Can You Continue to Fund Your Business Growth? A Look at Your Balance Sheet

Can your membership business continue to fund its growth? The balance sheet can answer this for you right away.

By knowing how to read a balance sheet, you’ll also be able to have a relevant discussion about it – or a discussion about the balance sheet of a business you’re interested in acquiring.

In addition, the balance sheet has two other uses: 1) Vendors and lenders can use the balance sheet in considering the creditworthiness of the business. 2) Owners and potential investors can use it to help determine the value of the business.

Let’s look at the balance sheet to get a picture of your financial health.


Getting to Know the Balance Sheet

First off, the balance sheet is a snapshot that helps you identify and analyze trends in the health of your business. The balance sheet reports on the financial condition of a business at a specific point in time.

Balance sheets are often shown with information from two or more dates, such as year-end information for the last two years.

Other key financial statements, such as profit and loss statements and cash flow statements, report financial activity over a given period of time.

Breaking It Down: How to Read a Balance Sheet

The balance sheet is made up of three parts:

  1. Assets — what you own
  2. Liabilities — what you owe
  3. Owner’s equity — the owner’s stake in the company

Take a look at the example balance sheet below. The company and amounts are fictional.

Balance-sheet-example-showing-assets-liabilities

 

All About Assets

Let’s look at the left column first titled Assets.

What are assets? Assets are the things that the business owns that have monetary value, such as equipment. The assets are listed in order of liquidity, which is how quickly the items can be turned into cash.

Here’s an explanation of each line item:

Current Assets — assets that can be turned into cash within one year of the balance sheet date. The most liquid asset of every business is of course cash.

Accounts Receivable — amounts owed to the business by customers who made recent purchases on credit terms.

Inventory — items purchased by the business for resale to customers.

Prepaid Items — items that have been purchased but will be used and expensed on the profit and loss statement in a future period. A good example of a prepaid item is paying an insurance premium six months in advance.

Fixed Assets — sometimes called Property, Plant, and Equipment (PP&E), fixed assets are not considered very liquid and are therefore excluded from the current assets. Except for land, fixed assets depreciate over a period of years. They are listed at their purchased amounts, less accumulated depreciation to arrive at their net amount. Land is thought of as never losing value and is therefore not depreciated over a period of time.

A Look at Liabilities

What are liabilities? Liabilities are what the business owes to the various creditors and vendors. Like assets, liabilities are shown in current and non-current sections.

Again, an explanation of each line item from the top:

Current Liabilities — those amounts that must be paid within one year of the balance sheet date.

Accounts Payable — monies owed to vendors and suppliers for items acquired on credit.

Wages Payable — owed to employees and taxes payable amounts due to governmental taxing authorities.

Unearned Revenue — an item that is often not well understood by non-financial individuals. Unearned revenue is money received by the business for services not yet rendered or product not yet delivered to the customer. A good example in the member-service industry is membership fees paid-in-full by a member for the next year. The money has been received but the service for which the member is paying has not yet been rendered. Examples would be a one-year Martial Arts membership or a six-month Personal Training package. The service is still owed to the customer and therefore the revenue is unearned and reported in the liability section.

What Financial Analysts Look for When Reviewing Your Balance Sheet

One of the most common ratios that analysts use when viewing a balance sheet is called Working Capital, which is defined as current assets less current liabilities. The current ratio tells the reader whether or not the company has the liquid assets required to pay its obligations owed during the next year. If current liabilities exceed current assets, the company has no working capital.

Current Ratio is another common ratio used which is current assets divided by current liabilities. Higher ratios indicate more liquid companies. It is possible to be too liquid as investors would view the company as sitting on idle cash that could be invested elsewhere.

Non-Current Liabilities — amounts owed to creditors beyond one year ahead. Non-current liabilities are also referred to as long-term liabilities. The most common long-term liability is bank loans which are paid over several years.

Owner’s Equity — this equals assets less liabilities. The equity is comprised of the investment made by the owners into the company and the earnings retained by the company (versus distributed to the owners as dividends).

When All Is Said and Done

So now you have a basic understanding of what a balance sheet is and what the terms mean.

