MA Business Success 58: How to Learn From Lessons of the Past to Create a Business of the Future

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Phil: Good day, team. Phil Britten here from Martial Arts Business Success. I am here joined with Graham as always and also the one and only, for our third podcast with Kiyoshi Dave Kovar. Welcome again.

Mr. Kovar: Nice to be here, guys.

Phil: Awesome.

Well, you know, we've been diving real deep with some great strategies and mindsets and experience from somebody who's been in the industry for many, many, many years and you know, I thought, what better way than to kick off today's podcast would be, if I had my time again, what would I do? Step 1. Mr. Kovar, sir.

Mr. Kovar: All right. I'm all right. And so first and foremost, I think if I was starting a martial arts institute full over right, if that's what I decided I wanted to do, which I would decide, right? And I look back and think of all the mistakes, but I'm not disappointed with the decision I made to be a full-time martial arts professional. And that's first and foremost. I mean, I think it's just important to understand what a frigging great impact we make on our community you know, we get to do what we love, so that part I wouldn't change at all.

I think first and foremost is that I think wherever you are, you kind of acknowledge and accept where you are in that particular place. So that would be "Okay," that would be the decision that "Yes, I want to do this.” So that would be the first step and then the second thing would be, I think it would be really important, what I wish I would have done different is that I kind of signed on like "Okay, I'm not really ever going to make any money doing this," you know. "But this is what I love and I'm going to be the starving artist" kind of mentality. You know what I'm saying?

Graham: Yeah.

Phil: Yeah.

Mr. Kovar: "I'm not going to worry about that, I'm just going to..." And so that I think the step two is, you know cultivate the belief that your best years are in front of you. I mean, you can really do this and make this work. I think it's so easy to talk about "back in the day" stories, etc., right? And so that would be the next kind of I think, step. And then step three would be to have a real clear vision as to where you want to go.
Right? And so that's what I don't think I did. You know, as a matter of fact, interesting...I went to a Zig Ziglar seminar and this would have been in the mid-early 80s and I was struggling and I remember writing down something he had. It’s the first time I had really heard of a goal-setting concept, right? And it was, create a vision of where you want to be. And I wrote down and I described this school and I remember him saying, "Don't even think if you can believe...it doesn't matter if you can believe it or not, just write it down."

So I remember going, "Oh, man." And I described a school of a couple hundred students. But to me at the time, it was like, you know we've so blown past that it's unbelievable. But the point was, at first, that was really a stretch for me right? And so I think that's the next step, is to be really clear as to what...now, you all know you're going to deviate from the plan you set. It's not ever going to...but at least you have a plan to deviate from okay?

And then there's a couple of other things that, first off is make sure who you're taking your cues from. Actually get a coach out of the gates, right? Someone who's going to help mentor you so you don't do the wrong turns. And here's something that took me forever to figure out. Get a really good accountant. Right? and don't try to cheat on taxes or all that kind of stuff, just do it frigging the right way, legal out of the gate, right? Because every time you kind of short the system it just gets complicated. It's not a clean business, right? Establish credit early on, you know what I'm talking about? This of course only applies to martial arts schools, not other people right? But and then, on top of that, get your expenses in line. How many times have you seen someone have a successful school and when they started experiencing success they went out and got a new car, a bigger school, more rent. And here's another thing, is bigger isn't better when it comes to square footage. You guys are in this school right now, it's a pretty good-sized school. And we have big schools and we have small schools, right? And bigger isn't better, it's just bigger. And so a lot of times, guys go for it because their ego wants to be "So, I've done that. I've done this. Oh, look at this, look at this building, it will be so cool and when my friends come they're going to go 'Wow!'" You know, forget that crap. You have to write that rent check every month right? So you find an ‘A’ area but you don't necessarily need an ‘A’ location.

In my mind as long as the area is good, the demographic's good, it doesn't have to be super visible. If it is, great. But you know, we're a destination business. How many people actually...you know, it's word of mouth. So find a great area that doesn't have to be on Main Street, you know, necessarily. If you have it, great.

Graham: Do you have certain things that you look for? I know that we do when we look for an area.

Mr. Kovar: Yes. Yes. Yes.

Graham: But what about yourself? What do you guys do if you want to find a brand new area? What are some of the...

Mr. Kovar: First off, know your market and our market is kids and their parents okay? So we're going to go for upper-middle class income okay? High level of kids, high percentage of kids under 12.

