Episode 643 - Financial Considerations of Opening a Martial Arts School
In this episode, Jeremy and co-host Andrew Adams take on the Financial Considerations of Opening a Martial Arts School.
Financial Considerations of Opening a Martial Arts School - Episode 643
As Martial Artists, most of us may have thought of passing along our knowledge to other people by way of building a dojo or martial arts school. However, opening up a school entails a lot of things and it may mean you have to spend a considerable amount of money. In this episode, Jeremy and co-host Andrew, school owners one way or the other, take on the Financial Considerations of Opening a Martial Arts School. Listen and join the conversation!
Show Transcript
You can read the transcript below.
Jeremy Lesniak:
What's happening everybody? Welcome. This is Whistlekick Martial Arts Radio. And today Andrew and I are going to talk about the financial considerations of opening a martial arts school. Even if you're not opening a martial arts school or you've already opened a martial art school, there's a good chance that what we talk about is relevant to you. So stick around. If you're new to the show, well, welcome and thank you, and go to whistlekick.com, check out everything that we do, we do a bunch of stuff, so many things more than I'm going to name now. But we do have a store, it's one of the ways that we pay the bills over here. And if you use the code, podcast one five, podcast 15, you save 15% on some new gear, or shirt, or a sweatshirt, or a water bottle, or training program, any of the other things that we have over there. So go check it out. And while you're there, you can hit the link to go to whistlekickmartialartsradio.com, which is where we put all the stuff related to this show that we release for free to you, twice a week. You can find our episodes on YouTube, or in your podcast feed or you can just go to the website and listen to them. Every single episode we've ever done is available for free. Because we want to connect you and educate you and entertain you the traditional martial arts of the world that is our mission with this show. Why do we do that? Because our goal at Whistlekick overall, is to grow the martial arts world. We love martial arts, we love traditional martial arts yet Andrews enjoys broadening his hands. One of my personal goals is that every single person on the planet trains for at least six months. That's what I want to see. And that's why we work hard at the things that we do. So if you want to support that, yeah, you could buy some at the store. You could also tell people about what we do. Spread the word, spread the love for check out our Patreon I know that came out so weird patreon.com/whistlekick, he found the site in patreon/whistlekick, you can get it for as little as two bucks a month. At higher tiers, you get better rewards that are stuff that we will send you for no extra charge, as well as different, more better behind the scenes caught exclusive content information, sort of thing. People don't unsubscribe from our Patreon, we're doing something right. So go check it out. Okay. All right, Andrew.
Andrew Adams:
Hey. What ‘sup?
Jeremy Lesniak:
Now this started as a listener question, didn't it?
Andrew Adams:
Well, I don't know if it was a listener question. But someone had asked you. And so I don't. So I don't know who it was, but asked you, your thoughts on if they were to open up a school, start their own school, what were you.
Jeremy Lesniak:
Yeah.
Andrew Adams:
Thoughts on having to take out a loan in order to do so.
Jeremy Lesniak:
Now my apologies that we didn't write down who that was and where that came from. So there's a good chance that person is watching or listening? And I'm sorry, because we do try to make note of that, but couldn't find it again, my bad. So let's, instead of just talking about that piece, just should you take out a loan or not when opening a martial arts school. Let's expand the subject a little bit too financial considerations of opening a martial art school. Because what are the things that we have to worry about? It's honestly it's not very many. And I see that a lot of martial arts schools try to compete with big established schools on things that honestly are not that important. Oh, I've got to have a whole bunch of really nice new heavy bags, and I've got to have this big, beautiful space. And I've got to have all this training equipment. And I've got to have a school open full time with you know, half a dozen instructors. Its cost prohibitive, it's not going to happen, if you go into that unless you are independently wealthy. By the time you cash flow positive, and are making money, you will have run out of money. It's just it's not going to happen. I'm a firm believer in any service based business. And I've started and consulted on dozens if not hundreds of them. You start with the smallest version you can what some circles called a minimum viable product. And so what would that be? That's probably and we've done a variety of episodes on pieces of this. It's a shared location, part time while you have a job somewhere else. Now, why is that so important? Because it's going to force you to be creative and scrappy, and focus on the thing that matters the most, which is the quality of the instruction. If you have a big fancy storefront and you're trying to bring in as many people as possible, if the temptation becomes to run for revenue, and possibly make some decisions that are not best for your school long term. Either allowing students in that you know aren't right for your culture or offering classes that you really don't want to offer, and they sap your energy, and then when you step into the classes that you're really passionate about, there isn't as much of you enough energy to go around.
Jeremy Lesniak:
Yeah. I mean.
Jeremy Lesniak:
What?
Andrew Adams:
I mean, when you think about the financial considerations of opening a school, what do you really need money for? Like, just say, I'm Joe Schmoe. I want to go open up a school next week, what do I need money for, like.
Jeremy Lesniak:
Rent and insurance?
