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Opening Your Own Martial Arts School
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by William Beaver.................................................................
A mature martial artist knows that the key to opening a successful dojo resides within himself. He knows that managing a dojo is a means to self-improvement. He knows that he must continue his own understanding and development if he is to teach others. And lastly, he knows that the key to all this is "know thyself".
PHILOSOPHY: The teacher who knows himself can tell you what he believes. He can tell you what his philosophy is concerning courtesy training, competition, promotions, mental and physical development, and time. Until he can tell you what his philosophy is, he is not ready to open a dojo.
Courtesy:
The formalities that are required upon entering a dojo, before coming on to the mats, in the presence of the master, are part of the tradition of respect honored by the martial artist, The respect shown to peers, opponents, and even to beginners, sets the tone for all activities.
This tone is one of seriousness. Seriousness suggests that all activities are intended to maximize skill and learning; that the art and the person are the highest ideal.
And in turn, the improvement of the individual and not the glorification of the individual is the objective of the art.
The individual who succeeds in the area of seriousness may one day contribute to the art as it has contributed to him.
Respect requires humility. The master as well as the student must be willing to observe proper courtesy and behaviour in all circumstances, not merely in those that are convenient. We have all seen competitors who throw tantrums, instructors who berate officials, and judges who show favoritism or worse when evaluating competitors. Such behavior is more than ugly, it demeans an art that requires the respect and humility of all.
Training: Training is the primary activity within the dojo. Bodies must be limbered up, basic skills must be practiced, coordination must be drilled, endurance must be enhanced, forms must be learned, discipline must be instilled, and those judgemental skills that can only be learned by continually facing an opponent must be repetitively sharpened. In these activities there is no substitute for hard work, perspiration, and concentration. The importance of these attributes must be understood by the instructor. And they must be a part of his philosophy before he can share them with his students.
Conpetition: Competition is a point somewhere on the line between the hard training in the dojo and the hard realities of life. Once the competition begins, the student is past the opportunities for training provided in the dojo. He must rely on what he has already learned, not upon what the future promises. On the other hand, the competition does not have the potential for the penalties provided by a winner take all confrontation in the streets.
The katas are demonstrations of skill and prowess without the undisciplined attitudes of a bully or a showoff. The sparring is as much a test of a good referee and the judges as it is of the competitiors. The high level of control and the demand for excellence provide a sharp contrast to most real life confrontations. Thus the competition is not real in the same sense that life is, but it does provide an essential component in the preparation of the martial artist. This the instructor should know and exploit on behalf of his students.
Promotion: How promotions are conducted shows the students and honored guests the respect the instructor has for his art. The well arranged promotion, conducted by a skillful martial artist, is an event to be appreciated. Students who are well trained and adequatedly prepared, students who have faith in their own skills and in the guidance of the instructor are a pleasure to observe.
There are no shortage of things that can go wrong at a promotion. But the demeanor, efforts and skills, and the ability to adjust to the unexpected clearly tell the experienced observers whether the promtions are merited. It is during the difficult moments of a promotion that the realities of an instructor's philosophy of the martial arts is reflected in his students.
Mental and Physical Development: Master Halbuna (9th Dan, Kajukembo, San Francisco) once said, "the heart of the lion in the body of a rabbit does not lead a long life. And the heart of a rabbit in the body of a lion does not lead to success". He was, of course, referring to the need to develop both the body and the mind- the need to achieve a balance.
The instructor must have an understanding of the role that attitudes and attributes play in the development of martial artists- especially the young. Attitudes of humility, respect, honesty, fairness, and diligence, seperate the martial artist from the braggard or showoff on the streets. Attributes of agility. endurance, skill, and inner strength, seperate the martial artist from the lamb who simply waits to be destroyed and devoured.
Time: Time is the most difficult variable that the instructor must understand, work with, and explain. It is time that makes all movement and progress possible. It is time that allows the martial artist to develop the critical skill of self-assessment. It is intelligent, consistent training over time that leads to the improvement and peace of mind. And lastly, it is the cold eye of time that will evaluate the success or failure of the philosophy of the instructor.
CONCLUSION: A man without a philosophy is like a ship without a destination. If a man does not have a destination, then it does not matter where he is going. If what the instructor is doing is important, if it does matter to him, then you can be sure that he has a philosophy of the martial arts. If not, then it is time to think about it, write it down, read it and reread it, and over time, refine it. More men have been convinced and won over by well thought out ideas than by any other weapon.
Let's simply start with the basic qualifications to open a martial arts school.
BASIC QUALIFICATIONS FOR A SUCCESSFUL MARTIAL ARTS SCHOOL
: These seven points are for you to better understand your ability to operate a successful school. They should be considered as thought provokers, not final criteria.
