Archive for November, 2009

New FTC Guidelines Martial Arts Schools Need to BEWARE (Be aware) of!!

Click Play!

[flv:http://www.napma.com/toby1/FTC3.FLV 480 320]
Feel free to leave your comments below!!

Link to FREE 1 Day “Mini-Bootcamp” :
http://www.napmaseminar.com/members.html

Link to FTC Testimonial Guideline Overview:
http://www.ftc.gov/opa/2009/10/endortest.shtm

Read the full text in all it’s regulatory glory:
http://www.ftc.gov/os/2009/10/091005endorsementguidesfnnotice.pdf

Link to FTC Guideline on “RoboCalls” (Voice Broadcasting) Overview:
http://www.ftc.gov/opa/2009/08/robocalls.shtm

Link to the text of the regulation:
http://www.ftc.gov/os/fedreg/2008/august/080829tsr.pdf


Mile High Maverick

As I write this it’s been a hectic few weeks.  Tomorrow I’m off to Salt Lake City for the day.  Head off first thing in the morning.  Four meetings back to back, and back on the plan at 7 pm to head back to Denver.  I’m sure it’s going to be productive, we’ve just added 6 new locations in Utah and many more to come.  This week it’s been the Maximum Impact members teleconference (I hope you never miss one!) two Mile High Karate Regional Developers Calls, our national (international, actually) Mile High Karate school owners call.

In the mean time I’m just coming off of a week of training new Mile High Karate schools for a week (23 in attendance for the past week)   This week Toby Milroy, myself and the rest of the NAPMA staff and contributors are working 24/7 on details for Quantum Leap … sure to be your best event ever (you better be registered by now!  www.NAPMAQuantumLeap.com) and, Rob Tucker, Jeff Smith and I are working diligently on filling up our newest regions with schools:  Miami, New Zealand, LA, Utah, and many others.

Geeeeeez, I’m exhausted just thinking about the past couple of weeks.

In the mean time I’ve talked to about 10 coaching clients.  A few of them were “whining” about the economy in the 4th Quarter of 2008.  After I slapped them around a little guess what?  Record results for January 2009!  (Record GOOD by the way!)   Most of your results is dependent upon how you are looking at the world, not what’s really happening by the way.

A couple of asides.

I invite you to join me on Facebook, to keep up daily with our various activities:

http://www.facebook.com/people/Stephen-Oliver/820497518

Look also for our new “Social Networking” site being released this month on www.MartialArtsProfessional.com

If you haven’t noticed we’ve completely updated and redesigned Martial Arts Professional Magazine with many more enhancements to come.

Toby Milroy has also recorded a series of “webinars” to help you deal with the 2009 Recession.  It’s a 6 part series.  Make sure you go through all of them.  See www.NAPMA.com for the links (or, www.MartialArtsProfessional.com)

Anyway,  let’s move on to something more valuable for immediate implementation for you.

There’s lots of crazy ideas floating around our industry.  I watch several of the major “Martial Arts Business” discussion board and am typically amused to watch the “blind leading the deaf and dumb”

Hopefully you don’t fall victim to “Masterminding with Failures.”  Or, to repeat my often quoted line from Sales Master Tom Hopkins:  “Never Take Advice from Someone more screwed up that you are.”

Anyway on misconception is about how much income and revenue a relatively small martial arts school can generate.  (2,000 square foot more or less.)  I did the following projection for my Mile High Karate school owner training… and thought I’d share it with you:

Same Enrollment Numbers – GROSS Revenue Triples.   Most of the difference is
Net Profits.

The above comparism does not factor in:
Larger Downpayment.
Size of PIF’s.
Accelerated Tuition on Upgrades.
Successful Kids extending past enrollment period.
Therefore the difference on school 2 is higher than shown.

Now, without becoming too “academic” I’ve got to tell you I’d much rather to TRIPLE the revenue from the same volume, wouldn’t you??

I was thinking about all of this during our training week last week.  Interacting with real school owners like yourself thriving or barely surviving looking to me for a “life raft.”  During my time running the most elite (and, more expensive) coaching program in the industry I had two experiences that repeated themselves over and over and therefore are seared into my memory.

Experience 1.  “Typical” of school owners that I worked with that started at $12,000 to $18,000 a month in gross revenue.  In all most all cases in somewhere between three and twelve months I was able to turn these schools into schools grossing between $27,000 and $52,000 (double sometimes triple or more.)

The formula was easy.  By the way it did NOT include turning coaching clients into “sales masters” or, even marketing gurus.  In most cases it’s was subtle tweaks some simple and some rather sophisticated and difficult to do without the one on one personalization possible.

What are a few of the keys?