Andrew Adams:
That I mean, that.
Jeremy Lesniak:
Those.
Andrew Adams:
Really boils down to?
Jeremy Lesniak:
Those are the vast majority. Well, Jeremy, you need a website, and you need this, and you need this. If you're doing it on a budget, I can do this tomorrow. And, and, you know, I don't have the time. Nor am I going to step on the toes of some of my friends in the area who have a martial arts school, but I could open a school in my garage tomorrow and have nothing more than a free Facebook page. And I could get people I absolutely could get people.
Andrew Adams:
Yep.
Jeremy Lesniak:
When I opened my martial arts school 20 years ago, wow, how is that even possible? When I opened my martial art school 20 years ago, which was only around for a couple years. Now, because it wasn't successful, but because I there wasn't enough of me left, I had other things I was working on professionally. And I was showing up to class and I was fried at the beginning, not the end. And it wasn't fair to my students. I was doing things like going around town and putting up posters that I printed out on a black and white printer on yellow paper, black and yellow, it's the best contrast.
Andrew Adams:
Yep.
Jeremy Lesniak:
And I would just go around and put those up. And those were the most effective thing. I also did various things to get featured in newspapers, which still have some sway. So there's a lot that you can do for free. And I think if you focus there, not only does it help you get to cash flow positive sooner, it keeps you from making dumb mistakes. There's a saying in the startup business world that "too much money at the wrong time is actually a bad thing". And it doesn't sound like it should be. But if you've ever been in business, and you've had a big chunk of money come in, you know that you're probably in a car some of that offers something that you want to do rather than something that you should do or hasn't doing.
Andrew Adams:
Exactly. Yep.
Jeremy Lesniak:
And when we talk about somebody taking out a loan, if the things that are most important are quality and instruction, rent, and insurance, are you going to prepay your rent? That would be dumb. Are you going to prepay your insurance? That would be dumb. Are you going to take out a loan to pay your salary? Because you left your full time job to jump into this? That's a poor idea. Start small, you should go ahead.
Andrew Adams:
You know, a lot of the number of schools that I know of whether I trained there or know of them started out really small, they started out either teaching at like, you know, in the United States, you might have a VFW Veterans of Foreign War building, or an Elks club or a Moose Lodge or some sort of fraternity location where the rent is very cheap.
Jeremy Lesniak:
Yeah.
Andrew Adams:
Because they're 8:13 shared space.
Jeremy Lesniak:
Yep.
Andrew Adams:
Right? And so the rent is very low, which gives them you know, much smaller overhead, and they can grow their school in that location. And then when they're ready to grow into a larger location, then they do that, and I know some that started at a Elks Lodge, and they got bigger, and they moved to the Eagles, the fraternity of the Eagles, because their space was bigger, right?
Jeremy Lesniak:
Right.
Andrew Adams:
And then eventually got their own building. But I would imagine starting out a school right off the bat day one with bring your own building with huge high rent, it would be nice to be able to do that. But the reality is, it might not happen because of finances.
Jeremy Lesniak:
I've watched so many schools do this, and they try to hit the ground, you know, at 60 miles an hour, rather than just I'm going to crawl and walk. And it puts so much pressure on them and they have to put so much time and energy into marketing. And sometimes it doesn't work. Here's another consideration. Andrew, have you ever been part of a small class in a very large space?
Andrew Adams:
Oh, yeah. Absolutely.
Jeremy Lesniak:
Sucks. Doesn’t feel good. Like where is everybody? Why are no other people here? Why am I one of three people in 3500 square feet?
Andrew Adams:
Yeah.
Jeremy Lesniak:
It doesn't work. When I counsel businesses of any kind on starting a service based business product, these businesses are completely different, but a service based business. It should always be a push towards maximum utilization. So let's say you can have 20 people in your training space at one time, do what you can to get 20 people there and then open more classes, and then open more classes, and then open more classes and do what you can to get more people to sign up, and then raise the monthly fees a bit, and then raise them some more. And then, after a couple years, you'll have this packed high energy environment. And the money's coming in you're looking at you're like, wow, I could quit my job. And then you quit your job. And then you have more classes and more classes and more classes.
Andrew Adams:
It's totally cliché. But the race between the tortoise and the hare, you know, slow and steady wins the race, as they say. And I think there's a lot to be said for that. In this particular case.
Jeremy Lesniak:
Yeah. I completely agree. Now, let's play devil's advocate.
Andrew Adams:
Okay.
Jeremy Lesniak:
Are there circumstances where you might need to take out a loan? Yeah. What if you're opening a boxing gym, and you need to do some renovation on the space that is affordable, and build a ring?
Andrew Adams:
Yeah.
Jeremy Lesniak:
That might take some money. What if you're opening a gym, to train people for fighting in a cage, you kind of need a cage. A cage is not free.
Andrew Adams:
Yep.
