MA Business Success 86: Strategies Expanding For Your School

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Graham: Good day, everyone. Welcome to Martial Arts Business Success episode number 86. Goodness. I'm Graham McDonnell. We have Phil Britten as always, the dynamic duo. And today, we're really gonna talk about, I guess, expansion, expansion of your business. Now, everyone wants to grow, but there's pros and cons, and this, I guess, podcast will cover strategies that both apply if you're a part-time school that's looking to move to full time, if you're a full-time location looking to use your space better or expand to a new location. So, again, guys, we're gonna give you a bit of an overview, and we'll certainly give you the meat and potatoes as well too with what we've got.

Phil: Cool. Before we get started, I just wanna update you guys on our new CRM that we've had a fair bit to do with. You know, we're probably similar to you guys. There's no particular software, or although there are some dedicated ones to martial arts, they still don't have quite all the features and benefits that we need to run our businesses and maybe the same for you as well. So we teamed up with some people to add some value in our take on how to build a CRM to help our schools and your schools as well. So, if you're interested in learning more about that CRM and how it can help you, please shoot us an email [email protected], and then I'll send you a link where you can log your details in and be one of the first adopters. Now, we have got it running at some big schools here in Australia and a couple overseas to test it out. It's going really, really well. We wanna make sure that we've ironed out all the bugs before it gets to your hot, little hands, so you don't miss out and you get on the first early adopter list. Please send us an email, and we'll get you guys uploaded so you get all the information that you need.

Also just to let you know as well, we always have our try five for five for our viewers and our watchers here and listeners. So, the idea is that you get to try our paid area membership, $99 a month for just $5 for 5 days. Take a poke around. See what's under the bonnet behind the curtain, and also the new feature that we have is the TIMA mastermind. So, people who are in that paid group get uploaded to our private Facebook group, where we do, once a week, live Q and A, helping you with all the pressing topics, challenges, issues that you're facing right now and help you with the accountability that you need to get to the next level in your business as well. So, guys, if you're interested in, or you want to know more, or, you know, if you need to know a little bit more information to make that next step, please reach out to us, same email. Or shoot us a message on Facebook, that's fine.

Graham: All Righty, so, expansion, bigger is not always better. There's pros and cons to it. I guess I'd like to just reiterate that there's going to be plenty of you guys out there. There are viewers and listeners that have a great model that's working for you. I guess what you got to understand is do you want to expand your business? If you're happy with how it's working and operating, great, thumbs up to. Well done, perfect, but, again, what's the legacy? What's the thing that you help your staff to do? Because I know that we as martial artists hit a point in our journey as young instructors where our instructor at the time never gave us a vision on how we could be part of his business. Therefore we're often gonna do it by ourselves, so he didn't have an expansion plan and lost, probably, some really good people because of that. So I guess, for you guys, you need to know if you are going to expand one for yourself or, two, if you wanna leave a legacy, and there's some stepping stones there to help your staff do that as well too. So, again, pros and cons, goodness.

Phil: It's funny just listening to what you're saying. When we were looking at expanding from one school to the next and, you know, like, obviously, growing from one venue to renting out the one next door as well...but there's always the wise guy on the hill saying, "Bigger is not always better. Like, make your decision wisely before you go from one school to two schools." From people who already got two, three, four, five schools, because they know what the headaches are. Now, if you can get past all the headaches and challenges, then, yes, the fruits are there, you know, if your labor is fantastic. And there are great rewards, but you have to be ready, and that's what we're here to talk about is are you ready? And what do you need to look for before you make that next step? And, for example, I'm just gonna give you a real life example. Literally, a month ago, we made the decision not to upgrade one of our facilities. So, what I mean by upgrade is we're busting at the seams at our second location at Currambine. It's got 450 or so members. It's in a small facility. Graham, you probably know the numbers.