BLACK BELT:- obtaining the rank of black belt is the absolute minimum rank for opening a martial arts school. Lower ranks may be able to do so, but by now the public has come to associate a black belt ranking with being a martial arts instructor. There are many who feel, with good reason, that a third or fourth degree black belt is the minimum.
TEACHING EXPERIENCE: Being a good technician and being a good teacher are two separate skill groups. You should have taught classes in your instructor's school and come to understand the many problems and situations that can arise while teaching, The new shcool will certainly give you experience, but previous experience will come through in your teaching style, giving you the ability to teach with a knowledgable authority, and instilling the new students with confidence in your abilities.
ASSISTANCE: We will assume you have earned the approval of your instructor to start the new school. Approval is not necessary, per se, but you may find it foolish not having it for the following reasons- first, your own training should not stop simply because you have a new school, and secondly, as someone who has opened his own sscool (we will assume), your instructor offers a wealth of experience and information from which you can draw. Working together, he can lend you assistance when needed.
KNOWLEDGE: you must have a working knowledge of not only your own particular art, but also of the business side of the martial arts school. The former you must acquire on your own, and the latter will come in part from this book.
PLANNING: one of the greatest principles of success is planning. From the moment you decide to open your own school, until the day you close your doors, your business will require organization, a plan of attack, and most importantly, the persistent carrying-out of the plan.
AWARENESS: planning and knowledge require a third factor-being constantly aware of problems and possibilities, both for you and your students. In short, your must strive to stary aware of everything affecting your school and your business.
PERSONAL UNDERSTANDING: This book is designed for martial artists and therefore we recommend that you discuss with your instructor, your own particular strengths and weaknesses, both as a teacher and as a technician. Such a discussion is apt to give you a much more realistic appraisal for this particular business- your own martial arts school.
Assuming that you have the qualifications laid out in the Seven Stategies table, the next step is to consider the martial arts business more in depth. Traditional marketing outlines several parts of what is usually called the marketing mix- product, price, place, and promotion.
The martial arts school, more accurately, your instructional abilities and the benefits of your teaching are the product. The martial arts school is a service business- you offer no tangible product like a stereo or automobile, rather you make available the attainment of intangibles, such as physical fitness, self-defense skills, improved confidence, and better self-esteem.
Having and understanding the product are only the beginning. You must develop a business plan. The business plan traditionally is a multi-page document that accomplishes several important functions- it helps the new business person organize and develop a solid plan for reaching goals and deciding what the goals are; it serves as a document to help arrange and secure financing from banks, private individuals, and other institutions; and it helps the business stay on course by being modified when old goals are reached and new goals are set.
There are many excellent sources written strictly about business plans, some of which are mentioned in the appendix, but for our purposes- the martial arts school- this book can be used as an outline from which to construct a business plan.
The business plan includes an executive summary outlining the basic information contained in the plan as a whole, a market survey of potential customers, an analysis of competition, a forecast of revenues, expenses, and profits, plans for financing the business, and any other information deemed necessary. Try not to be intimidated by words like "analysis" and "market forecasting". We will examine all these concepts in the following chapters.
No matter what type of business you start, there are basics which must be understood and utilized to insure success. The basic elements, simply stated, are understanding the customer, setting the price, understanding the product, and promoting the product. Each must be examined at length.
Understanding The Product: As we have already stated, the product that concerns you is the martial arts instruction and it's benefits, offered through the facilities of your school. What is the nature of this instruction? If a potential student were to ask questions at length, could you answer them, at the same time giving an accurate and honest portrayal of the new school? The following series of questions will help make this point clearer and also help you formulate a better understanding of your product. Take the time to think out and write the answer to all the questions. I have been a student of the martial arts for how long?
I have been a martial arts instructor for how long?
I have the following special skills which make me a good instructor (and why so):
The following non martial arts related skills also contribute to my teaching ability and quality (how?):
My classes are conducted in the following manner:
A short history of my style of martial arts is:
A short history of my instructor and his background is:
Three strengths of my instruction are:
Three weakness of my instruction are (yes, you have them):
Some of the benefits which students will enjoy from my training are:
Why someone should choose my school over another is:
KNOWING THE CUSTOMER: Answer the following questions in detail. If you do not have the information necessary, then take the time to find it out- it will prove critical.
Who are the primary persons (age, sex, income range, background) that your are trying to attract as new students?
What is the size of the group (portion of the population surrounding the location you have chosen) you are trying to attract?
Who or what is the competition (other schools, other activities) for your target group of people?
What is the size and number of the various competitors?
Given the location and the target market, what possible things could happen in the future to alter your situation? For example, is your location dependent on a single factory? If so, how would you handle it's closing?
What do you personally have in common with the target market?
What differences do you have personally with the target market?
Have other martial arts schools, aiming for the same market, open and then failed in the past? If so, why, and has the failure affected your target market in any way?