Jeremy Lesniak:
There are times where you have to do some renovations. But if you are a good business person, and you are running your business correctly, whether it is a martial arts business or other the things that you want to do, should always exceed what you were able to do. And thus you will need to prioritize at any given time.
Andrew Adams:
I think there's also something to be said for recognizing financially when you need to take a step back. Like there's nothing wrong with having your own physical space that you train in that's not shared space. And for various reasons. If you can't maintain that location financially, you could take out a loan to continue to pay your rent.
Jeremy Lesniak:
No.
Andrew Adams:
I think that's I don't think that's a good.
Jeremy Lesniak:
No.
Andrew Adams:
You could do that.
Jeremy Lesniak:
You could if something's going to change short term.
Andrew Adams:
But that wouldn't necessarily be a great idea, right?
Jeremy Lesniak:
Right.
Andrew Adams:
So you could quit teaching completely, just close your school.
Jeremy Lesniak:
That's sad.
Andrew Adams:
That's an option. You know, it would be sad, you could do it. Or you could just take a step back, regroup, go to find a shared location, find someplace where the rent is going to be a little bit cheaper, and start building up again, you know, there's nothing wrong with taking a step back and reevaluating.
Jeremy Lesniak:
Some of the most financially successful martial arts schools I know of do not own their own space. They teach in a variety of locations, thus, they're able to pull from different populations. And they're supporting their community. There's some really nice, the tone of the marketing, hey, come see us at the such and such school gym or.
Andrew Adams:
Yup, yup.
Jeremy Lesniak:
This community center, right? Like there's a tone to that I think is really positive. And they don't have to worry about any upkeep. As soon as they walk out of that building. They don't care about the plumbing. They don't care about the roof. They don't have to worry about any of that.
Andrew Adams:
Exactly.
Jeremy Lesniak:
And everybody wants to own their own location. And it's the same argument about owning a house versus renting. There are times when owning a house makes sense. There are plenty of times when it doesn't.
Andrew Adams:
Yep.
Jeremy Lesniak:
Should you buy a house if you're never going to be there? Probably not. Right?
Andrew Adams:
Yep.
Jeremy Lesniak:
Could you buy an owner location? If you're going to teach four hours a week? Probably not.
Andrew Adams:
It's a whole lot of upkeep for four hours a week?
Jeremy Lesniak:
Yeah. It is rarely worth it. Lots of nuance, lots of opportunities for individualization there, but as a general rule. Did we cover it?
Andrew Adams:
Yeah, I mean, I think so. I mean, the biggest fight, like you said, the, really the two financial considerations when opening a school, how much is your location going to cost you, whether that's you're deciding to buy your own physical space, or you're renting it, whatever, well, how much you need to pay for your space, and any insurance that you'll need. And that varies from state to state.
Jeremy Lesniak:
I have again, I have worked with many, many businesses in many different capacities over the course of my career. And the businesses that are small and scrappy, and have to be creative with their cash flow inevitably become the best and most successful businesses because of the discipline that is bred early on in their career. If you open a business and it's suddenly putting, you know, $50,000 into your checking account every month, you're going to make terrible decisions. You don't have the discipline. Just as if you were a white belt, and you walk into martial arts classes and you suddenly have the ability to punch and kick people really, really hard. Oh wait, they generally end up with that. It's why I hate sparring white belts. Right? You've experienced this?
Andrew Adams:
Yeah, absolutely.
Jeremy Lesniak:
Hey, toned it down a little bit. You don't have to hit so hard. I don't understand, because they don't have the context. I don't actually hate sparring white belts, but I would much rather spar with people with experience because they generally know how to regulate their power output in a way that new students generally do not. Okay.
Andrew Adams:
Excellent.
Jeremy Lesniak:
All right. If anybody wants us to go deeper on an aspect of this, email me Jeremy@whistlekick.com we may or may not do a follow up episode. At the very least I can probably throw you some thoughts back via email, no charge. Happy to help. Alright, if you want to go deeper on this or any other episode, go to whistlekickmartialartsradio.com check out notes and links and transcripts and sign up for the newsletter. Go to whistlekick.com grab yourself something to celebrate Whistlekick and your love of the martial arts or some gear whatever use the code podcast 15. Don't forget our Patreon, patreon.com/whistle kick started as little as two bucks a month most people were in the five or $10 a month tiers and they stick around they don't quit.
Andrew Adams:
And they get stickers.
Jeremy Lesniak:
And they get stickers and there's actually there's better stuff coming. We started with stickers. The longer you stick around as a Patreon contributor, the better and better things. Value we're all about value over here. If you have feedback or anything email me Jeremy@whistlekick.com. If you want to talk to Andrew about me, you can email him Jeremy. You know him Jeremy. Now, Andrew@whistlekickmartialartsradio.com or social media we're everywhere at Whistlekick. And of course, that's it. So until next time.
Jeremy and Andrew:
Train hard. Smile and have a great day.