Graham: Two hundred thirty square meters, so, for you guys who are using a different metric system, I'll let guys convert that, but generally, it's not a large space. But I guess the training area that we have in there is about 110 squares. So when you look at 230 as an operating space with office reception, sitting area and the training floor... You know, our business is on the floor, not where the spectator stands.

Phil: Yeah, but, you know, it's busting at the scenes. It's, you know, overflowing. It's funny, both Graham and I, our children, trained at that school, and we sit in the grandstands like all the other parents. And I'm thinking, "Man this is full. Like, you can't move anywhere." And, you know, there's still room on the floor, though, in some classes, so we've looked at the idea of, you know, a venue came available to a bit bigger. And it definitely could could have handled a little bit more growth, but to be able to afford that, our school would have to have grown minimum 20 members which is possible, but it's also an unknown. So it's all that risk versus reward. Like, are we willing to risk it to be able to get the reward of a bigger school and maybe grow a little bit further? Or can we push the boundaries a little bit more in the current model, and then when we're truly busting at the seams and really [inaudible 00:05:38], we make that step then? We made the decision to hold. Whether it was the right or wrong decision, who knows? Only time will tell, but that was our decision. We weighed out all the options, you know, the financials and the possibilities, and the opportunities. We made a decision going, "Right now is not the time, but it's something that we will look for in the future."

Graham: Look, I guess, in talking about that too, Phil, what you've probably done is summarized "Are you getting the most from your venue?" Really, that's, I guess, the thing is before you talk about expansion, there are sometimes underutilized space that you have that you could potentially remodel what you've already got and have more students that can be fitted, if that's what you're looking for. You may just want something different. Yeah, look, you may have a lovely place, but it's a bit dreary and drab in their locations that you wanna move, so be it. But let's just talk about student numbers annual...you're actual, dare I say, ROI, return on investment, per square meter. Now, this is a lesson that we learned from our, I guess, troubles. We had a school that had boxing ring, and this, and that, and bags, and you name it, we had it hanging up. But when you really look at it, the return on investment, the money that was made was when we're teaching the class the martial arts on the floor, not just having the people using the bags. So bags are very complimentary, but it took up a lot of space.

So, as we moved into second and third locations, and we'll continue to expand, we got rid of our rings. Now, we have bags, and we still have the same way that we can provide that service, but having a boxing ring, for example, that may take up a 10 to 15, 20-square-meter space, we will better utilize that space to teach X number of students. So when you look to expand, it may not necessarily be to get new premises. It may be that, "How do I expand my student base? But I'm gonna have to get rid of a few of these. I'm gonna have to remodel. I'm gonna have to renovate the inside, change things around." I know we do this often. We look at things and go, "You know what? That was good, but if we turn it this way, it may be a bit better." If we get rid of that push and push that out, we can fit a few more students, or it's more comfortable, and it's a little bit easier to teach and get those better results.

Phil: Yeah. I think with those decisions you have to make, it's like, "Let's maximize our current school, and, you know, I think pre-see...I think making the decision, "When is the right time to move," way before it's the right time to move is very important. So, you know, begin with the end in mind. It's like, "What could this school handle?" Like, do all the maths and all the metrics that you need to go, "This school could handle this many students. So, when I get to here, I'm going to start thinking about what the next plan would be, or where could I go?" Now, what could also benefit you? And I know here in Australia, it is a bit of an economy drop in rentals and leasing and stuff of premises. Maybe it might not be the right time for student numbers, but if your lease is up, and there's other places you can lease and get free rental period, then there's definitely a chance for making the most of a bad situation in the economy but also gives you a leeway and time to how to build those students up to be able to afford that.

You know, so, there's different things you can think about, and this is whole, like, weighing up the risk and reward, you know? You've gotta do your financials. You gotta go, "When we're in this position, we start looking at this. When we've got this many students, we start looking at this." And that's where we got our base off our million dollar model thing is, like, "When we get to about here, we should be looking at an instructor program. When we get to about here, we should have about four instructors."