PRICING DECISIONS: It is far too easy to simply say "I will charge X dollars for lessons" and hope that the market will bear the price. You must instead carefully consider several pricing factors first.
Completely answer the following questions. Given a range of possible prices:
What is minimum and maximum price the target group would pay for your services?
Would your prices be competitive for the target group as compared to the other activities which you have identified as competition?
Will you have only one price schedule, or will you use various discounts and rates?
Based on your financial situation and the target group, would you need to change your pricing if the competition would raise or lower theirs? What kinds of changes could you make in the price if necessary?
LOCATION AND MARKET ANALYSIS: A good location is crucial to success for any business and is found by analysis of many factors- the number of people from which to attract students, their income range, the type of area, the various facilities available and much more. The next several sections will consist not only of information, but also a series of question for you to answer.
Choosing A Location: Suppose that you have selected two general areas which appeal to you for several reasons- they have a large population near by, a steady economy, and it is possible to open a school in the area. The next immediate necessity is to find a location for the school. The following are some considerations to help make your choice the proper one. Be sure to answer all the questions in detail.
Parking Space- pick a location with plenty of parking space available. This may not be possible in a downtown location. Does the parking lot have lights at night? Would you share the parking facilities with other businesses? Are there any restrictions on the parking spaces? Describe your choice:
What kind of condition is the premises in? Do it need at fixing? If so, who must do it? Can the place be adapted for your needs.
What is the general appearance and feeling of the location? What kind of impression does it give a potential new student?
If your school were to grow and be successful, could the location adequately accomodate the growth? Can you expand the facilities in any way?
What kind of facilities does the location have? Restrooms? Adequate lighting? Air-conditioning? Electric? Heat?
Does the lease permit additions to the interior for such things as heavy bags, mirrors, stretching rails? If not, what can be done?
What kind of covering is on the floor? What kind can be added?
What are the regulations concerning signs at your location? Can you paint of the window and door glass? Hang signs over the sidewalk? Put a sign at the entrance of the parking lot, if in a mall?
Do you fully understand all the terms of the lease? What is required at signing? First and last months rent in advance? Security deposit? Any special clauses? Are there any noise restrictions?
You should have all the answers to the previous questions before deciding on a location. More importantly, however, is the complete and thorough understanding of the lease and it's clauses, implications, and details. If you are unclear or uncertain about any part, seek legal counsel. It may be expensive to do so now, but you should know in advance if any possibilities for trouble are in the contract.
The next important part of preliminary planning involves forcasting your revenue, expenses, and other financial considerations.
START-UP COSTS AND REVENUE FORECASTING: The next step is to begin an examination of the financial needs for the new school. This will also include a brief section on long-term planning.
START-UP COSTS: Start-up costs are those involved when you initially set up the business and are generally paid only once. As you will see, you must be prepared to pay them without the benefit of student revenue. Start-up costs include such items as: Lease signing requirements- first, last months rent, security deposits. Any new equipment or fixtures you will need. If you decide to supply uniforms, the initial inventory will be needed. Any costs for structural changes. Deposits for utilities- gas, electric, telephone, water, sewage, garbage. Any legal fees you might incur setting up the business. Any license or permits needed. All beginning advertising and marketing costs. Setting up a cash reserve. if you decide to start your business full-time, you will need to plan a personal budget for at least nine months.
ESTIMATIONS OF EXPENSE AND REVENUE: The next step of your financial planning involves estimating all monthly expenses and monthly receipts. This aspect is crucial to planning and is greatly dependent on the information you have already obtained. Remember you are estimating. Allow for the worst case. Having more revenue or less expense is nothing to plan on and certainly a luxury you can manage should it magically appear.
Figuring Revenue Estimates: The first section detailing information about potential students and competition should have given you a range of acceptable prices charged by other martial arts schools in your area. With this information, you now prepare a forecast of what you might expect to earn when the school opens. To do so, multiply the number of students by the amount charged per student. This total gives only a rough estimate. Keep in mind that you earn money personally only after all other obligations have been met.
An excellent technique for forecasting involves giving yourself a range of students and prices from which to plan. For example, you might include the following: 100 students x $25 per month = $2500 per month 150 students x $30 per month = $4500 per month 50 students x $35 per month = $1750 per month
Once you have found a range of revenue forecasts, you can set up estimation worksheets for each. The numbers and prices you choose cannot be based on a fantasy of becoming an overnight martial arts mogul. Base your choices and forecasts on solid research.
MONTHLY EXPENSES: Several monthly expenses have been listed as a model for estimation. These expenses will be the key to financial control, being the expenses over which you have some control.
If you knew for example, that during a particular season you would have trouble keeping students enrolled, you can adjust the amount of expenses in order to compensate. Some expenses are generally consistant from month to month- rent, electric, or insurance, for example.