Remember that the balance sheet only shows a snapshot of the company at one particular date in time. It’s a useful tool to ensure your business finances are properly managed — and it can help uncover the true worth of your membership business.

To get the complete story on the health of your business, you must review the balance sheet, along with the profit and loss statement and cash flow statement.

Profit & Loss Statements: What Every Business Owner Should Know

As an owner or manager of a business I’m sure you have heard of Profit and Loss (also known as P & L). But do you know what it is and understand its components?

It”s important to understand in order for you to talk knowledgeably with your managers, bankers, tax advisors, and investors. In this article, I”ll show an example of a P & L Statement and explain what the terms mean.

A Profit and Loss Statement or Income Statement is one of the documents that show the financial condition of a company. Other documents include a Balance Sheet, Cash Flow Statement, and the Statement of Retained Earnings.

Here is an example of a P & L and an explanation of each item:

ABC Example Company, Inc.

Profit and Loss Statement
For the Year Ended December 31, 2011

describe the image

The first section of the Profit and Loss Statement is the heading which shows the name of the company and the period of time for which the statement relates. Every Profit and Loss Statement is for a specified period of time. It is usually for one year but could be a week, month, quarter, or any other time period.

The first line of the P & L, after the heading, is Sales, or Gross Revenue. This is all the money reported for sales of products and services. The term gross is used in business to mean that the item is shown prior to deducting certain expenses.After expenses are deducted, the term used is Net.

Next are Discounts and Returns which must be subtracted from the sales to arrive at Net Revenue. On occasion, you will see these first three lines shown as one line which would read as Revenue Net of Discounts and Returns.

After that comes the Cost of Sales. These are costs which can be directly traced to the products or services sold. Examples of such costs are the purchase costs of items sold, labor associated with making the products or providing the service, and sales commissions.


Net Revenue Less Cost of Sales arrives at Gross Profit or sometimes called Gross Income.

Again, it is called gross because there are still some expenses that must be deducted to show the net profit or net income. Those expenses are called the Operating Expenses. These are the expenses that cannot be directly traced to the products or services sold. Occasionally you will hear these costs be referred to as Overhead Costs. Examples of operating expenses are owner and management salaries, marketing costs, utilities and the like.

After the operating expenses are deducted, we arrive at *EBITDA. This is an acronym for Earnings before interest, taxes, depreciation and amortization. EBITDA is a key indicator for companies that have a large amount of debt and/or property, plant, and equipment (fixed assets). This line shows the bankers and creditors how much money is available to run the business going forward. EBITDA is sometimes referred to as operational cash flow. This is generally not a line that you would see on the P & L of a small company with little debt or fixed assets.

Interest and taxes are self-explanatory. Depreciation is the term used to spread the cost of fixed assets over a period of several years. For example, a building is purchased for $500,000. Rather than showing this cash outflow as an expense in year one, the building would be placed on the balance sheet as a fixed asset and depreciated over say 30 years. So the depreciation expense that you would see on the Profit and Loss Statement would be 1/30th of $500,000, or $16,667.

Amortization is a similar term used to account for items over a period of time greater than one year. It usually refers to loans.

After interest, taxes, depreciation and amortization are deducted, we arrive at the last line which is called Net Income. This is sometimes called the bottom line. We started with Sales, which is the top rung of the company ladder, and as we deducted certain items, we descended the ladder to arrive at the bottom rung or bottom line.

I hope this brief explanation of a Profit and Loss statement helps you in all your future discussions regarding your business’s profitability.

Of course, should you have any questions, feel free to contact me at mconnor@membersolutions.com.

About the author: Michael Connor is the Director of Finance for Member Solutions. He is responsible for the financial reporting and budgeting process for Member Solutions as well as overseeing all cash flow and managing banking relations.

Make Direct Mail a Part of Your Back-to-School Marketing

"Back to School" chalkboard on desk with school supplies

I’m a huge fan of using direct mail to market my martial arts studio. Being just outside of Boston, Massachusetts, I’ve always had to find creative, low-cost alternatives for my marketing. My overhead historically has been high, so a costly marketing plan has never been an option for me.

When I first started to use direct mail as part of my marketing plan, I did everything wrong and wasted a lot of money. The difference between then and now is that I have a strategy. My ads work, my list is hot, and it’s coupled with an email.

