualified. So it was like full contact point karate. Well that’s what it was. In Texas we’re known as head hunters which means most of the areas were smart enough to stay away from the head because they didn’t want to get disqualified. Whereas the Texas guys would go in there and whack them in the head to try to intimidate them or whatever reason they would do it. And so they were known as the blood and guts era. And then you had California who were really known as the technicians.

And they’re the ones that really mastered the art of karate with control. They’re the ones that started initiating the penalty point. Pat Johnson and Chuck Norris were the main ones to start that off. And Pat Johnson was one of the black belts. So he had a big influence in the developmental stages of karate in California tournament competition and started initiating the penalty point if people got hit in the head. And so that kept people away from punching in the head. But in Texas we still, we would not penalize them if they got punched in the head. It was just if you hit them too hard in the head then you might get a warning or you might get a penalty. So we actually brought that style of fighting now to the east coast with Jhoon Rhee in Washington D.C.

And of course it was quite a shock for everybody in the east coast, east conscious, very nominate when they came in with the sweeping and the ridge hand, run them over style of fighting it upset a lot of people in that they thought when we came up here that we never met, we didn’t like anybody. We would go to tournaments and we would beat people up. The thing about it was we would fight these other schools and I would train with each other. We fought each other like that. I mean that was just our style of fighting. And then over the years when people realized that when they saw some of us fight each other they went well it must not be us because look they beat the heck out of each other too. So it was quite a cultural shock to that area.

In terms of business, what were some of the important things that you learned during your time with the Jhoon Rhee organization and how did this help you to establish your foundation?

Back then anyway, but I knew pretty much zero about it until I moved up to Washington D. He walked into one of his studios and he saw all these students in the classroom and the phone ringing off the hook and Jhoon Rhee out in the middle of the classroom trying to teach it. didn’t even have time to talk to people when they walked in. And Nick had the vision to say, hey, this is a goldmine. Look at all these people phones ringing off the hook. People are waiting to get information. Classrooms are full. Nobody’s answering the phone. Nobody’s talking about it. So basically, Jhoon Rhee did not have a business plan. His business plan was teach them and they will come. And they were but there’s a certain amount of time you have to have somebody to talk to him.

[20:35] And he didn’t really have any kind of system. And Nick Cocina helped him help him organize that whole system and really started the foundation off for the Jhoon Rhee organization in a business concept. And of course, Jhoon Rhee was the real master of the martial art and the way he taught and his techniques were, you know, as they proved over the years were far superior to a lot of other styles or a lot of other groups. He really had a real vision and in the application of the techniques and how the basics were taught. And so he was a real master of teaching. So, you know, when you combine a great teacher with a good business head and a good business program, it’s going to spell success. And that’s what it did with the combination of Nick Cocina and Jhoon Rhee. So when I came on the picture in 1970, they had already been operating. I guess Jhoon Rhee at that point in time had been in Washington, DC for about eight years or so. And so they had already built up about four or five schools that they were running. And so when I came up, my position was just an instructor because I was still going to school. But over the next year or two, I

Quickly moved up the ranks and became the head instructor. And slowly over the years, I moved from the teaching aspect of it over more to the business side of it. And then I became eventually the head manager. So I was in charge of training both the managers and the instructors. Nick Cocina was still working with Jhoon Rhee at the time and actually worked very closely with me and really taught me a lot of the business stuff that we still use today. He was a real visionary in the business side of the martial arts. And Jhoon Rhee, being the catalyst on the technical and technique side, it still kept it in a strong combination. I still feel today if you’re overloaded in the classroom and you’re under loaded in the office, it’s going to create a problem.

If you have a great office and you have a weak classroom, define that balance in a school to find out where your weak areas are so you know how to strengthen them. Eventually, over the years, Nick Cocina left in the late 70s, early 80s. He went on to do Jhoon Rhee to general manager on eventually to vice president. So totally I was with the ranking black belt in his whole organization. Fantastic. Well, it sounds like you’ve carried a lot of those success principles with you throughout the years. Are you a martial arts millionaire? In the martial arts is a millionaire. They just don’t know it yet. Martial arts is the easiest way to make a million dollars because the overhead in the school, if you really look at business opportunities today, and there’s a lot of franchising and a lot of stuff going on like that, and a lot of businesses fail. But when you look at a arts field, it’s growing so fast. The cost to get it open a karate school, there’s not much overhead. You know, you’ve got just your facility, you don’t have to buy expensive equipment. You don’t need to have a big expensive payroll with staff. And you can advertise as much as you need financially, because you get so many free modes of advertising,