Other expenses are dependent on usage- long-distance telephone calls, advertising, or auto charges for instance. The variable expenses are one key to control. Depending on the particular operation, you may find that even variable expense tend to be consistent. The answer for budget problems, other than controlling variable expenses, involves increasing revenue- a point easily understood, but incredibly difficult to make happen. We will explore this concept more fully in the sections on advertising and marketing, but first, day-to-day operations must be examined and understood.
CHOOSING A BUSINESS STRUCTURE: For income and other tax purposes, you must choose a business structure from among several options- the sole proprietorship, the partnership, and the corporation. Each has it's own legal considerations and advantages or disadvantages, depending on individual circumstances.
The following section will briefly outline each, but keep in mind a major point of advice- we highly recommend that you present your particular case to a specialist- a tax expert perhaps, or a lawyer. The reason is simply based on the continuing complexities of tax structures and their effect on business. Many people spend a great deal of time telling you how unnecessary experts are, but in the case of your new business, it is far more important that you do everything right the first time.
SOLE PROPRIETORSHIPS: A sole proprietorship is the simpliest of the business structures and means that you go into business for yourself, having no other partners.
For tax purposes, the paperwork is generally quite limited, with the exception of state and local licenses or other forms. You also have unlimited liability as to your taxes and financial/legal responsibilities. In terms of a martial arts school this means if you are the sole owner of the school and incur any debts, you are responsible for the entire amount of the debts to be repaid. If you did not have enough money to pay these debts, your personal assets could be sold.
Sole proprietors report the activities of the business on Income form 1040, Schedule C (Income or loss from a business or profession). Schedule C is an attachment to form 1040, and as such can be used, if there are losses, as credits against other earned income. The income tax rate for the sole proprietorship depends on the level of income. In the range of income from 0 to $43,149, the rate of tax is 28%. Over $43,150, the rate is 33%.
You must also pay other taxes as a sole proprietor. Instead of Social Security, you pay a self- employment tax, which is 12.3% of the first $43,800.
PARTNERSHIPS: The partnership is somewhat similar to the sole proprietorship but with several distinctions. A partnership usually has two or more people involved in the entity. While a sole proprietorship needs no legal forms to identify it as such, the partnership usually consists of one or more legal agreements spelling out the nature of the partnership pact- terms of agreement, responsibilities, salaries, and other business related details.
There are two types of partnerships- general and limited partnerships. General partners share in the status of having unlimited liability for the business in the same manner as the sole proprietorship. If one partner could not cover his part of the debt, the other can be held liable for the entire amount. Limited partners are not generally involved in running the business, and usually are liable for only the amount of money invested in the original partnership agreement.
Each partner, unless specifically stated otherwise in the agreement, can carry on the activities of the business. This indicates one of the major disadvantages of the partnership- if each partner can carry out business, problems can arise if communication is not kept open and smoothly flowing.
Partners file an additional tax form, Form 1065, to the federal government, as well as any state forms which are needed. Income or loss is reported on Schedule E of Form 1040. The partnership ends when either of the partners dies, when the agreement calls for the end of the partnership, or when a partner wishes to leave the arrangement.
CORPORATIONS: Broadly speaking, the last business structure is a corporation. Laws concerning corporations fill volumes, especially as the very from state to state. We will present basic information about corporations, and then show some of the complexities that can arise in a particular case. We will use the laws of the state of Ohio as our example.
While the sole proprietorship or the partnership is a legal entity in which you are the whole or part of the whole, a corporation is an entity unto itself. If you would die, the corporation could still remain in existence. You might set up the John Q. Smith School of Karate, Inc. and one day decide to give the stock of the company to someone else, in which case, the basic structure would remain.
There are several reasons for choosing the formation of a corporation, with the most outstanding reason being limited liability of the corporation's stockholders. Where the owner in the sole proprietor is held responsible for all the debts of the business including the selling of personal assets to pay, the corporation's liability is generally limited to the assets of the corporation.
Occasionally an event called piercing the corporate veil can take place, which means that the courts find reasons to hold some or all of the stockholders responsible for the company's liabilities. This might occur in a martial arts school as a corporation if the courts thought that the company was grossly mismanaged and your were the sole stockholder.
FORMING A CORPORATION: We will use the state of Ohio as our example. In order to form a martial arts school as a corporation. Ohio, like many other states, has a center set up to assist you in this regard- the center is called the One Stop Business Permit Center, which can be reached by calling a 1-800 telephone number. The One Stop center sends you a packet containing all the forms and information you need to start the business.
To form a corporation in Ohio, several steps must be followed. You must file articles of incorporation (see figure ), which include the following information: Corporate name, ending with or containing, Company, Co., Corporation, Corp., Incorporated, or Inc. the location of the principal office in Ohio. the purpose of the corporation. Authorized number of shares and their par value if any. Amount of beginning capital, which must be at least $500.