Think of your marketing plan like your fighting plan. When you first started, you closed your eyes and just went in swinging. As your martial arts skills developed, you became a smarter and more strategic fighter. You picked your shots wisely and with laser-point precision. In the end, you were less tired, less beat up, and more victorious.

Thinking through your marketing plan is extremely important. It will take some time to execute properly, but the results will be worth it. Here’s what to consider.

1) Mail to a Good List of Prospects

The first step of having a successful campaign is to keep a good list of prospects. If you are just starting out, purchasing a list is always an option. However, if you can create a list of people who have visited your school through special events or have taken part in something you’ve offered, you will find that your results in turning them into students will be much higher.

2) Create a Professional-Looking Advertisement

Once you have your list in place, it’s time for your advertisement. I create my own because, over the years, I’ve become pretty good at graphic design and making my ads more specific to our offerings. If you aren’t at this point yet, Get Students has some really nice, professional-looking cards that will help you get started.

3) Keep in Mind You Have to Pay for Postage, Too

Regardless of what you use, there are some important tips to remember with direct mail. First, you need to understand that in addition to the cost of printing the cards, you’ll also have to pay for postage. A postcard stamp is cheaper at $0.34, but if you mail 5,000, you’re still looking at $1,700 in postage. It still may be worth the cost, but I personally try to keep my budget lower and more focused on the hot leads I mentioned above.

4) Consider a Bulk Mailing Service

What’s worked best for me is to create oversized postcards and mail them through a bulk mailing service. Standard rate postage is much cheaper—the only drawback is that it will take a couple weeks for your pieces to be delivered. With a little planning, it’s worth the money you’ll be saving versus mailing first class. Plus, you don’t have to be the one putting the labels and stamps on each card.

5) Present an Attractive Offer

I’m getting ready now to start my mailing for the Back-to-School rush. My postcards are set to hit 500 mailboxes on or around August 29th. The 2nd set of 500 will be delivered to the same prospects two weeks later on or around September 15th. We’re offering a $100 discount on enrollment if they sign up prior to September 30th.

6) Include a Call-to-Action and Testimonials

It’s very important to have a call-to-action, or CTA, on your postcards. If you don’t have an expiration date, there is no sense of urgency for them to call you now. Figure out what type of promotion works for your school and make your offer. Always include a testimonial from a happy student or parent. Testimonials are worth their weight in gold when it comes to marketing your school.

7) Send Emails Between Mailings

In addition to the postcards being delivered, send emails to the prospects between mailings. This helps with reminding them that you are the one extending an offer.

8) Look at Your Return on Investment

Lastly, always review your return on investment prior to spending any money on marketing. My direct mail campaign will cost me roughly $700 from start to finish. One student who signs up from the efforts will bring in $2,600 for the year. I’m confident I’ll get more than just one new student from this campaign, but regardless what that actual number is, I think it’s a pretty good gamble.

If anyone has questions about direct mail marketing at your school, please don’t hesitate to ask. I’m happy to help.

About the author: Steve Giroux has been training in the martial arts for 30 years and is a 7th Degree Black Belt in Chun Kuk Do. In 1999, he graduated from Bentley College with a Bachelor of Science Degree in Accountancy with a minor concentration in Law. After founding his studio in January of 1999, Steve has successfully grown revenues over the years after starting at only $7,000 in his first year. You can contact Steve via email at Steve@GirouxBrosMartialArts.com

After the Birthday Party: A Follow-Up Formula that Turns Leads Into Students

Birthday party event registration and planning

The #1 and #2 reasons for offering any event at your school are retention and new memberships. In last week’s post, I provided tips to help you get your birthday party program off the ground.

In this post, I’ll cover our follow-up system in detail to help you gain those new potential memberships that can result from hosting birthday parties. Keep in mind that you can use this system as a base for follow-up for any of your events—not just birthday parties—with a few minor changes.

Step 1

At the end of the party, all of the guests are handed a VIP pass, which entitles them to one free introductory lesson with the owner of the studio (me). They must call or email me for an appointment. I had 1,000 cards printed for less than $50 through VistaPrint.