[24:58] That there’s not any school in the country that does not have the potential to produce a millionaire from that organization. That was a great answer, Jeff. How many schools do you operate today? I have two. I actually downsized from three. I combined two of my schools when one of the leases ran out. They were so close together that I went ahead and combined them into one location, which actually cut the overhead and then actually increased the net profit of the business because the gross went up, but the expenses and cost of doing business went down. So it’s important when you’re laying out your expansion of schools, too, that you make sure that they’re not too close so they don’t overlap each other, so they don’t draw from the same area, but not too far away. So you’re kind of isolating yourself where you’re not going to be so far away from each other that you can’t easily commute. Yeah, you bet. That makes a lot of sense.

How many students do you have, Jeff? 1200 students, I would say, active now. Great. And you know, the thing is, over the years, what I tell all school owners when they say, how many students do you have, you’ll always hear different numbers. It’s kind of funny, but if they actually counted everybody who ever signed up for a program, whether they continued or not or dropped out, they would all probably have several thousand. But what usually happens with most schools is you sign up 20 new ones this month, but 20 old ones go out the back door and they keep, every year, getting a couple hundred new students, but keep losing a couple hundred. So one of the the problems that school owners have is how to control that retention so you don’t lose them out the door. And once they start figuring out how to plug the holes in their bucket where they’re losing all these people, then that’s another step to success. And we’re going to certainly talk about some retention strategies here in a bit. I want to talk a little bit about Jeff Smith, the Point Karate Champion, and of course the first light heavyweight full-contact champion of the world.

In fact, Jeff, you’re one of the most respected fighters in all of American martial arts history. Tell us about your most memorable fight. Well, I appreciate that comment. Throughout the years, to single it down to one fight is very difficult because I had different different levels of fighting. My very first tournament in 1966 was an important one for me. I took second place in a white belt. I was a white belt and Johnny Wooley took me to the tournament and forced me to compete. And I didn’t even think I was ready. And once I won that trophy and it was a little, probably a 24 inch second place trophy to me, that was the biggest trophy I’d ever seen in my life. And I mean, I literally from the tournament with that trophy in my lap the whole way. And that’s really what got me hooked into tournament competition.

[28:32] And I had a lot of point fights that were memorable. You know, Howard Jackson was one of my, probably one of my biggest rivals where we were always ending up fighting for the grand championship. So we had numerous grand championship battle of Atlanta, where back then it was two minute rounds in the grand championship fight. And it seemed to be us in the finals there quite a bit. So he was always memorable in the point fighting circle. There was also a lot of team fighting going on. And these were usually highlights of these national tournaments, where there were all these school owners. There was a Midwest team with Kenny Knudsen that would travel around. Joe Corley had a team from the Southeast. And Texas always had a big tournament group going and Chuck Norris had a team going and there were teams from the Northeast. So I mean, it was like a battle of territory also. And probably my most memorable one in that team fighting was against Pat Johnson, who, you know, went on to fame in the movie, choreography, stunt choreography for all the martial arts movies. He was the top stunt coordinator for the Ninja Turtles. He did all those movies. He did the karate kids series.

Sure he did. He did Batman. He did Mortal Kombat. I mean, he did so much stuff. His movies that he was involved with gross. over a billion dollars. Yeah, great guy too. But he was a great tournament fighter. I don’t know that everybody knows him because he’s such a soft-spoken guy and such an easy-going guy that most people probably don’t know all about his fighting career. But anybody who ever fought him in point fighting, including Joe Lewis and everybody else, knows that he was the top point fighter in team fights. He probably to this day has the best tournament record in team fighting. He won and he tracked all his tournament fights in team fighting because it was so important to him. And he has fought 300 times. He had won 299. He only lost one.

