| Friend,
Ah, Mondays. If you love your job (and if you're a school owner, I hope you do), then you love Mondays.
But if you're still doing the 9-to-5 grind, you're probably dreading heading into work today. And let me tell you, I get it.
Regardless of your current employment (or self-employment) situation, I ask that you do your best to tune into what I have to say today. I realize it might be very hard to think about this stuff when you're still not teaching full-time, but at some point this info is going to be vital to your business.
So, pay attention and then tuck this stuff away for future reference.
Future Planning
Just about every instructor I've ever worked with starts their dojo thinking that they'll be teaching martial arts as a career until they retire or keel over on the mats. I know I did, most definitely.
However, when life threw me a curve ball and I had a health crisis, I soon realized that I hadn't planned for such an eventuality. So, I had no "Plan B"; not for my dojo, not for what I was going to do after I sold it, and not even for how in the hell I might sell my school.
But, I got lucky. Someone happened along who wanted to transition into teaching martial arts full-time, and they had the financial resources to buy my first studio. So, I was able to sell it, and take some time off to recuperate (and write SDBP).
Yet, I know that if things hadn't worked out, I might have been stuck running a dojo while I was ill (which I did for some time), or shutting it down and going on disability to pay my bills. Either option would have sucked, but obviously I would have chosen the former over the latter.
Yet, if I had planned for such an eventuality ahead of time, I wouldn't have found myself in a bind because of my health. And, I damned sure wouldn't have had to rely on providence or serendipity to see me through.
Having An Exit Strategy
And that's why I harp on my clients, once they get their dojos up to the stability phase (which is 150+ students maintained for longer than 12 months), that they start developing an exit strategy for their business.
Now, this isn't so they can treat their martial art school like a golden parachute, and take the money and run like some Y-Combinator wunderkind. Unfortunately, martial art schools rarely sell for enough money to retire on (although you might use the proceeds to start a retirement account, if you're willing to let it to compound over a few decades).
Instead, it's simply intended to motivate my clients to do things that they should be doing in their businesses anyway. This mostly has to do with: - Tidying up their operations,
- Making sure they have systems in place,
- Training staff to replace you,
- and making sure you have certain financial and insurance instruments in place long before you need them.
Let's take a brief look at each of these topics, so you can understand where I'm coming from and why they're important to your business.
Tidying Up Your Operations
If you ever want to sell a business, the first thing you need to know is that businesses are only worth money to a buyer if they have one of two things: - A verifiable history of profitability over a period of years -
Or... - Ownership of a unique technology or intellectual property that cannot be duplicated (because it is patented, etc.) and that has exceptional market potential -
If you watch Shark Tank (and you should), you have probably seen the sharks rip an entrepreneur to shreds for over-valuing their business. In some cases, people come on the show with zero profits, and they have the gall to ask for large amounts of money from the shark investors.
They usually do this because they think they have an idea that will make millions (insert laugh track here).
Well, the first thing they find out is that an idea isn't worth squat... not without execution. And no matter how much you think your dojo is worth, the only thing that matters to an investor or buyer is how much profit you've made in years past.
And that's why you need to work on tidying up your operations and books. See, it's easy to let little things slide when you have plenty of cash coming into a business. You start getting sloppy with your books, you start spending money on services and expenses you don't really need, and pretty soon your profit margins start slipping.
This can get away from you, quick. Which is why you need to stay on top of things and keep your operations and books tidy. Neat and accurate bookkeeping is the only way to stay on top of your profit margins. And, profit margins are the only thing that will make your business attractive to a buyer.
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Tomorrow I'll be back to discuss the importance of systems, and why they are critical for future planning.
Until next time,
Mike Massie MartialArtsBusinessDaily.com
Quick-start Guide to My Books and Resources: - Looking for a list of books and resources I've written? Click here! - Need business coaching to grow your dojo? Click here…
P.S. - I know we've discussed some of these topics very recently in the newsletter. However, I'd be remiss if I didn't briefly cover them again. So, please bear with me -- I might mention something that you missed the first time round.
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