A fee must be paid for forming the corporation on the following scale:
1-750 shares.................... $75.00 751-1,000 shares................ .10 per share 1,001-10,000 shares............. .05 per share 10,001-50,000 shares............ .02 per share 50,001-100,000 shares........... .01 per share 100,001-500,000 shares.......... .005 per share 500,000- shares................. .0025 per share
All corporations must pay Ohio Corporate Franchise Tax, at tax which is figured either on income or net worth, which ever leads the greater tax liability. There is a minimum tax of $50. Estimated tax payments must be started on Forms FT-1120E, FT 1120ER, and FT-1120EX.
There are several other laws concerning Ohio corporate taxes which are too complicated to be explained here. Again, this is a general overview and we recommend seeing a tax expert.
Besides forming the corporation, Ohio demands several other things related to the business.
When you choose a name for your business, you must check to insure that the name is not already being used, which is done with the Ohio Secretary of State's office. In order to register a trade name or fictious name for your business, the following steps must be taken: File the name with the Secretary of State's office within thirty days of it's first use. A fee of $10 is required to register a fictious name, and the registration is good for five years. You can renew the registration six months before it's expiration. To register a trade name costs $20 and means that noone else can use the name; also lasts five years. A vendor's license is needed for the purpose of collecting Ohio sales tax, obtained from the county auditor. There are several other complicated procedures which must be followed if you employ anyone.
You must also pay federal income tax according to the following rates:
TAXES FOR THE MARTIAL ARTS SCHOOL: Much of this information appeared previously in an article which William wrote for Inside Kung-Fu (December, 1986). The most important point to remember is that we are not offering you a definitive guide to the nature of taxes, rather we are illustrating some general guidelines. With any information of such a complex nature, you are best advised to seek counsel with a competent tax specialist, especially as the structure of the martial arts school becomes more complicated.
You might also consider help from the Internal Revenue Service. There are several verbatim quotes contained in this portion which are taken with permission from IRS Publication 334-M, Tax Guide for Small Business. There are also many other excellent publications from the IRS, many free, which we highly recommend. See figure for information about them.
Because a focus is needed to clearly present this material, we will assume the perspective of a person who is the sole proprietor of his school, has no employees, and rents his location. The first important thing to consider is recordkeeping.
BASIC RECORDKEEPING: The sole owner will eventually report his taxes on Schedule C of Form 1040- Profit or Loss from Business or Profession. Because this schedule is used for presenting businessincome and expense deductions, records must be kept to support and justify these figures. Probably the simplist method to use for the martial arts school is single-entry bookkeeping. Detailed and helpful information can be obtained about this system by Ordering IRS Publication 583- Information for Business Taxpayers (see figure ).
This system uses records of daily cash receipts, a monthly statement of cash receipts, and a monthly summary of cash disbursements. This type of system would be effective for schools receiving all forms of income, such as weekly, monthly, and individual lesson payments. Regardless of the system, there are several guidelines that new or existing schools should consider to be sure that their records provide accurate tax information.
The IRS suggests small- business owners should at least do the following: Keep the school's finances in a seperate bank account from personal accounts. Try to pay by check to give extra documentation of both receipts and expenses. Keep supporting material for all entries if possible- for example, canceled checks, deposit slips, paid bills, and receipts. Keep all past records on file in case of audit. Sources of income should be identified, i.e. John Smith, Monthly dues. Record all deductible expenses when they occur, and keep all supporting receipts and vouchers.
INCOME AND EXPENSES: Income and expenses are recorded and filed for a given tax year, which in our hypothetical case would be January 1-December 31. A sole proprietor, as in our mythical case, would have the same due date as the normal 1040 filer- April 15.
When figuring taxes, IRS defines income as what you receive for services rendered, and could include cash, property, or services. Since martial arts are usually limited to cash, we will immediately move to deductible expenses.
To qualify as a deductible expense, four rules set forth by the IRS must be conformed with: Expenses must be incurred only with the business. Expenses must be ordinary and necessary. Ordinary is is defined as common and acceptable in a particular business, in this case a typical martial arts school. Necessary is defined as an expense that is appropriate and helpful in developing and maintaining your business. Expenses cannot be items that will be used for more than one year. Expenses must be kept within reasonable limits.
With these rules in mind, some typical expenses related to the martial arts school might include the following.
Rent- Rent can be deducted if and only if the property is used for business and you do not own it. If you use part of your home for the school, you may be able to deduct a portion of the rental or mortgage cost. The IRS is becoming very stringent on the meaning of this rule, so you should consult a tax specialist and IRS publication 587- Business Use of Your Home.
Advertising- Advertising expenses can be deducted if they are reasonable and bear a direct relationship to your business.