Step 2

After each party, I upload all of the event registrations to an Excel file and enter all hard copy information into the same file. I then save it and tag it as “GB attended an event” (GB for Giroux Bros.) and put into my martial arts management software offered through Member Solutions.

As soon as this information is transferred, they receive an automated, personalized email from me that looks something like this:

Hi Mary,

I see that your child attended an event at the studio this weekend, and I heard that all the kids had a blast!

The instructors should have handed you a VIP Pass for a free introductory lesson. I wanted to follow up to see if you were interested in scheduling one with me this week or next.

I will give you a call in a few days as well to set one up for you.

Thanks, and I look forward to meeting you and your family soon!

Sincerely,

Steve Giroux

Owner | 7th Degree Black Belt

Step 3

I take 10 or 15 minutes to enter all the leads into my cell phone and mark them accordingly to have quick access to the information when I call. An example is Bday217 | Mary | Joey and Lexi 7 and 8.

Mary is the mother listed with the child or childrens names and ages.

To help with my own time management, I make these calls during my commute. I’ve had the most success reaching people during the late morning to early afternoon timeframe while the kids are in school.

If I don’t reach them live, I leave a voicemail. I only call them once unless a call back is requested.

At the end of the week, another automated email is sent, which looks something like this:

Hi Mary,

I’ve been trying to reach you. I wanted to see if you were interested in coming in for your free trial lesson. I still have a few spots available next week. If you are interested, please give me a call.

Thanks, and I look forward to hearing from you soon!

Sincerely,

Steve Giroux

Owner | 7th Degree Black Belt

Step 4

Although these leads are warm, remember that they haven’t specifically asked for any information. They’ve simply attended an event at our studio and hopefully had a great time.

If my initial attempts haven’t sparked a response, I put them into my drip system.

Within the member management software, I tag them as Children Program Prospects 2015. They will receive a series of seven informational emails, automatically-timed, three weeks from one another as a result. The emails are in a newsletter format and discuss topics such as listening skills, bullying, ADD, and ADHD to name a few. I also include these prospects in my direct mail campaigns that I launch three to four times a year.

I hope this information has been helpful. If anyone has questions on hosting birthday parties in your martial arts school or setting up a lead follow-up program, please don’t hesitate to ask. As always, I’m happy to help.

About the author: Steve Giroux has been training in martial arts for 30 years and is a 7th Degree Black Belt in Chun Kuk Do. In 1999, he graduated from Bentley College with a Bachelor of Science Degree in Accountancy with a minor concentration in Law. After founding his studio in January of 1999, Steve has successfully grown revenues over the years after starting at only $7,000 in his first year. You can contact Steve via email at Steve@GirouxBrosMartialArts.com.

Martial Arts Summer Camps: Tips to Heat Up Student Retention and Revenue

Girl practices punch at martial arts outdoor summer camp

Our three-week martial arts summer camps usually bring in $12,000.00 to $15,000.00 each. We look forward to these events as a way to generate more revenue for our school and to engage students during a time where attendance usually thins out.

Whether you’re running your first martial arts summer camp or hoping to optimize your upcoming events, our marketing and logistical plan can help you increase income and attendance.

Martial Arts Summer Camp LogisticsScheduling & Length

We hold three to five three-week camps throughout the summer. Typically, we host camps in June, July, and August. We prefer to offer full-day camps; however, half-day camps can be more manageable if your school is not equipped to run full-day camps.

Themes

Themed camps are popular and can command a higher price. In June, we host a Ninja-themed camp. Each camper receives a ninja outfit and every activity corresponds with the theme. For July’s army-themed camp, attendees receive nerf blasters. In August, we hold a Star Wars camp. Camper get their own light sabers and we watch the movies during snack and lunch breaks.

The Price of Admission

We charge $169 per week for our camps. Beginning in February, we offer the following pre-sale discounts:

  • 17% off three-week camps
  • 13% off two-week camps
  • 10% off one-week camps

Early-bird discounts are applied per registrant; therefore, if you registered two family members for one-week camps, each would get 10% off each camp, rather than 13% off.

Food & Beverage

We provide snacks in the morning and afternoon. Campers must bring their own lunches and drinks.

