The Two Pieces of Advice That Keep School Owners Broke: Protect Your Next Five Years!

Two errors do most of the damage. One question sorts the advice worth taking from the advice that costs you years.

I’ve opened eight schools. What eight teaches you that one never does is what a wrong decision actually costs, because in one school a bad policy is a bad month and you catch it at the door. Run the same policy across eight and it’s a bad year, eight times over, and you find out last.

That’s the part nobody warns you about when they hand you advice. Advice doesn’t fail loudly – it fails on a delay, and the bill shows up quarters later.

My estimate, and I’ll label it as mine, is that roughly 98 out of every 100 school owners never get past a net income of three or four thousand dollars a month, and plenty of them work another job to finance the school. They work hard. They love their students. They believe in the martial art. They still spend years at a number that barely clears the rent.

The reason usually isn’t talent and it isn’t the market. It’s where they got their business information, and whose advice they trusted.

Two errors do most of the damage, and I see both of them constantly (one of them came up yesterday).

Error A: one great school is not a blueprint

An owner finds somebody who built one terrific school, and treats that single result as a plan they can run.

Respect the success, because it’s real, and there’s plenty that owner is doing right. A single success still isn’t a system. What worked for them was fused to conditions you will never reproduce: their location, their demographics, their staff, their history, and the plain fact that they aren’t YOU. Those classes filled because of who that person is, in that building, in that town, at that time.

Here’s the line I use. One school can be luck, timing, or a great corner with a big market walking past the window. Two schools is often a husband-and-wife team, or two similar buildings run by two individuals. Three or more, in different towns with different teams, is a system.

There’s a name for the error, and a measured version of it

This is not just my opinion about martial arts schools. Jerker Denrell wrote a paper about what goes wrong when organizations learn by watching other organizations, and the title carries the argument: vicarious learning, undersampling of failure, and the myths of management (Denrell, 2003).

Here’s how it goes wrong. When you study only the organizations still standing, you’re looking at a sample that had the failures removed from it. The owners who ran the same risky playbook and closed aren’t available for you to interview. What that does to your conclusions is specific: risky, under-informed practices come out looking BETTER than careful ones, because the cases where they destroyed somebody are missing from the data you’re collecting.

Apply that to a martial arts convention. The owner on stage with the one spectacular school is there precisely because it worked. The forty owners who tried the same thing and closed didn’t buy a booth (they’re not at the convention at all, which is the whole problem). You are sampling the survivors and calling it research.

I’ve written about this at more length in Understanding Survivor Bias, which goes through how it shows up in business books as well as in our industry.

Error B: you can’t assemble a business out of borrowed parts

This one is trickier, and it fails more reliably than Error A does.

It seems reasonable. You’re opening a business, so you go to a dozen people doing the same thing and pick their brains until you’ve collected enough to assemble an operation. Another flawed strategy…

Picture the same approach applied to your own art. You want to learn martial arts, so you walk into a dozen schools, watch each one a while, take a class here and there, put the fragments together and call yourself a Black Belt. Of course not! You need a system where each piece sets up the next, and early on, no matter how smart you are, you won’t understand every piece or how it connects to the others. You find somebody who’s done it and you do it, and do it, and do it.

Take a marketing idea from one owner, class scheduling from another, pricing from a third, and you end up holding a pile of parts that were never engineered to run together. They don’t fail because any one of them is bad – they fail because nothing was built to connect them.

Expertise gets built by doing the whole thing

The research on how people actually get good at things points the same direction. Anders Ericsson and his colleagues put forward the framework that explains expert performance as the product of extended deliberate practice rather than inherited talent (Ericsson et al., 1993). Sustained, structured, effortful repetition inside the domain itself.

Notice what that rules out. Observation is NOT practice. Collecting other people’s conclusions isn’t practice. You get the reps by running the thing.

How long that takes in our business is my own estimate rather than anything Ericsson measured, and I put it at ten years minimum before it clicks. Treat that as one operator’s read, not a finding.

The bonus error: deciding you’ve got it figured out

This one is a warning for the owner who’s been at it a long time. Ray Kroc said it: “As long as you’re green you’re growing, as soon as you’re ripe you start to rot.”

If you think you’ve figured it all out, you’re often on a plateau instead. A school climbs through startup and growth, then slides into three stages most owners never name.

There’s a measured version of the confidence part too. Colin Camerer and Dan Lovallo ran experiments on overconfidence and excess entry, where people decide whether to enter a market that only rewards the strongest performers (Camerer & Lovallo, 1999). More people entered than the market could support, because each one rated their own chances against the field rather than the field against itself. Everybody in the room knew most entrants would lose. Almost nobody applied that to themselves.

In Phase A they’re plateaued and don’t know it. A strong month reads as a trend, and the flat line hides inside the normal monthly variance. This one is dangerous because they’re early enough to believe it’ll improve if they keep plugging away.

In Phase B they finally feel it, and they start buying. Programs, coaches, seminars, software, one purchase after another, and they mistake shopping for fixing. That’s usually Error B wearing a different hat.

In Phase C they make peace with it and call the ceiling a lifestyle business.

Worth watching in real numbers, by the way: a school flat in nominal dollars is going backwards in real ones, because inflation keeps moving while your tuition sits still.

What to ask before you take the advice

One question does most of the sorting. Have you produced this result more than once, in more than one place?

If the answer is yes, you’re talking to somebody whose approach survived being separated from their personality and their zip code. If the answer is one school, take the inspiration and leave the blueprint. If the answer is “I’ve seen a lot of schools,” you’re collecting fragments again!

Go count something this week. Pull your net income for the last twelve months, not your gross, and write down the twelve numbers in a row. Then look at how many of the last five significant changes you made came from somebody who’d done it more than once.

If most of them came from a single great story or a pile of borrowed parts, you’ve found the thing that’s been costing you the delay.

References

A version of this article first appeared at mastermoody.com.