And the one he lost was to me in Washington DC. And every time I see him, he still rubs it in that I blemished his perfect record where he could have retired with undefeated with 300 victory. But it was a little biased. He was captain of the Chuck Norris team and I was captain of the January Washington DC team. And we were fighting in Washington DC. So I always tell him, I say, Pat, that was a hometown decision. Had we been in California and I was fighting. I’m sure you would have beaten me there. That’ll make him feel better. But he was very, very tough on into the full contact series. I had a couple of great fights with Wally Slokey, but probably the most important in the martial arts community was when I fought on the Ali Frazier fight, the Thrill of Manila.

And the reason that one was so important, it was the first time they ever did a world champion boxing with a world champion karate to give us worldwide exposure. And that fight was a 11 round fight for the world heavyweight title. Well, I was a light heavyweight and I fought one of Don King’s fighters. He was one of Ali’s sparring partners who was a black belt from New York City. His name was Kareem Allah. And he was a 10th degree self promoted black belt. And he dominated all of New York in the tournament circuit with his fighters. And nobody could touch their fighters. They would go in and they would wipe out all the tournaments. His top fighter back then was Kevin Thompson, who became a top point fighter on the NASKA circuit too and is still competing to this day in the senior divisions.

[32:48] But he was his top junior and would win all the tournaments. So he had a big reputation. And he was actually supposed to fight Joe Lewis for the world heavyweight title. And Joe Lewis had dislocated his shoulder and got hurt in a fight previous to that against Ross Scott about six or eight weeks before that and was unable to fight in it. And they didn’t want to use Ross Scott because he was a young guy and he didn’t have a reputation. Nobody really knew him. And a lot of people said that he lucked out beating Joe Lewis because of his shoulder even though he went on to prove that he was a very tough fighter and won a lot of fights after that. But I was a light heavyweight so I ended up fighting him. They said, well, they’ve done that in boxing where they had a light heavyweight world champion against a heavyweight world champion.

And so they thought since I had more of a reputation at the time that that would be a better fight. So that’s how I was able to take advantage of that opportunity. And I won an 11-round unanimous decision. And of course that was with Don King’s judges. So you really had to definitely win to win that fight. That was probably like Pat Johnson coming to Washington, D.C. and beating me with our judges. It was a good fight. It was a good fight for karate because there was a lot of kicking from both sides. There was a lot of action. How many people saw that around the world?

There was 50 million people. 50 million people. To this day holds the record for the largest viewing audience of any karate event. That is simply incredible. Many instructors, Jeff, love to compete but this often interferes with the growth of their school. What advice would you give to someone who’s trying to become a great fighter such as you did and also a highly successful school owner at the same time?

Is this like oil and water or not? Well let’s just say it can be. It takes a very unique person that can do that. I mean even when I was doing it I still didn’t own the schools. It was Jhoon Rhee’s school I was teaching for him. And he was kind enough to give me a leeway on time to train and things like that. When you’re a school owner you cannot give your own self leeway time away from the business unless you have a staff in place that is highly trained that you know for sure that you can count on. And if you do then that gives you the opportunity to train. Training for full contact back then I always prided myself in my conditioning so I was training six hours a day and I broke that up into three workouts every day and I did this for almost 20 years.

So it was a time in reference that most people cannot devote that kind of time with running their own business starting a business at the same time unless the business is already well established and you have your staff in place. Of course that makes a lot of sense. Now as you know cash outs seem to be the latest rage but cash outs have also become a highly controversial topic. Jeff what’s your philosophy on cash outs?

[36:17] You could Rob for your listening audience here clarify what a cash out is. Sure cash out is when a student comes into the school they enroll in a program and the instructor will request all of the money upfront and possibly give some sort of a discount for paying out the entire membership upfront. The advantage to school owners to do that and there are advantages and there’s disadvantages. What I always tell the school owners when I’m conducting a seminar and they ask me about accepting cash or trying to get a paid in full program or get all the cash upfront. The way that I tell them is when you present the program I always present it with three different payment plans and let them pick the one that’s best for them. We do offer a 10% discount to our students if they do pay it in full and if that’s the best way for them then there’s nothing wrong with that.

And obviously your most committed student is going to be the one who is paid in full because you know the financial situation down the way is not going to interfere with his training because it’s already paid for. But a lot of people have trouble with collections and I would probably say one of the biggest problems that school owners run into is that ability to convert their paper into cash. And by my definition of converting paper into cash is when somebody signs a contract they’re agreeing to pay you a certain amount of money over a course of time. And I would venture to say that most school owners percentage of that collection falls below the 50% margin. And if they actually take a look at the total amount of and it’s a figure we use to track it’s called contract value.