Field Trips

We occasionally include field trips in our martial arts camps to keep attendees interested and involved in the programming. We take the campers to a softball field to play kickball, whiffle ball, and soccer. We also plan a pool party and provide a picnic lunch, which includes hot dogs, chips, and soda pop.

Staffing

As a school owner, I do not have the bandwidth to manage our summer camp program. Instead, I incentivize our Head Instructor to oversee these events in exchange for a substantial share of the profits. To supplement our regular staff, we offer a discounted price to any campers between the ages of 13-15 who will serve as “camp leaders.” We accept up to four leaders per camp.

Martial Arts Camp MarketingPromotional Pricing

We begin marketing early to ensure we fill our summer camps. Five months prior to the first session, we begin offering discounted pricing as follows:

  • February – March: 17% off three-week camps; 13% off two-week camps; 10% off one-week camps
  • April – May: 10% off all camps
  • June – August: full-price for all camps

Marketing Communications

We communicate about our events through a variety of channels to maximize our reach:

  • Posters and handouts in our school and local businesses
  • Mat chats during classes at our school
  • Facebook Event posts
  • Facebook Ads
  • Emails marketing campaigns
  • Text messages

Scarcity & Urgency

We impose a limit of only 30 campers per week. We advertise these limits to creates a sense of urgency. We state the current number of spots available in our mat chats, blog articles, Facebook posts, emails, and text messages. We do this consistently so that it feels to our audience like we are counting down the limited availability.

There’s Still Time!

Think there’s no time left to run a camp? Not true. Simply adjust the timing of the promotions I’ve described to apply them to your event. Start today by creating your registration form so you can start marketing your camp.

Questions?

If you have questions, please feel free to contact me. I would be happy to help. You can reach me at tristarkarate@gmail.com or 815-932-5425.

About the author: Duane Brumitt is the co-founder and owner of Duane Brumitt’s Tri-Star Martial Arts Academy in Bradley, Illinois.

What You Need to Know to Increase Leads and Membership Sales

Membership software dashboard on laptop with mobile device and notebook on white office desk

If your members are the lifeblood of your business (and they should be), then tracking their behavior is what keeps the blood pumping.

Being able to regularly and systematically track, assess, and triage weak spots in your membership strategy will not only keep your business running smoothly, but it also will spotlight areas of opportunity to grow even further.

Here’s what you need to know to generate leads and drive more membership sales.

Know Your Lead Count and Lead Status

The beginning of the year is one of the busiest and most critical times in the fitness industry. For a multitude of reasons, people are flocking to your facility en masse. You need to be equipped to accommodate these prospective clients to make sure no one slips through the cracks.

Utilizing the lead management functionality in our member management software will allow you to:

  • Gather and store prospects’ contact information

  • Track prospects’ areas of interest
  • Assign follow-up actions for you and/or your staff
  • Automate email messages to engage potential members after the initial inquiry

Through the software, you’ll know exactly how many inquiries came through your door, how many were converted to full members, and how many you still need to follow up with.

Know What Marketing Channels Work

What kind of marketing actually produces leads for you? This question can be answered through the member management software by assigning lead sources to each lead, such as “website,” “walk-by/walk-in,” “Facebook,” and “referral.”

The lead source data will tell you if that ad in the newspaper is driving any leads or if your marketing efforts are better served on Facebook advertising. Knowing this, you can appropriately allocate marketing dollars to what works and stop spending money on what doesn’t.

Know Your Conversion and Membership Sales Numbers

Maybe you are doing well with bringing in leads but lack conversions and new members. In this case, you’ll want to pinpoint the piece (or person) in your sales process that needs improvement or re-training.

The Lead Activity Report in our member management software will show you your list of prospects and where they are in the sales process. The report also will show which program they chose if they did enroll.

If you find that you lose one or two out of ten sales, you may have encountered some tough prospects. If you lose eight out of ten, then it may be time to reconsider your value proposition and how your team presents it.

Make Reporting Part of Your Daily Routine

In addition to making the entry of key data a part of your business process, you need to make the management of this data a part of your daily routine. I recommend running the End of Day Report (an overview of your sales from the previous day, including what was sold and how much was charged) and the Lead Activity Report every day.

