Increase the number of new clients.
Increase the amount of the monthly tuition/deposits/upgrades.
Increase the frequency of purchases or renewals.
Developing Multiple Revenue Sources for Your School
Much of a martial arts school’s business success depends on the owner’s ability to create multiple revenue sources or streams. Jay Abraham, a world-renown marketing expert, refers to this concept in one of his Black Belt Power Principles.
Think of your business as an ancient marble temple with numerous pillars to support a massive roof. Every pillar must contribute its share of support or the roof collapses. Each of those pillars represents a potential income stream for your business. The more income streams that support your business, the more likely you will survive and succeed. Too many business owners gamble everything on a single revenue source, hoping a single pillar will keep their businesses erect and safe from falling objects.
Surprisingly, a school owner with the right system can gross above-average revenue from just an average number of students, training in an average-size school, and paying average tuition and fees.
However, your goal should be to increase your revenue proportionally and increase your revenue sources; regardless of what size school you own, you should always be maximizing your revenue opportunities.
Revenue Source #1: Monthly Tuition
Develop a system for collecting Monthly Tuitions. Many school owners frown on using agreements (not contracts) because of their fear of scaring members away or thinking that members will stay because of their fantastic instruction. Don’t fall into this trap.
When collecting monthly payments, have a method to do that automatically. I recommend not managing them at the school. That saves you a lot of work. I used to bill everyone monthly. It would take hours of work to prepare the invoices and mail them out. Then you had to collect the payments at the school and keep track of who paid and who didn’t.
Many school owners use a billing company. I’ve used a few different ones throughout the years, but quite frankly, I do not believe it improved retention or payments collected. The fees were collected automatically through EFC or Credit Cards, but the downside was that my members would get nasty letters or phone calls when they were late with payments. They got mad, and I had to spend the time consoling them and straightening out the problems.
We use our private auto collecting system. As a result, we can easily track payments, and if problems arise, we can handle them ourselves without getting our members upset.
Revenue Source #2: Down Payments
Your enrollment goal should be 20 new students a month, with a 20% cash-out rate. His cash-outs are approximately $1,500 each, or a total of $ 6,000/ month from the four students (20% of 20 enrollments) who cash out.
The other 16 new enrollments pay $130 each for the first-month tuition, totaling another $2,080 per month. Each of the 20 students also pays an enrollment fee of $99 ($100 for our calculation purposes), totaling another $2,000 a month. That’s more than $200 per student for the first month and more than $300 (and maybe $400) when you add the extras from revenue source #2 above.
With cash-outs, first-month tuitions and enrollment fees, you can collect just more than $10,000 per month from new students. ($6,000 + $2,080 + $2,000 = $10,080).
Even though the numbers look great, I do not recommend using Cash Outs for the first enrollments. We would rather have a steady income from members. Once they join the Master’s Club and feel more comfortable with the program and school, we would present a Cash-Out. Then we are getting $7000 to $8000 at one time. Don’t forget no one will purchase a membership from you unless they trust and like you.
Revenue Source #3: Renewals
Renewals are the lifeblood of your school as much as getting new members. You should have an automatic renewal process to make it easy for your members to renew. If you make it too hard, they start to think about it, and the buyer’s remorse might set in.
What we use is a simple letter printed out from the SMS database automatically. That gets mailed out, and all the member has to do is sign it and bring it back. Easy! It would be best if you considered several things when renewing a member, increasing the number of months of the renewal or upgrading to a Master Club for higher tuition. See above on how to Grow Your Business.
Revenue Source #4: Merchandise
Many schools overlook the value of selling merchandise. I encourage you to develop a Pro Shop with various equipment, shirts, p[ants, and uniforms. Do not have one of everything and order it when a member wants a product. A lot of people do impulse buys. Also, you can sell packages based on memberships or training curriculum. That is a big boost to your monthly gross sales.
Using Gift or Loyalty Cards is another crucial benefit of selling merchandise. When members buy merchandise, we reward their loyalty cards with points. For example, once they get 100 points, we reward them with $10 off their next purchase. I’ll take that deal anytime. Give me $100, and I’ll give you $10 back.
Boost monthly sales by having sales every month. For example, one month offers 10% off shirts or uniforms. Another month, offer 20% off weapons or some other product.
Revenue Source #5: Special Events and Extras
Special events can raise money for your school. These would include birthday parties, specialized training classes, Summer Camps, and interschool tournaments. We do not do many of these. First, it requires specialized staff training, and it’s a lot of work to run and set up. Many times it also interferes with your regular class schedule.
Revenue Source #6: Testing and Belt Fees
Many schools charge a fee for promotions or belts. They run monthly tests and charge fees based on the level of achievement for which the member is testing. In other words, if they are testing for an Orange or Yellow belt, it might cost $30. If they are testing for a higher level, they might pay $50 to $100.
I do not subscribe to testing fees. It’s like getting nickel and dimed from the airlines. It’s irritating. Need more room in your seat, $30. I need a second bag, $50. Need to change your flight time, $100. I do not know about you, but I think it’s unfair. So what I did, I just built the price into the tuition. Charge an extra $10 per month. If you have 100 students, that’s an extra $1000 per month, and you do have to irritate your members with additional fees.