And the contract value ratio if you take for the past year the contract value of every one of your programs and then you take the cash that you collected in the past year then you can compare the two because you’ll find that your cash cannot exceed your contract value. So the more paper you write the more money you have potentially to collect. The biggest obstacle in collecting that paper is retention. Students drop out when they drop out no matter what kind of paper they sign they’re all going to want to balk at paying for something they’re not using. They’ll all want to come up with an excuse to not pay. So it’s prevention versus cure. If you can retain the students and you have a good retention value then there’s nothing wrong with doing collection. If you can retain the students, in other words if I can keep those students then the ones that are coming to class consistently you don’t have a problem collecting from them 99% of the time.

It’s the ones who aren’t coming that don’t want to pay. Non-active non-paying. Exactly. Cash out I don’t worry about because once they’ve paid for it 90% of them are going to stay with it because they’re already paid in full. So if you go through and you look at your drop out you’ll see that there is a big ratio between the ones that are paid in full tend to stay with it a lot better. The ones that are monthly are the ones that tend to drop by the wayside. What’s the single largest cash out you’ve received over the years? Just curious. Well, because we have families coming in, it’s not unusual for us to do anywhere from 10 to 15,000 on one paid in full program. Fantastic. And because of the family programs. Now, that might not necessarily be on an extension.

[40:36] When somebody comes in to our school, we offer a trial program. And I firmly believe in a trial program to give the students a chance to really see what the classes are like. And in our school, we do a three lesson trial program. There’s a lot of schools that do the trial program, which is a one class thing. There’s some that do a two. I still am sticking with my threes and it seems to work best for us. And if it wasn’t working, then I would be switching to a two or a one. So, you know, I feel you got to use what works for you. You know, a minute ago, you touched upon collections. Let’s go back to that if we can. Do you lean more towards hard or soft collections? And will you allow a student to break a contract without pursuing them legally? What’s your view on this?

Well, I think you have to handle that on a case by case business. I see. What I tell school owners when they ask me that question is, do you have a contract with that student? Is it signed in by both parties? Are you living up to the terms of that contract, which means you’re providing the service and the opportunity for them to train? Are you giving them good service? Are you training and teaching them good classes? Are you monitoring their progress? Are you calling them when they don’t come in to get them back in there? In other words, are we doing our part? And if you are, then there’s nothing wrong with making them or trying to enforce them doing their part, which is to pay for the lessons that they contractually have signed. Now, you have to make sure that your contract allows for collections even if they don’t come, because not all contracts have the same language. And if the contract is written as such that says you are obligated to make payments whether or not student tends the classes, and it is further understood that it is the student’s obligation to attend the classes, then you make it very clear that they have to accept some responsibility too. You know, the last time I looked

On my car payment, when I decided that I wasn’t driving that car very much, and I called the car company and asked them to take it back that I didn’t want to make any more payments, they said certainly, but you have a balance due on the car, and then you can do whatever you want to with the car. But if you don’t want it anymore, we’ll take it back, we’ll repossess it, we’ll sell it, and then you’ll make up the difference. Point well taken. This is what happens with school owners. If they let everybody out of their program, word gets around to the students. And what happens is they don’t have a solid business. You know, all of their creditors are holding them to their contracts. When they contract for advertising, they cannot call their advertiser and say, I’m sorry, I can’t pay you because I didn’t like your ad, I didn’t have anybody come in on it. You know, our leases, our schools, we have to pay the rent. Look, I’m sorry, nobody came in this month, so I’m not going to pay the rent. Doesn’t work that way. So, you know, what makes this world go around is contractual obligations, it’s agreements between two parties. And as long as both sides understand the agreement,

