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Doing the Math to Calculate Martial Arts Business Success

Why do some martial arts studios have 50 students while others have 500?

Before delving into the multitude of factors contributing to business success or failure, understand first that it all comes down to two very simple metrics: Number of monthly enrollments and drop-out rate. As long as your number of enrollments is greater than the number of drop-outs, your school population will continue to climb.

Let’s take it a step further.

You enroll a certain number of students every month. Let’s say 10, for example. You also lose a certain percentage of your current student population each month, perhaps 10 percent.

When you first start a school, you gain students but lose very few. If you have 10 students and you lose 10 percent, you lose only one student. Your net gain is nine students. However, if you have 100 students, you will lose 10 each month. At this point, your enrollments equal your drop-outs, and you will stay at about 100 students.

When your school is growing, eventually the number of students you gain will equal the number of students you lose, and you reach a point of equilibrium where your student population will remain steady.

A Formula to Calculate Martial Arts Business Success

There is a very simple formula to calculate exactly how many students you can have based on your key business factors:

n = e / d

What are they and how do you determine these values?

1. “n” = how many students you have right now, hopefully, you already know this number.

2. “e” = the number of new students you gained over the past 12 months divided by 12 or simply your average number of monthly enrollments.

3. “d” = your drop-out rate which is calculated by taking “e” and dividing by “n” (e/n).

An Example to Illustrate

Imagine you are a studio that enrolls 15 students each month, and your drop-out rate is 8 percent. Let’s do the math:

n = 15 / 0.08

n = 187.5

This means that if nothing changes, your school will build to around 188 students and then will cease growing beyond that point.

Using the Numbers to Grow Your Business

What is more important is how you can use this to grow your school further. For example, what if you improved your enrollments to 18 students each month?

n = 18 / 0.08

n = 225

Simply by increasing your monthly enrollments by three, you have set yourself up to become a 225-student school. Now what if you took steps to keep your students happier and in your school longer to decrease your drop-out rate to 7 percent?

n = 18 / 0.07

n = 257

Now you will have become a 257-student school through a few very small tweaks to your business metrics.

The point is that by making little improvements, you can propel growth tremendously. Try applying this formula to your studio. See what sort of effect improving either of the variables will have. You will be surprised at what a big difference they make.

Take steps specifically to improve those variables in your school. Everything that you do should be focused on either increasing the number of monthly enrollments or preventing current students from dropping out.

There are many fantastic ideas in the Member Solutions article library that you should consult. If you have any questions, feel free to send me an email at sifu@wushucentral.com.


About the author: Sifu David Chang and his wife Elizabeth Chang are the owners of Wushu Central Martial Arts Academy with two locations in California. Sifu Chang is a former Wushu style forms national champion and Elizabeth is the brains behind the business. Each location enrolls an average of 25 students each month with a drop-out rate of 5 percent.