A good rule of thumb: Pick three to four reports that are important to your business. Run them every morning as soon as you turn the lights on. You’ll start every day with clear insight into what you need to make and keep your business successful.

These are just a few examples to show the impact that keeping close track of your stats can have on your business. Without tracking these numbers, it’s all too easy to bury your head in the sand and hope the problem goes away; something no business, regardless of industry, can afford to do.

If you’d like to learn more about how our member management software can help you track your statistics and focus your business, reach out to the Training and Support team at 877.600.3811 or support@membersolutions.com to schedule a training session today.

About the author: Justin Bodamer is the Product Support Manager for Member Solutions. The Training and Support team is dedicated to helping you and your team make the most of your relationship with Member Solutions. You can contact him at membersolutions@membersolutions.com.

Sales Scripts to Improve Your Martial Arts Membership Selling Skills

Woman talking on mobile phone

In my last post, I covered how you should respond when a prospective martial arts school member insists on getting a price from you over the phone.

The truth is that price is just one of the objections you’ll face during membership selling. In order to turn a hesitant prospect into a long-term member, you need to address each and every one of their concerns. Specifically, most prospects will push back on the same four areas—location, schedule/time, motivation/commitment, and their significant other.

The good news is that there’s an easy, fool-proof way to eliminate each of these four objections. To learn how, all you and your staff need to do is practice these simple sales scripts.

Membership Sales Script: Answering the Price QuestionQuestion: How much is it to join?

Never give your membership prices until they’re ready to buy. Giving a price before they’ve experienced what you have to offer is telling them is that there’s no benefit to choosing you over the competition, other than price. However, you must answer their question.

You: Thank you for your interest. The price of your membership is going to depend on the program that you choose. We have quite a few options. Have you ever trained before, or is this something new for you?

Prospect: Oh, I’m new at this. I’ve never joined a gym before in my life.

You: Ok, great. Well, we’re very beginner friendly. We’re good at helping new people with little or no experience get great results in a safe and healthy way. What’s the goal you’re looking to accomplish by becoming a member?

Prospect: I’m looking to lose weight.

You: Very good. That’s actually the number one reason why people become members here—so you’ve called the right place. May I ask your name?

Prospect: My name is Judy.

You: Ok, Judy. What I normally do is have you come in and try out our club/program for free. I’ll talk to you a little bit more about your goals and some ways that we can achieve them when you come in. This free session gives me the opportunity to see where you are and helps me make the best program recommendation that I can for you. This also allows you to try us out—without any obligation and to see if you like it. When are you available to come in for your free session? Do you work days or nights?

Appointment Tip for Prospective Members

When setting an appointment with your prospective member, confirm that she knows where you’re located and how to get to you. Be sure to get a phone number and to add them to your member management software, which will allow you to track your interactions with them through the sales process.

Erik Charles Russell has been in the Martial Arts and Fitness industry more than 25 years. He owns Premier Martial Arts and Fitness in Watertown, NY. In 2015, he published a book based on his successes called “The Art of Selling Memberships”. The book became an international best seller—hitting number one in three categories in the U.S., Australia, and Germany on Amazon.com.

5 Ways to Increase Your Event Turnout

Whether you’re hosting a one-week camp or a one-hour seminar, you need to make people aware of the event in order for it to be successful.Here are 5 useful event marketing tips to help get those seats filled.

1. Promote your events through ALL communication outlets REPEATEDLY.
Your target audience is overloaded with information so you need to put yourself in front of them again and again. Repeatedly spread the word about your event across all marketing channels. Send e-mails to prospects several times before the event date with a link to the registration page. Post about your event on your social media networks at least once a week (again, include a link to the online registration page). Ask staff to mention the event at the front desk, and at the beginning and end of classes and lessons. Post flyers around your facility. Make calls to invite your members.

2. Get everyone involved with promoting the event.
Beyond your staff, ask your members, friends and local businesses to help spread the word about your event. Those that help promote the event and feel a part of it are more likely to attend and bring family and friends.