[44:07] And both sides agree to the agreement, and it’s in writing, so there’s no gray areas, then there’s nothing wrong with enforcing the collection. Sure. You know, like I said, there are a few exceptions. There are certain hardships and things that you can make exceptions, and that’s up to the school owner to do. Makes sense. Jeff, we did a survey at NAPMA recently, and I was just shocked to learn that only about 50% of the members have a renewal system. I’d like to focus for a moment on upgrades. How many upgrade programs do you offer at your schools, and specifically, what are they? Well, the first thing that we’ve got to do is we’ve got to sign them up for a regular program. And some school owners try to sign them up for a long program right in the beginning, some try to sign them up for a short program and convert them later. I find that most comfortable, and it’s the easiest sell for our school, is we usually enroll, and there are exceptions, both more and less, on a one-year program. And we kind of use the analogy with the students that that’s like their first year, like a freshman in school, like a freshman in college. You need to go for at least one year, so you really get the basics and the

Foundation down so you know what you’re doing. That way you can maximize your benefits from the program. If you take it for just a few months, you’re really not going to know enough to do anything with. So a year kind of makes a complete cycle where you’re kind of learning how to throw the techniques in that year, and you’re also learning how to defend against them. So you’ve got a little bit more practical application in that year. So right after the intro, the only option is a 12-month course? Well, that’s what we try to sell the student. That’s what we try to encourage. Make a commitment for that period of time. Now we do have some students that have other family members already in the program, and they might do a black belt program. We also have other students who tell us, well, I’m only going to be here for three months, or I’m only going to be here for six months, or I might be moving in a few months. Well, then we do have a three or a six-month program. But your three or six-month program should be a lot more expensive, so that way it doesn’t encourage them to do a three-month or a six-month program. In other words, let the time be the factor, not the price. Let the best value be on the year program.

If a year program you sell for $1,500, and then you turn around and you say, well, or you can have a six-month program for $750, then who’s going to buy a year program?

They’ll say, well, I’ll just do six months, and then six months later I’ll spend another $750, and then I’m still back to the $1,500. So you try to make it cost efficient, that if you buy more lessons, you get a better rate. And people are usually used to doing that type of thing, buy two, get one free. The sales they have, buy one, get one half price. So you get a little bit more higher conscious students out there who are looking for a good value too. So that way it helps them make a commitment like that sometimes. So after the one-year program, do you then have, say, a black belt club, a master’s club, you have instructor training, what are some of the other upgrade programs? Well, you just hit them all, Rob. After a felt, but that’s what we’re targeting, just like when you go to school and you’re in the first grade, at the end of that year, you’re expected to graduate. And not everybody does, but most of the students do.

[48:00] And that’s kind of how the karate school is. But our next upgrade after the basic program, the black belt program is the, and after the master is… Interesting. What is your, what is your tuition range from the trial program up to the most expensive? Well, $50 a month, and you probably are. But if you’re giving them good lessons, then a lot of the schools are charging a hundred up to $200 a month now. Yeah, that’s right. That’s right. And giving this, let’s say, and mentally we’re developing our students, one of these learning centers to get tutoring and stuff. I know my daughter was getting ready to graduate from high. She had to get ready for her college learning centers dollars for her.

Which was like one hour a day like three days a week And I’m looking I’m saying now wait a minute This is just so she can take a simple test to improve her percentage points or her numbers for her college interest entrance test and I’m going boy are we under selling our karate program?

So the take home message really is don’t undervalue your services exactly charge which one worth providing now They felt like what we were providing parents were willing to spend that to see that their kids Can improve their grades and get in a better college you know to improve their SAT Scores or whichever test that they’re trying to qualify for To get into college the better Prepared they are the better school that they can get into and that’s important But then again when we’re talking about developing your child’s confidence or discipline their respect I mean where can the parents go to develop that nowhere?

Where are you gonna take your kids would they pay $1,200 for an eight-week course you betcha?

-if they could if you can show them that it will develop that and that’s what they did They showed me that they could improve her scores, and they did improve her scores So I was happy so the only parents you’re gonna have complaining about your prices are the ones that are not benefiting from your program And that means that if you’re not doing what you’re saying in our school. We not only Tell them what they’re going to develop we’re gonna show them how they’re developing it -and that is the key ingredient that a lot of schools talk about developing Self-discipline they talk about developing confidence, but how do you how do you track those things and how can you actually know that?

How do you quantify that at Jeff Smith karate?

[52:01] The way and the first way we do is to make it very visual let them see the child doing things that they had it haven’t done before and one of the things that we educate all of our kids even the three and four year olds when they first come in is What discipline is because most?