Well obviously from above one of them is in fixing pricing structure.   Typically we’d add a larger down payment on enrollments and renewals.  Increase the monthly tuition on enrollment and add in additional levels of “upgrades” with an appropriate price bump.  Typically the “transition” is good for an extra $50,000 to $150,000 in 60 or 90 days (enough to pay for the coaching for 4 to 15 years!)    I always promised coaching clients a 10 to 1 return on their investment (for each $1,000 invested that they’d get back $10,000) in reality they often dramatically exceeded that return.  Our franchisee schools obviously can do better than that (we figure they need a 10% improvement to cover the expense of the program – after that it’s pure and sometimes massive – profits.)

Another “tweak” was typically fixing the intro-enrollment-upgrade process.  Most schools have big holes through that process and are sloppy about “pre-framing” the long-term student relationship.  Fixing those holes can often make a dramatic change in results.

By the way.  In the above Profit and Loss projection there are a few assumptions that are useful to point out and to explain in the context of massive improved NET PROFITS of coaching clients and Mile High Karate franchise schools.   First, most schools tend to overspend on rent, over spend on “head count” ie pay too many people, and under spend on quality people.  Finally, just about everyone under spends on their marketing efforts and fails to properly track their results.

What should be your benchmarks?

Rent no more than 12-15% of the gross.
Total payroll (including yourself) 25-30% of the gross (I target 25%)

Marketing expenditures 15% of the gross.

And, note my projection of $277 average revenue per student.  Obviously a little arbitrary designed to help a round number (300) active students become a $1,000,000 a year school.  In all most all cases coaching clients as described above ended up at $200+ per month average per student (therefore 300 active AT LEAST $60,000 a month.)  My target for Mile High Karate schools is $300 a month and soon to be higher.

Experience 2 from Coaching.   The clients I took under $8,000 a month (and, frankly those over who made no progress) had a couple of things in common:

First.     A very low self-esteem about the value of their instruction and of being a member of their school.

Second.   A tendency to “Question Everything” and therefore not implement proper strategies or “pick and choose” and therefore end up with a hodge-podge of stuff.

Third.  A “good excuse” about why their school, style, city, state, etc. was “different” than the successful schools and why it was not possible for them.

The question for you is whether you’ll be the take massive action, follow the plan to the letter, and make no excuses type…. Or not?

Before we go I want to remind you of a couple of things:

1.    Know your numbers.  If you aren’t keeping track of what’s happening then it’s pretty much impossible to improve.   I’ve enclosed again the template forms for monthly and yearly stats tracking.  More complete forms (including Word and Excel files that are editable) are at your NAPMA Member Site.

2.    If you are in the $12,000 to $20,000 a month range and would like some personal hand-holding to get your school going.  Send me a note with your 2008 Stats and we’ll discuss ways to get your school really rockin in 2009!

A couple of Recession Warnings (again and again.)

In a tough market you really MUST accelerate your educational process.  Open and read (listen to, and watch) each piece of your NAPMA membership materials.  Visit your member website weekly to find new videos or audios to watch/listen to.   Attend all of the live events (100% participation in Quantum Leap and Extreme Success Academy.)  Consider participation in Coaching ($12,000 a month and up only please,) Inner Circle ($25,000 a month and up only) or Peak Performers.

Above all don’t cut back on your own education, the education of your staff, or your marketing efforts to gain new students.

The Economy Sucks?

The Economy Sucks? Really?

I’ve had the interesting and annoying experience of “Car-Shopping” recently.

You see a couple of months ago Rob Tucker and I were running errands – trying to track down copies of “The E-Myth” at various bookstores around Denver since I had waited to the last minute to decide to use that book for our Regional Developer Training. While we waiting to turn left into a Barnes and Noble parking lot an otherwise nice 18 year old recent H.S. graduate gunned his SUV while looking for songs on his I-Pod. He failed to notice us sitting there with our turn signal on and rammed into to my Mercedes going probably 35 and accelerating.

Well. His SUV looked like it had been in a war. His “deer catcher” from end was torn off. Smoke coming from the engine. Front bumper gone, hood crumpled. It wasn’t drivable. In our case we had a dent in the rear quarter panel. Bumper unharmed except the plastic cover which snapped nicely back on. We waited for the police. Consoled the young man. Picked up a couple more copies of the book and drove on to our next errand.

Well, the insurance company “totaled” my car as well. Giving us about $10,000 more than was estimated for the repairs. Apparently Mercedes parts can cost more than expected, and some of the electronics can start running the price up.

Well, now I’m looking for a replacement.

It’s interesting because I know that car companies, dealerships, salesmen have been whining for a year now about how bad things have become.

Anyway, on to my point.

We’ve been visiting a lot of BMW, Mercedes, and Lexus dealerships. Looking for a mid-size, 4 door sedan with all wheel drive. That narrows it to Lexus GS 350 AWD, BMW 5 Series (BMW 535ix), and another E Series (E500 4 Matic.)

Now, after visiting a bunch of dealerships you would think that these guys are semi-retired and really would prefer to collect the cars rather than sell them.

What do I mean?

