| Friend,
Over the last few weeks we've been discussing reasons why dojo owners fail. Sometimes they fail due to errors in their mental attitude toward business.
I've written to you about these common mental mishaps in past emails in this series. Sometimes it's ego, sometimes it's unrealistic expectations, and sometimes it's ethics (or a lack of ethics) that causes a school owner to fail.
In still other cases it's simply because they started off on the wrong foot. One way this can happen is by taking bad advice. Another way this can happen is by taking on too much overhead or debt when you're first starting out.
But in many cases school owners fail because of a faulty operational strategy. And typically, having a faulty operational strategy when running a small business can lead to only one thing...
Cash Flow Issues
When small business owners who failed in business were surveyed, the number one reason they gave as to why their businesses failed was a lack of cash flow.
Martial art schools are no different, and as I've mentioned in previous emails in this series, we are not immune to the challenges other types of small businesses face.
Every small business--heck, every business, period--operates on cash. Whether it's cash that your business generates as revenue, or cash that investors put up, or your savings, or cash from a loan or line of credit...
...your business needs a steady flow of cash to survive.
Ignoring The Elephant In The Room Doesn't Make It Go Away
What's interesting to me, however, is how many martial art school owners are seemingly unconcerned with generating cash flow for their businesses. I say this because the martial art school owners I coach are often preoccupied with aspects of their business that don't generate income.
For example, curriculum. I can't count the number of struggling martial art school owners who have come to me for advice who were focusing all their efforts on curriculum instead of cash flow.
This is a mistake, because "If you build it, they will come" only works in the movies. In real life, you have to generate cash flow to grow your business and keep it alive.
A Business That Doesn't Make Sales Won't Be In Business For Long...
One of my friends has a rule for running his martial art school that seems like common sense to me, but to many school owners it might seem strange. That rule is that he and his staff must enroll someone every single day they are open for business.
To illustrate why, he poses a rhetorical question: "How many businesses do you know that don't make a sale every day, that can still stay in business?"
The obvious answer is, "not many." But yet, I still regularly come across struggling school owners who are farting around with their curriculum or equipment or competition team, when they should be trying to enroll more students.
But, I'm getting ahead of myself... This week, I'm going to talk about reasons why school owners struggle with cash flow issues, and I'm going to explain how to correct those issues.
So, stay tuned.
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! - Looking for low-cost business coaching to grow your dojo? Click here…
P.S. - You might be saying to yourself that because our business model is based on memberships, you don't have to make a sale every day to stay in business. However, when the average time a students sticks around is measured in months, it stands to reason that eventually you are going to run out of paying students and go out of business if you don't go out and find new ones regularly. I'll talk about this in detail later in the week.
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