Kids think discipline is when they’re being punished. They did something wrong We tell them in karate Discipline is not punished. We don’t punish you for discipline. We reward you for That means if you do something around the house to help your parents Without being asked else discipline because who told you to do it and then the kids say we did that’s right You told yourself to do something So you disciplined yourself and you did some things around the house to help mom or dad without them asking you After you do them take them your self-discipline paper have them write down what you did you bring that in to get their white belt in our school They have to turn in one of those sheets with two or three things on it now the parents see the kids as soon as they go home run around and start cleaning up their room Making their bed help with the dishes take the trash out pick up after the pet Clean up their toys from the living room all these things that they have been hollering Number numerous times before to get them to do and would never do it Now we also explain to the kids that there is another type of discipline. It’s called Parental discipline that means your mom or dad ask you to do something

So if your mom or your dad ask you to do something and you do it right away without making a fuss That means you have good discipline and that’s good, isn’t it?

And we start nodding our heads so they start nodding their head and I say both what if what if mom or dad?

Asked you to do something and you say not now I was watching TV or I’ll do it later Or it was Bobby’s turn like putting it off on brother or sister. That means you have bad discipline That’s not good. Is it so we kind of talk in their language so they understand the Explanations and then they start nodding their head So now the next time mommy asked them to do something They don’t want to have bad discipline. So they run and do it right away And we tell them we expect all of our kids to have good discipline and we’re going to reward you for yourself So you’ll not only earn your white belt, but you will also get stickers and medals for doing the self discipline Great. So that’s just one of the ways we have of Monitoring this stuff where the parents actually see it. That’s very very powerful Jeff and after the white belt, Rob Yeah to make sure that it wasn’t just a one-time thing We then give them a sheet that has 30 things on 30 30 blanks after each 10 They bring it in they get a sticker in their class in front of the students We call them up to the front of the classroom We tell all the students that they’re getting their self-discipline sticker

They’ve been doing things around the house to help their parents and all the students give them a big hand the instructor gives them a big high five and When the parents see that they are so impressed because for some of these kids They never get recognition any time among the peers And now when they do something good in school a lot of times the kids that do things good Get ridiculed and they get picked on for being like the smart ones or the nerds or the teachers pet Whereas in karate when you do something good and the teacher recognizes it all the other kids cheer for you And when the kids walk back into the classroom the other kids are even high-fiving them on the way back through the line So this is also teaching them that they have that they’re developing by getting peer recognition Yeah, when kids get ridiculed and picked on their self-esteem goes down when they get cheered and recognized by their students and teachers

[56:21] What you’re talking about is so essential and if any of you NAPMA members out there are Interested in a program that will help you to quantify character education at your school check out the random acts of kindness program that NAPMA offers it was Co-created with Tom Kalos and it is just a phenomenal program Jeff and a number of years ago you and I were on a seminar tour called breakout and I remember that you spoke Extensively on the subject of average student value for the benefit of our audience today. What is average student value? Please educate us average student value You know if you know when a student comes into your school if you know how much That student is worth then you’re going to treat them a little bit differently when a student in our school Comes in we actually track to bring that a step up

There’s three different student values that we actually talk about Okay, the basic student value is the first one that everybody should do but once they get good at that then they can add in the second or the third level because it’s kind of like Teaching a kid a form you got to teach them a basic form before you teach them one a little more advanced and then one More advanced, you know what? I’m sure so it once you start understanding the concept of student value and Average student value the student value is defined as the amount of money that a student spends in your school over the course of a year So what we do is we go back for the last 12 months total gross that was collected in the school Divide that by the number of students that enrolled in the school who signed up for a regular program over the course of that year and That will tell us exactly how much each one of those students were worth And that is what we use as our average student value -and when you find that your average student value is going up from Some schools have like a $500 average student value that that’s what they spend in a year in our schools

It’s three to five thousand dollars Then you figure wow so if I can get just 20 new students a month and those 20 can generate $5,000 on the average Remember this is an average Then the school has the potential of making a hundred thousand dollars a month now Is that average student value so high Jeff because of your renewal program? Absolutely. Okay see because Then I have some people who argue the point they say well That’s not student value because they’re renewing that’s not the ones who signed up But what happens over the course of a year and a year when you do your back-to-back years?