Graham: Yeah. Look, I think there's a whole another depth to this as well too. And first, talking about maximizing your location, for us, for example, and for you guys who may operate a part-time school is where's the extra time slots on your time tab? You know, because, again, some people go, "I'm full." Well, no. You're not, because you don't run until 9:30 at night. You don't run on Saturdays until this time, or no, you don't run on Sundays, dare I say. It's that for business sort of message that some people go, "Seven days a week, my goodness." Well, maximize it. Doesn't mean you have to do everything, but you may just look at things differently. I know we had a couple of guys that have always visit, come and see us, and I think we talked about he runs in a hall in a part-time location. He finds he's restricted on class times because of the school venue. And we said, "Why don't you open up on Saturdays?" He's like, "You know what? That is a great...I never thought of that before." So, again, Tim, have a look at your time tab. I know we're looking at, coming up later this year, to open up Sunday trade. We've got a location. How do we maximize risk versus reward, so those pros and cons and all, we've thought about it a long time. It's coming, so we'll tell you all about that when we do it.

Phil: Yeah. At the end of the day, you know, exactly that, you've just got to weigh it up. I can't stress that enough. You don't wanna make a decision to move a school, upgrade it or even open up your second location if you don't have the time, the money and the resources to do so. You know, you really gotta stack the odds in your favor to make that next step. It's almost like the big step of going from is getting from your employment and opening up your own martial arts school. That's a massive step. Going from a part-time to a full-time school, that's a massive step. Going from a current location to a different location, it's a massive step. They're all risks, but you've gotta stack the odds in your favor, and you gotta be willing to do the risk versus reward.

I just wanna finish with this one thing is that, you know, Graham and I, you know, we've now got three schools. We're, you know, just under 2,000 members. We have 50 staff. Every school that we've opened up, we've opened up with zero students. Now, what we've done, though, is we've gone, "Look we're gonna go get a bank loan out, or we have some cash in a bank. We got 100K." Hundred K, that's what we're willing to invest. That's the risk. Now, we need to be able to go, "How long will that last? Rent, electricity, outgoings, wages for the staff, that's gonna last 12 months." Now, if we're not profitable in 12 months, we're gonna make a decision, "Do we close shop? Do we soldier on? Do we get more..." There's decisions that need to be made, but we set the path. We set our intention. We set the the stop-loss, if you're in the stock market, or anything like that. And we've got to there. Now, we've been lucky enough to have all our businesses profitable in the first year which is fantastic. Doesn't happen a lot, but that's really good, and once we got to that point, well, we needed...that's the risk. The reward is now we've got three very successful schools, multi-million dollar organization. We don't have to be there. We want to be there, but that's the risk. That's the risk. We were willing to risk it. If it didn't work, we would have lost 100K. Do you know what I mean? Do you know what I mean, like...

Graham: It's all, I guess, relative, guys. If 100K sounds like a lot, what's your 10K, what's your 20K, you know? Again, for you guys, you've gotta weigh it up. So, I guess, the tips we gave you today was part-time schools maximizing your space, maximize your time table, full-time locations, maximize, again, your space, time table, and then expanding to a second location. Guys, that's a whole other podcast I'll be happy to share with you guys. Look, as always, we wanna keep things short, sharp, punchy, so if you've got any questions or further questions on this podcast, drop us a line at [email protected]. We're always there. We'll do our best to respond, and we'll get our guys and us to give you a bit of a helping hand where possible.

Phil: If you're watching this on Facebook, or whatever it may be, drop a comment. Tell us what you like. Tell us what you don't like. Just give us some feedback, guys, because that's what it's all about. Feedback is the breakfast of champions. Just to finish with you, guys, just wanted to update you guys. Don't forget our sponsors, Hyper. You get $100 off their program. We rate them so, so much, every program that they have, we have. We'll support them until the cows come home. Hence, while they've been out, they gave us $100 off every month of their program just by putting in the promo code "TIMA," okay? So, guys, I hope you've enjoyed today's podcast. Can't wait to see you on the next episode. Catch you on the flip side.