And so that's the first thing. Yeah and the second thing we're going to do is, we're going to obviously look for a location. For us (you guys use meters) a couple thousand square feet. Kind of a normal-sized school. Two to three thousand square feet, you know. A normal-sized location, not anything really big. Unless the rent is so easily in line, but usually you can't have it both ways. You're usually not going to get a prime corner, have a big space and a low rent, that’s pretty hard to do. So like I said, best area possible. If I'm going for prime space it's going to be a little smaller, or I'm going to a ‘B’ location it might be a little bigger. But you guys know, you have a big school. You know how long it takes to frigging clean this place! One time when you have one location and so that would be...I'd strongly look at that. So that's the demographic you're looking for. And of course parking, ample parking. But that's one you can adjust as well right? you can go with...and then another thing is, find yourself a really good attorney. Make sure that when you're signing leases, you don't have your buddy Bob look at it.

You know, I have guys that I coach that call me that want me to look at their leases. Like, hey, I'm not a freaking attorney. You know, I can give you...I've looked at a lot of leases, I've negotiated a lot of deals with my business partner, Dave Chamberlain is an amazing lease negotiation. So I feel pretty comfortable that I can help people, but don't make me look at the small print. Don't put that...get a good attorney that can look at that. And so someone you can call. Then make sure out of the gate when you hire people, you do background checks with them, right? And you get good people and then, be really clear. Here's the deal; what your culture's going to be in your school, what the protocol's going to be in the school, what the rules are. Because when you try to adjust a school and make it, when it's here and you bring it here, it's really hard. Okay?

So if you're going to have them bow on the mat at a certain place and they're going to call the instructor a certain thing and they're going to put their shoes in a certain area, the clearer you can make that at the gate, the better off. So be really clear on what your culture's going to be, and I don't care what your protocol level, there's different...you see, we're pretty casual, you know what I'm saying? And there's a time when I'm Kiyoshi and there's a time when I'm Dave and I don't really care either way personally, but I get for us there's a certain amount of that's important, you know? Like, so be real clear on what that is.

Phil: What about Dave, I guess everyone has a different way of getting into business. And we've seen a lot of models where people either start in wholes or they have a part-time school with a full-time job and they're making that jump, or they go all-in and burn their bridges. I know we've done different areas of that ourselves. Would you have a recommendation?

Mr. Kovar: I think those are all really good methods. If you go all-in and burn bridges you better be really well-capitalised, right? Because here's what happened. I was talking to a guy about this subject last night. It's right there, he's got his part-time school, full-time job, he wants to go full-time. How much savings does he have? Zero. Right?

Don't do it man. Because what's going to happen is, you are going to start desperate and desperation gives off a different vibe, and it's not a good vibe. When I try to enrol you and I need to pay the rent, and I've been there. There's a certain amount of franticness that's going to make you...it's going to repel you right? And so like, if you're going to do all-in, that's great, but have six months worth of living expenses for your business and personal lives. So be really well capitalised.

The other methods are great. You know, full-time job, part-time school until you build it up and you make the transition, you put money away. Halls are a great way to go into a community and test the waters. That's tried and true.

Graham: What advice do you have to any of the listeners or any of the guys watching this on the video when they've got a good solid school and they're looking to expand? You know, moving into multiple locations or whatnot.

Mr. Kovar: This is my advice to someone who has one school that seems to be having success that wants to think about doing a second school; Turn and run. Seriously!

So, I'm not saying don't ever do it, but go in with your eyes open, because here's the deal. Rarely, rarely - and you guys know this - rarely does that second school offer twice the income. Here's what happens. You work twice as hard, you make half the income for quite a while. Eventually, if you have the right team in place...so if you open up a second location, here's the four things you need okay:

First off, you have to have disposition and the willingness to do it. Secondly, you have to be capitalised to do it okay?Third, you have to get a frigging great lease. And number four, you have to be, well, most important, you have to have a team in place. And see, what people do, let's say you and I are partners,and we say, "Hey, let's open up a second location. You know, you work that one, I'll work this one." Something happens, it doesn't work. So what one person has got to go do is take themselves completely out of the equation. So really, if you have one school and you're in the trenches, you want to have two, you got to pull yourself out of either school. Because, you know, you can't be...otherwise you're running back and forth, and you're covering and next thing you know your active count drops 10% here and it may go...and you're spinning your wheels. So if you do decide to go; like, I've talked a lot of guys out of doing a second location. They've said, "Okay. I'm going to do it anyway." I tried and sometimes it works. Who are we to say...we all have...but, I've had several times where people say, "Holy crap. Never mind," go back to one and happy they did it and [inaudible 00:10:22] so it takes the right person.