Well, Jodi seems determined to get the BMW 535ix. (The Mercedes was really her car. I primarily drive the Porsche Turbo.) We went to a HUGE new dealership in the south area of Denver. They have a HUGE inventory.A multi-million dollar facility in a location between Cherry Creek and Highlands Ranch (a RICH area of town.)

We’ve been to their dealership now three times. EACH of the three times we’ve dealt with salesmen who did the following:

1. Kept us waiting for what seemed like hours (probably 15-20 minutes before being helped.)

2. Had no idea what inventory they had on hand.

3. Had no idea how things worked in the cars they were selling.

4. Spent one to three hours with us, including test drives in at least one car.

After all of the above. None of the three salesmen asked for Name, address, phone number, or email. None asked any “background questions” ie learning what I do for a living or why we were shopping now. None asked SPECIFICALLY what we were looking for to track it down for us. None followed up, and obviously had no way to do so.

Now, I’ve got to tell you this dealership must have MILLIONS in facility. A huge overhead. And, LOTS of inventory.

Their salesmen were mostly hanging out in the dealership (several at once playing with my daughter’s new puppy on one trip.) I’m sure they are bitching about the recession. The owner is worried by the down-turn.

I’m betting they spent 100 times for on facility than on service and sales training for the staff.

Stupid, VERY Stupid on their part. We literally had a check in our pocket and needed a replacement. Clearly as “live” a prospect as exists.

Anyone, on to another dealership. This time a retired chief from the airforce. He asked background questions. Tried to figure out exactly what it is that Jodi is looking for (not that I can figure out the difference between the three she hasn’t liked. Something about the wood trim on the door being the wrong color or orientation, or some such thing.)

He’s followed up.

Researched new and used inventory on it’s way. Called anytime a new car is headed for prep. And generally built rapport, followed up, and really has done his job.

I’ll tell you sincerely that even if it’s not exactly the car we were looking for I want to buy it from him. If the other dealership gets exactly the right car at the right price I’ll be disappointed and frustrated to buy it from them.

How does this apply to you?

Well your students are more persuaded by your follow-up, your sincerity, and your competence in showing that you care about them than about your technical proficiency. Certainly more than about price. With the first dealership I’d haggle for every penny. With the second, I’d want to have a reasonable price but really wouldn’t be pushing for every penny.

Oh, and at the second dealer he’s had several cars just this week come in and, they were sold before we got around to looking at them. Recession, what recession

Four Keys to your Future

Starting this month, NAPMA introduces “The Four Keys to your Future.” In an unprecedented, yearlong series of feature articles, you will learn how to benefit from the new era of the martial arts industry that is upon us.

During each quarter of the year, Martial Arts Professional will focus on one of the four key concepts that will guide you toward a future of amazing growth in enrollments, retention, renewals and student quality.

This month, the series begins with the first of the Four Keys: developing an exit strategy for your career and/or business. Quite simply, you must know where you’re going, if you expect to reach the finish line.

The other Four Keys to your Future are:
2. Building equity in your business.
3. Implementing total school systemization, without re-inventing the wheel.
4. Utilizing economies-of-scale methods to operate at lower cost.

Think of each Key as your means to open another door to your future. It’s a progression of steps—from developing an end goal for your career/business—to building value in your business—to implementing systemization and economies-of-scale methods, to transform the average martial arts school into a highly desirable, marketable asset that will dramatically boost your personal wealth when you sell it.

For many years, and now as NAPMA CEO, Stephen Oliver has brought a sharper clarity to what the future of the martial arts industry will be, and what current instructors and school owners and those who will open schools must do to be a part of that future. His Mile High Karate franchise system is already bringing that future to an ever-growing group of school owners who want the best a martial arts business has to offer.

He has repeatedly stated that, first and foremost, you are faced with a fundamental decision: to hold fast to the school model of the past or join those who are already benefiting from the new model, and create a thriving martial arts business for yourself.

Although there will always be room for hobbyists and volunteer and part-time instructors (and they should be congratulated for what they do), cultural and economic forces are coming to a head. Industry leaders and more and more school owners are finally realizing that a martial arts school is an outstanding business opportunity—one that has been largely unnoticed for decades. This has led to the development of a serious business model that is increasingly becoming the norm.

The pioneers of the new era are those school owners who have already made the transition from part-time and/or mediocre-performing schools to high-grossing businesses. The much higher student quality they’ve achieved (as well as skyrocketing revenues) proves that the “selling out” concept is also old history. Many traditionalists (including this month’s Success Story, Charles Dudley, on page XX) have been able to develop synergistic business models that accommodate both the traditions of their arts and the highest goals of business.

As the martial arts industry transitions to this new era, there are no real impediments to move from where you are today to where you want to be—except, frankly, those in your head. That is why NAPMA has committed so many pages in Martial Arts Professional during the next year—to clear your head, change your mindset and focus your energies on your future, where the success you’ve always deserved is waiting for you.