Dues and subscriptions- Dues paid to professional organizations, such as the USKA, USTU, ATA, groups such as the Chamber of Commerce, and other entities can be deducted if the membership promotes your business interests.
Licenses and fees- Any licenses or fees paid by the school to local or state governments are deductible.
Supplies and materials- Expenses such as office supplies, and other materials used to run the school on a day to day basis are deductible during the year they are used.
Utilities- Expenses for heat, electricity, telephone, and other utilities are deductible if they are directly business related.
Uniforms- Martial arts uniforms for the instructor are deductible because they are worn solely for business and would not be considered street wear.
Other expenses are martial arts school might be able to deduct are insurance premiums for liability insurance, certain franchise expenses, and transportation expenses involved in promoting the school. This chapter by no means constitutes the entire list of possible deductions for a martial arts school. You are well advised to present your business situation to a tax accountant or specialist who is knowledgable about current tax regulations.
FOR MORE INFORMATION: There are several methods to obtain information and help. First is the Small Business Administration, which puts outs several publications either free or at little cost.
A second source is the information available from the Internal Revenue Service. The IRS provides several valuable services including TELETAX. TELETAX allows you to call the IRS and receive recorded answers to many tax questions in about 150 different subject areas. TELETAX is not toll-free, but the IRS does have other toll-free numbers available- the Federal Tax Question Hotline, and the Forms line, from which you can order forms and publications. Both numbers are listed in the telephone book under Internal Revenue Service, and are listed in the Instruction Book for Form 1040.
CASH RECEIPTS: A martial arts school usually receives payment in the form of cash, check, or perhaps money order. To record the income properly, you must develop a system which reflects the needs of your particular business. The daily entries, monthly summaries, cash disbursements, and other needs should all be recorded in such a way that you can have the financial information you need quickly and precisely.
CASH PAYMENTS: Because you as the sole proprietor must file a Form 1040 Schedule C, it is helpful to record these expenses which must be listed in part II, as well as any other cash payments.
The IRS recommends a monthly summary of Schedule C entries taken from the cash payments journal and entered into a journal similar to figure . At the end of each month, the columns of the cash payments journal are totaled and the total is recorded into the summary journal. Then at the end of the year, the totals from the Schedule C summary journal are accounted for on the Schedule C, part II (see figure ).
Other devices helpful to the martial arts school are a contract register, a student file system, a long distance telephone call record, and class attendance records.
Contract Register: Assume for the moment that you have decided to use training agreements or contracts (which will be discussed shortly). The contract register is used to keep track of when each contract is nearing completion so that you can begin the process of renewing it. One way the system can be used is when someone joins and fills out a contract, you put a copy of the contract in the student's file, and then enter the contract in the register, one month prior to it's expiration date.
The key to this system is to get in the habit of checking the register each month as a reminder. You could also enter other important notes in the register such as the expiration of insurance policies, leases, and the like.
Student File System: The file is kept with such information as the emergency data sheet , test records, contract copies, and other pertinent information. Some might argue that this is unnecessary work, but the file takes little time, keeps information organised, and can be extremely useful of a number of reasons.
Long-Distance Telephone Call Record: This record is useful when the phone company claims you are trying to recruit students in Alaska even though you live in Florida. Record the phone calls as shown and then when you receive your monthly bill, check it against the charges listed. You may find mistakes often.
Class Attendance Records: This is a good record if used for such things as testing and encouraging the student who hits a plateau. Keep the record simple. Post it somewhere that the students have access to and let them fill it in.
Contracts and Training Agreements: Many instructors now use some sort of contract or training agreement, consisting of the terms of training, the length of enrollment, and the price. There is usually a statement of health condition before training, and some form of liability waiver stating that the instructor or the school will not be held responsible for any accidents or other injuries which may occur.
We should first consider the nature of contracts before journeying through this minefield. Contracts in a traditional sense are extensions of a business agreement. You decide that there is something you want to enter into as an agreement, in this case accepting a new student for training in exchange for the certain sum of money which the two of you agree on.
The problem in recent years has been that some martial arts instructors have used the contract as the magic pill to cure the whitebelt dropout blues. Consider the way this tactic works. A potential student comes to the school and investigates the classes. The instructor tells the student that in order to join, a six-month contract must be signed. "It's the way we do things- protects us both". Several weeks later, the student decides that training is not for him, or perhaps something happens to prevent training- a new job or relocating. The student is faced with the remaining time and payments on the contract, which by law can usually be collected by the instructor.
Contracts today are a touchy subject with many students and instructors, both sometimes claiming that such written agreements are needed to protect, while others claim that the martial arts has a tradition of only a verbal contract binding the student and instructor together. If the martial arts school is approached strictly as a business venture, then perhaps the former position makes sense, but at the same time, based on tradition, the latter seems appropriate.