This is the amount of money that people are going to spend over the course of that year And the way you make that student value go up is through retention Because the longer I can keep you in my program the more you’re going to spend

What we realized over the course of people training is the time to target them for renewal or upgrade and And both some people use both those terms interchange Sure, a renewal is signing up for another program an upgrade is moving up to another program What is going to define?

[1:00:08] Them moving up to those different levels and different upgrades is is how long you can retain them?

And of course, it’s easier to Retain them in the first year than it is let’s say in the second year in other words the longer They’re there the harder it is to keep them there in other words You’ll have more less students drop out. Let’s say in the first two weeks There’ll be more drop out in the next month and then more the next month and you’ll see the farther the longer They’re in the program the more likely that they’re gonna get lost somewhere sure So what that means is if we’re going to do upgrades do we wait till the end of their program?

Or do we try to upgrade them at the beginning of their program?

And then I used to have a problem explaining to people well How are you gonna upgrade them to another program when they just signed up for a program?

Well, you have to Increase their vision of where they want to be you know, there’s a an expression I used to use With the staff when I was trying to get them to vision something I tell them if you look out on the horizon and You see as far as you can see You’ll pick a point and as you walk towards that point You can see farther. So that’s what happens with the student When they first come in they’re gonna sign up to where did they where they see themselves getting to and most people have no problem In visualizing themselves doing it for a year But most kids when they first come in don’t visualize themselves as a black belt But after getting them in there and letting them see what’s going on their vision increases they can see farther Because they’re getting closer to their goal And the closer they get to the goal the farther they’re seeing So we try to take them to that next level which is our black belt club in that first 60 to 90 days Now some schools even take them beyond that to the master But that just depends on their vision on how How well they’re doing how much they like it and the more?

Enthusiastic they are then the more chance you have of maybe signing up for a master club We usually do the black belt next and then after that in the next three to six months We’re trying to move them then into the master club. So our goal is in that first year We want all of our students on the master club Now That’s how you get an average student value of five thousand dollars. So the that’s fascinating So the action step would be to increase your attention and to perform Renewals a little sooner in the students training Absolutely, why are we gonna wait to talk to people at the end of the program? Guess what? You’re not there. They’re not there How you gonna talk to them? Yeah, I understand that time for them is When they’re most enthusiastic about it, so you have got to get them enthusiastic You have to create the motivation you have to create the inspiration Because a good instructor will motivate but a great instructor will inspire And this is what you have to do You have to have an instructor who inspires these people to set these goals and to reach them -And our first step is When you tell somebody your average student values should be a minimum of three to five thousand dollars and they’re gonna go

[1:04:07] Well, how could that be possible a year program? I only charge twelve hundred dollars So, how could I get five thousand dollars from them?

Well, when do you sign them up for the black belt? And then some of them say well It’s when they finished that one year and then I say well, how many of them are left if they’re lucky There’s two out of ten -So but in the first 60 to 90 days most schools Good schools will have 70 or 80 percent in there -So you have a bigger pool to select from This leads me to an interesting question It’s my understanding that some consultants suggest that there’s nothing that one could do to improve their retention I’m assuming that you don’t buy into that philosophy

-That is their excuse and once they have their excuse they will use it. – So I tell my student my instructors that if a student Drops out you must take the blame for it are legitimate reasons for but that doesn’t account for 70 percent people dropping out. Yeah Yes, we should have an 80 percent and I have instructors who can do that. -And that’s how You find your good your great your super instructors are the ones who know how to retain You’ve been affiliated with NAPMA since the organization’s inception in December of 1994 How have you seen the Association evolve over the years and do you like the direction we’re going in these days?

Not only Surfaced as the premier martial arts training Model in the country. It has attracted the top people in the martial arts field and What makes any organization strong is not what they do in a year or two. It’s their longevity in the market and As the years go by the good thing about NAPMA is that it’s grown not only in members But in the quality of service and I think the most important thing and in any organization to keep its people is you’ve got to Be on the cutting edge and you’ve got to be bringing the newest thing out there and it’s just like all of these other top corporations Top companies how they stay on the top, you know They have something new that they’re bringing out each year and that my head has managed to do that And they’ve even taken it to another level because not all school owners are on the You know can jump in and have multiple schools or Have the basics of running a school down So they are able to train in that and learn how to do that But through NAPMA they’ve even gone in a step farther I guess with your NAPMA squared program now, yes, Steve Oliver is running that program He sure is is able to then take those students and it’s kind of like, you know