But I think here's what's important, is that sometimes we think if we're successful, the next step is we have to open up a second school to be successful. And that’s quite frankly, not the case. You know it's really about the quality of living that you want, you know?

Phil: The thing it's going to come down to, like you said, big picture. Know where you want to be and scale to that and then when you get there, smell the roses. Like, enjoy it.

Mr. Kovar: Completely. Completely.

Graham: I couldn't agree more with what you're saying. Because quality of life's...I mean, you've got kids, your family and you’re starting out and what not and you've got multiple stores going on at any given moment. It's more of a headache, more time involved in it, more management of staff and running it and to stop and smell the roses isn't always as frequent as you may like, so…

Phil: I’ve got a question for you Dave. You know, we're in a very personality-driven business. People will come to your school because of you yeah? You know, I know when we first started our business, we plastered our names everywhere, it was the Phil and Graham show, but then that limited our ability to set out and work on our business. So, again, if you had your time again, would you make it "The Dave Kovar Show," would you…

Mr. Kovar: So, that's interesting, because the name of our school was originally not Kovar’s right? Originally I was Self-Defence School and I changed to Twin Dragons. And what had happened is I had a couple different locations, teaching out of my garage for a while and health club, and so I'd been all over town and when I finally got a centre just across the street from where we are right now, I wanted everybody to know that hey, it was me that had this school. So I said, "I'm going to call it Kovar's Karate Centre" Right? And that was my intention there.

Now, we made an attempt to switch away from that to Satori Academy, which is kind of our subtitle, but it really never kind of kept. It's kind of like, we've been in business a really long time, we've got, I like to think, a good reputation in the area, but it is limiting when you use your name you know. I'd like to think I didn't do it out of ego purposes, I did it to, like...well, who knows, maybe that was the reason. But, I don't think there's a downside to having it named after you, except if you're the guy, and then you want to step out, it's harder to have somebody else…yeah.

Phil: So, yeah. I guess, going on that, in that sort of naming your business, what about being a frontman on the floor?

Mr. Kovar: I think there's a time in your development that you have to do that, because you have to have product, you have transition and build the student body. So the key thing is you have a peaceful evolution too, when you want to step out; here's the first thing you've got to have, is you've got to have someone who can frigging do the job. Because a lot of people are, "Oh, I'm going to have my second-hand command do it," and he's only mediocre.

So you have to have the right guy that can step in. And then let's assume you've trained the right guy and he has what it takes. Like you know, you go to some of our schools, you'll see we've got the right guys in place, they know what they're doing right? I mean, I'm not teaching the classes.

Which I remember the first time I turned over...the last time I turned over all my classes was about 7-8 years ago. I turned over my black-belt classes at this location to one of my instructors. And I’d taken off the floor everything else, but I was convinced that these guys, if I wasn't teaching black-belt classes [inaudible 00:13:25] And so I turned over the classes to him and about a month later he said, "Hey, man, I'm going on vacation next week, can you cover my classes?" And I go "Sure," and I was looking forward to it right and I was thinking "Everybody's going to miss me so much and I hope there's someone that's still coming to class." That's kind of what I'm thinking. So I left when there was like 28 people on average and I show up, there's like 40 black-belts in the class and they're all asking where the other sensei is. That's when I knew I trained them well. It was kind of hard on the ego though. But so I think it's really important that you got the right guy and then what you do is you ease yourself out. And nothing, you guys don't know. I mean, you start out by the guy does a warmup and then he's doing a little bit more and then slowly you take yourself off right? We call it peaceful evolution vs. bloody revolution.

Graham: As always, we've got some brilliant gems there. Thank you so much for sharing it. I guess that the take that I'm getting here is this clarity. Really getting clear to who you want to be and what you want to be and the lifestyle that you want to live. Because don't try to be something that you think you should be.

You know, be true to yourself and understand, what type of lifestyle do you want to live as a martial arts business person and what legacy do you want to leave for you team and your family as well, too? So, great stuff as always, really appreciate your time, and can't wait to see you guys at the next podcast.

Phil: Excellent, guys. Well, look, just to give you guys a cap, this is number three of our podcast recordings, so if you haven't caught the other two, go back, listen them, they're amazing, go back and check that out. And then stay tuned for the fourth and final one with Kiyoshi Dave Kovar. Take care, gang. So long.

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