The authors make no recommendation on whether you should use a contract, rather we simply want to state the following. A student wanting to train will stay until he is ready to leave and then he will go. A contract will not make him stay if he does not want to. From the instructor's point of view, people often claim that an instuctor promised something, i.e. a test every six days, when no such promise was made. For an instructor then, a written agreement may be good protection. So which to choose?
George Will said it best when he complained that hotels and motels will do everything in their power to entice a customer to stay with them, but then they think so little of the customer's character that they use clothes hangers which cannot be removed from the rod- a ruse to prevent theft.
It's not whether you choose contracts or not, it's how you use them.
Subsidiary Sales: One way to help your income is to offer equipment for sale- uniforms, patches, and books. You become a wholesale buyer which means in most states that you must obtain a vendor's license. You must also purchase the initial inventory from a source.
This section has tried to outline some of the day to day activities and business concerns of the martial arts school. In the next section, we examine the importance of marketing and advertising.
This section will offer you several suggestions for teaching the public who you are, what you offer, and how to persuade them to try your school. The important thing to remember is that we offer only guidelines, suggestions to help in your owning planning.
All marketing techniques available are the result of someone's innovative and imaginative thinking, so don't limit yourself to the suggestions made here. Use the book as a springboard to create and be original. Creative and originality in any business will make you the one remembered.
There are several broad categories from which to market the martial arts school. We will include the presentation of possibilities in such areas as print advertising, brochures, flyers, business cards, television, theaters, magazines listings, yellow pages, word of mouth, college and high school teaching, community involvement, visitors, and demonstrations. From these you will see other possibilities in your own circumstances.
MARKETING BASICS: Regardless of the business, there are some basic marketing principles. You should at least be familiar with them and also learn to think of new methods. As we mentioned in earlier chapters, you must concern yourself with price, product, place (in the market) and promotion. You should have already learned a great deal about who your market is by researching the early questions. Now you must be concerned with translating the information into an attempt to attract new students from your target market.
A couple has been thinking of enrolling their child in a martial arts class, but have not yet made a decision about it. One night a knock at the door brings a student from the ABC school of martial arts whose instructor is trying a new method of building enrollment. He sends his students door-to-door giving martial arts demonstrations. (This was actually done in the past.) The student/salesman the proceeds quite sincerely to show the couple how many weapons can be found on the human anatomy. The parents are naturally uncomfortable with this approach, ask the person to leave, and dismiss the the thought of lessons for little Joey.
Now consider this example: The same couple is sitting at home, discussing the day's events. The conversation briefly passes over the fact that a friend's child has started martial arts lessons and truly enjoys the new activity. Later in the evening, father is reading the sport's section of the newspaper and sees a large ad for the XYZ school of karate. The ad includes a large picture of the instructor working in class with several children, all apparently enjoying the lessons. The parents decide to check out the school, mostly based on the picture.
The two examples are no doubt extreme, but the point is still intact. Marketing the martial arts can be tricky. You must overcome a large degree of stereotyping. The second example was meant to illustrate one means of doing this. People tend to associate credibility with quality advertising. The better the quality of your promotions and marketing attempts, the better your chances of successfully attracting new students.
The following sections will explore some areas of advertising that seem to work best for the martial arts.
Print Advertising: Under this heading we want to include newspaper and magazine ads, brochures, flyers, and other similar ideas. Most people by now have seen the martial arts in one form or another. Bruce Lee, Chuck Norris, and other martial arts stars have helped. Every major television network has featured the martial arts in different prime-time shows. The problem with advertising the martial arts then, is not to make people learn that something exists called the martial arts, but to make them understand two things: you teach martial arts and that they should come to your school and try it.
You must convey a small amount of information in your ads about your experience, reputation, and qualifications. Concentrate on the benefits for the student. The school information: location, phone number, class schedule, and school name must appear. Your second task in print ads is to convince the potential student to come to the school and try the class. To do this, you must overcome any stereotypes you think the person may have as well as trying to relax any hesitation he may have of starting. You must convince the target audience that they can and should be training in the martial arts at your school. Your ads must be tailored to the particular group you are trying to reach.
Consider the following example: Suppose you open a school in an area that is mostly made up of people ages 25-45, who are blue and white collar workers with medium range incomes. The majority would take classes at night, and most will have worked during the day. They will want classes designed to help them relax as well as stay in good physical condition as well as the other benefits of martial arts training. You now have a good idea of what the ads intended for this group should emphasize. A mistake would be to advertise something like "...Olympic and tournament training". A 25-45 year old working person has trouble relating to why they should enter into Olympic/tournament training.
Your advertising must be written so that the group of potential students you have identified can relate to and react from the ad. This holds for any form of advertising.
Print advertising is well-suited for the martial arts because it gives you a chance to combine action pictures with ideas met to convince the person that he or she is capable of what the pictures depict.
