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Kovar Systems
Business Tips

Running Your Martial Arts School by the Numbers

By Chris Mierzwiak

Today's Guest Blog is from our friend Chris Mierzwiak from Zen Planner:

Most martial arts school owners dread calculating profit & loss statements, tracking signup metrics, or making projections for expected revenue in the coming year. Unfortunately, consistently tracking key performance metrics and knowing their relationship to the goals of your school could be the difference between thriving and barely surviving.

Let’s take a look at exactly how tracking key metrics can help you work smarter towards your goals.

WELCOME TO GABE’S SCHOOL

Gabe has a solid school with 100 students training, charging $145/mo. He had the same number last year. His monthly revenue is $15,000. He signs up about 7 new students per month. Already we know:

Active count: 100

Monthly Tuition Rate: $145

Monthly/Annual Gross Revenue: $15,000 / $180,000

New Monthly Enrollments: 7

Unfortunately, Gabe needs to replace his mats and take care of some repairs around the school. Those costs will be $25,000! Yikes! Where is that going to come from!? Gabe needs to generate the extra money, but isn’t sure where to start.

Target Annual Revenue $180,000 current + $25,000 improvement expense = $205,000

But wait, we already know a few more important numbers to consider. Let’s add those in:

Average Student Value: $150   (monthly revenue ÷ active count)

Quit rate: 7%   (active count ÷ monthly quits, since active count is the same as last year, monthly quits must equal news, or 7)

Most school owners think, “just enroll more new students.” An extra 14 paying students tomorrow would cover the difference, but that’s pretty unlikely. Gabe needs another path, and because he knows his stats now, he has far more options for reaching his goals!

The first step for Gabe is his quit rate. 7% is high! (4-5% is a red flag!) Keeping students you have is always easier than recruiting new ones. Often students quit without letting us know, they just stop coming. Focusing on making calls each week to students who miss class will help tremendously. This can quickly bring Gabe’s quit rate down to under 5%. If he keeps enrolling 7 new each month, he’ll grow by 1 or 2 students every month. This little change results in 117 students within a year, adding $15,000 in extra revenue!

Next is his students value. With a student value of $150 compared to tuition of $145, he has room to generate more income through events. A great idea for events is offering additional private lessons to students. This will boost revenue and help retain struggling students. If he can generate an extra $400/mo. through private lessons, special event seminars, day camps, and/or birthday parties, he’ll produce another $4800 in revenue this year!

$15,000 from new student tuition + $4800 from events = $19,800 extra revenue

He’s close! New mats, here we come!

Now let’s looks at his tuition rate. $145 is on the low side for a professional martial arts school, and it’s been over 5 years since he changed his rates. He can charge $155 for all new students, and only raise current student rates to $150. He would earn at least $500 more per month in tuition, or $6000 for the year.

$15,000 + $4800 + $6000 price increase = $25,800

He’s there! All without enrolling any more students than he did last year!

In this situation, just a few simple calculations showed that there are multiple paths to the extra income Gabe needs to keep teaching great classes. When numbers are tracked consistently and understood, you as a school owner have more visibility into your business. Better visibility leads to better business decisions and improvements. Those improvements lead to a higher level of service and a better experience for every student overall, which should always be the real end goal.

Chris Mierzwiak is a Partner Manager for Zen Planner.  He has been part of the MMA and Jiu Jitsu community for over 7 years. He loves being able to help support the growth and success of the industry that has given him so much. 

 

ProMAC International ConferenceChris Mierzwiak and many other fantastic guests are on the agenda this year for the 2018 ProMAC International Conference on May 4-6 in Denver, Colorado. Register now and Save $100 before the event completely sells out! 


by Chris Mierzwiak