3. Add video and pictures to your promotions.
Videos and photos are more likely to get the attention of your prospects, plus they add visual interest to your promotions. Record a short 20-30 second video clip of a happy member that has just attended one of your events. Take pictures of happy students in action during your next tournament or camp. Include the videos and photos in your marketing emails and social media posts to make that human connection and show prospective registrants all the fun they’ll have.

4. Set a capacity and promote the limited availability.
Put a limit on the number of spots available at your event to get people to take action right away. Rather than waiting, prospective registrants are more likely to register since there’s a good chance they could miss out on the opportunity if they stall. Advertise how many spots are left as the event date draws near by posting about it on your social networks regularly.

5. Build in an added bonus to encourage early sign-ups.
You’ll see most events offer an early bird price break for those that register by a certain date. This is an effective tactic used to get people to take action early on, rather than waiting to register days before the event. As an alternative, you could provide a tangible gift ― such as a t-shirt — to those that register by a specific date. Either way, an incentive tied to a deadline is almost guaranteed to give you a nice spike in event registrations.

Add to the list! What are your top event marketing tips? How do you get your events filled?

About the author: Kristen Campbell is a brand manager for Member Solutions.

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Free Event Starter Kit

Hosting special events is a great way to strengthen member retention and drive new enrollments and revenue into your business.

Learn how to plan, market and manage your events for success.

Download the Event Starter Kit today!

Developing a Solid Business Plan for Your Membership-Based Business

Brainstorming Solid Business Plan

Developing a business plan is a great tool to help you effectively address any challenges you’ll face. More importantly, a solid business plan will help you set and reach your business objectives. After all, if you don’t have goals to meet, how do you know what you are aiming to achieve?

Here’s where to start when developing a business plan:

Begin with your business vision.

In your plan, describe the purpose and reason why your martial arts school, fitness club, or gym exists. Talk about what you are delivering to the marketplace and what sets you apart from the competition.

Be specific. Use the vision statement for inspiration and as a reminder of the business you are trying to build. Share your vision with your employees to keep everyone on the same page and hold staff members—and yourself—accountable.

Perform a market analysis that evaluates your membership base and competition.

Group your members into specific categories based on demographics (e.g. age, gender, proximity to your business location, class participation, training program).

When analyzing your member data, look at what needs your member groups have in common and what needs are being met at your school or gym. Are your competitors doing a better job at meeting any of those needs? Where do your members reside? How can you expand your reach to other communities? Are there new market trends that can make or break your business?

Next, take a hard look at your competition. Factor in their business location, costs for training, facility environment, class and training schedules, and membership counts. You must stay ahead of your competitors in meeting the needs of your customers if you plan on being profitable this time next year.

Member Solutions Member Manager -Tracking Financial Results

Develop a financial budget for the fiscal year that ties into your market analysis.

A financial budget is a plan for future income, expense, and cash flow. Tie your financial budget to your goals that you want to meet for the year. It’s important to make sure that each goal within your financial budget and business plan is specific, measurable, achievable, realistic and time-targeted (SMART)*.

Your goals need to be specific so that you can hold yourself, and your staff, responsible and measure progress within a designated period. For example, a business goal might look like:

<John’s Martial Arts Academy> will sign X new members during the month of March or <John’s Martial Arts Academy> will retain __% of existing member base all of 2012.

Keep your goals attainable and realistic, too. Finding a happy medium between stretch goals and erring on the side of conservatism is your best bet. You want to set goals that you and your staff can meet.

Lastly, when devising a financial budget, ask yourself best and worst-case questions such as:

  • What will revenues look like if a competitor opens up down the street?
  • What if you buy out a competitor and consolidate locations?
  • What expenses can you sustain if your promotion plan flops?

A final word: Keep in mind that a business plan is just that—a plan. It’s okay to miss your targets. If you find yourself coming up short, re-evaluate your plan, and adjust as necessary. Don’t become discouraged and abandon the business planning process entirely. It’s important to keep at it, and consistently monitor your progress against your goals. What gets measured gets done.

*Doran, G. T. (1981). There’s a S.M.A.R.T. way to write management’s goals and objectives. Management Review, Volume 70, Issue 11(AMA FORUM), pp. 35–36.


About the author: Michael Connor is Member Solutions’ Director of Finance.

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.