Flyers and Brochures: Both provide a means for you to explain in more detail the kinds of services and benefits you offer. Brochures and flyers give those who are hesitant some thing, some piece of information which they can carry home and think about. It is to your advantage then to have quality brochures with text and pictures.
If you know someone who is good at writing, artwork, or photography, then try to talk them in helping you prepare the brochure. Remember to strive for the highest quality possible.
Your flyers and brochures must do the following:
stress the benefits of training in the martial arts, and more specifically, at your school.
give relevant information about your qualifications to teach, i.e. training history, instructor's name, tournament or other achievements, and all other information that is pertinent.
If you use photography, make them action pictures. Try to keep the brochure informative and exciting, but keep in mind that the student must be able to relate to it.
List all necessary information for finding you and your classes. Use the address, directions to your location, telephone numbers, and office/class schedules.
Magazine Advertisements: A relatively new development that has potential for the martial arts instructor is the city magazine. Most major cities have something similar to New York Magazine, Cincinnati, or Boston Monthly. If your target market reads such magazines, you may want to consider advertising in them. However, a note of caution. For the new school, the rates of advertising in these magazines is very high. The money would probably be better spent in other ways, but the final decision is yours. Don't get caught in the trap of advertising in inappropriate places simply to see your name in print.
Word of Mouth: The library contains reams of material describing in detail how major corporations spend millions of dollars developing loyalty by customers for a certain brand of product. The tactics seem endless and the extreme lengths used to engrave product names in a customer's mind seem almost dangerous and immoral.
There is an important lesson among the stories that any person should learn and use. The corporations try to artificially manufacture a reputation for their products because they know that it is word of mouth that truly sells most products. You must earn a reputation on your own, one that is honest and deserved so that word of mouth is effective and enduring. Before these admonitions sound too righteous, we should examine exactly what we are discussing.
We will assume that you have several students in your new school. Your other methods of advertising have worked to a degree, but what now? Part of the answer lies with the students already there. If your teaching is of good quality, if you excite their interest, and offer all the other hallmarks of good teaching, the students will tell their families and friends and word will soon get around. You will also find that you must employ as many means of advertising and promotion as you can, but it will still be word of mouth that creates your reputation. A
good reputation has the potential to attract new students, but always remember the opposite nothing will drive away potential students faster than a bad reputation.
You can use the same principles as the giant companies. Get your name before the public, within the guidelines of quality, making sure that all associations made with your name are positive. When a potential student decides to try martial arts training, you want your school to come to mind.
Community Involvement: You will observe that many businesses are involved in community activities. Some feel that it is merely good business to become involved, while others sense an obligation to help the people that help them stay in business. In either case, you will sooner or later be asked to help in some sort of community activity, especially charity functions. You should strongly consider these requests if time permits.
You are a new and growing business, one that needs introduced to and support from other people in the community. The other business people who are involved in various civic affairs offer a potential wealth of experience from which to seek good business advice. Let them find out what kind of person you are, instead of making them guess about "that new guy in the chop×socky school down the street".
Granted these are all reasons which seem more of an advantage to you then to the community, but it is the spirit of cooperation that will make the community prosper. If you are a member of that community, and expect them to help you by becoming students, you will find that you must work that much harder to help them back.
An action that comes straight from martial arts philosophy.
High School and College Teaching: You will find another excellent possibility for promoting your school by teaching short length (one day, one week, etc.) classes in the physical education departments of local schools. The idea is to arouse their interest to investigate other classes.
Remember that in all the methods and possibilities of advertising and promotion, the key point is to get the potential student to try your school. If you actually have them involved in the training, so much the better. you give them the chance to actively consider the idea and become familiar with the product.
Visitors: The visitor to your school offers an interesting situation: he or she has made the effort, for whatever reason, to inquire about the school. You must now balance yourself between selling them on the school and not scaring them away from overeagerness on your part. There are several possible solutions to this:
Have brochures handy for the visitor. Make sure that they have something from the school when leaving.
If you have an assistant instructor, ask the visitor if they would like to try a short, private lesson. Offer nothing fancy, maybe just a simple self-defense technique. Again, the point is to get them involved.
Allow them to watch the class, if possible.
Consider some type of premium to have them return. A free uniform, or a free trial period of instruction, for example.
Encourage the visitor to talk with other students and to ask questions.
No matter what, be courteous. Remember you are developing a reputation. Even a visitor is a source of word of mouth advertising.
Demonstrations: Anything used to illustrate the actual nature of the martial arts brings the potential student closer to being an actual enrolled student. Demonstrations are excellent for this purpose, but they must be well organized. Try any potential source of students: boy and girl scout troops, youth organizations, garden clubs, lions clubs, booster clubs, senior citizen groups, business associations or any other suitable audience.
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