I want to kind of use an analogy of it’s kind of like our instructor training program it’s like taking the best people in the martial arts field throughout the NAPMA organization and Bringing them to another level that you’re training them beyond what the other people are being trained in And by doing so it’s like taking those top people in our classroom if we are Some of them are getting bored Because we’re talking You know so basic to them. They’re the honor students in school, you know They’re the advanced placement students in school. I mean, that’s how they started that program in schools The honor program in the advanced placement for those kids that are so sharp that they need something more challenging Well, that’s what NAPMA squared has done for those select school owners who want who want to put even more knowledge into effect and go to the upper levels of their training -you know and Steve Oliver has just done such a masterful job with the NAPMA squared program The level of content is just mind-boggling and will really take your school to the next level I have no doubt about that in fact for anyone listening to this interview if you’ve not yet seen a NAPMA squared package I’ll send you one on the house simply call the NAPMA office and let them know you heard the Jeff Smith interview and we’ll get

[1:09:08] You a NAPMA squared package so that you can actually see it touch it feel it and test drive this material. It’s just fantastic And one Oliver, you know, and I’m sure that most people know Steve Oliver that really don’t know Steve Oliver But I’ve heard the name and have seen him because he is the master of internet marketing He is the master and you know, I consider myself a master of all fields, but He has gone beyond my knowledge so far That you know, he’s even my master when it comes to the marketing of martial arts schools He has just got it down to a science. There’s nobody in the country that is better qualified That has a better system of how to get more people in your school Steve Oliver and the important thing with most school owners not all of them are ready to get all those people coming in there because they don’t know what to do with them.

But for those that do, once they increase the students coming in, their gross is going to go through the roof. And that’s the real key to keeping that school successful. Once you get everything down the way it’s supposed to be and you’ve got it running correctly, then the only thing that you have to do to generate more income is to get more students. And the problem for 90% of the school owners out there is they don’t have enough new students coming in. And that’s where Steve Oliver comes in. He is the master of that. No question about it. In conclusion, Jeff, success is a relative term. What is your definition of success?

My definition of success would be doing the things that you enjoy doing and being able to do them. To live the lifestyle that you have set for yourself. I had a recent discussion with Tom Kalos, who is another real top martial artist in the field. And he was talking about, it was a three-way conversation between Steve Oliver and Tom and myself. And Steve was talking about getting his new Porsche and things like that. And Tom was talking about how he doesn’t believe in materialistic things and that people should not splurge like that. That they should use their money for other ventures. And I kind of said to both of them, I said, you know, Tom, I agree with you. And then I said to Steve, and Steve, I agree with you. And the reason is because, Tom, if that’s what makes Steve happy, then he’s working to accomplish his goals so he can do what he wants to do.

[1:12:03] And Tom, you’re working to achieve your goals so you can be happy by doing the things that you want to do. And the thing is, we don’t want to try to reset everybody’s goals of happiness. They need to set their own goals. And all we need to do is to help them make enough money through the schools, through teaching good classes, being sincere martial artists, not just chasing the dollar, but being a good martial artist, and in turn, using your resources for whatever makes you happy. And if you do that, and you’re happy, then I think you’re successful. Yeah. That seems to be the secret to it all, is to be happy. Well, what can I say, Jeff?

You know, as a young martial artist, I read about you in the magazines, and then in the summer of 1988, I trekked out to Dr. Jerry Beasley’s Karate College, where I got to train with you, the DC Bomber, for the first time. And I have to say that ever since then, you’ve been a martial arts role model to me. And now, as president of NAPMA on the business side of things, you’re also a role model to me. And I want to thank you for all the inspiration over the years. Well, I appreciate it, Robert. And I still remember that email I got a couple of years ago, several years ago, which said that it was from you, and you were letting me know that you had been promoted to president of NAPMA. Yes, yes, yes. And I sent you back a big congratulatory email to that.

And you’ve lived up to that position and have taken it to a new level, and I congratulate you. Thank you so much, Jeff. And an honor and a pleasure, and we’ll talk with you soon. Okay, we’ll see you later. Bye-bye.