August 19, 2025 • 34 mins
Economic uncertainty looms large for martial arts school owners, but surviving—even thriving—during downturns is possible with the right approach. Master Lee shares battle-tested strategies that have helped him navigate three major economic crises since 2001.
At the heart of recession-proofing your martial arts business is delivering exceptional value that makes your service indispensable. When families scrutinize their budgets, you must ensure they see your training as essential to their child's development. Master Chan emphasizes creating genuine excitement in students while demonstrating clear developmental benefits to parents. This combination of enthusiasm and tangible results makes families reluctant to cut your program, even when finances tighten.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
In this episode, our topic is Black Belt Strategies
for Surviving a Bad Economy.
Welcome to Black Belt Banter,the best podcast to help your
martial arts school increase inprofits and generate substantial
revenue.
I'm Jimmy Hong and my co-hostis Master Chan Lee.
Master Chan has over 2,100active students with multiple
(00:25):
locations.
He is well-renowned and highlyrespected by his fellow peers
for his business acumen inoperating martial arts schools.
Master Chan, what are thesestrategies and how do we survive
in a bad economy that's coming,if it's not already here?
Speaker 2 (00:46):
In the words of Christopher Walken it's very
important that we have morecowbells like birthday parties,
more birthday parties.
I'm just kidding.
Someone remarked like you guystalk a lot about birthday
parties.
Anyway, I hope that broke theice Every episode.
Speaker 1 (01:05):
I think we mentioned one.
Speaker 2 (01:08):
And what do we?
More birthday parties.
What's the secret?
More birthday parties?
You got bad staff.
Have more birthday parties.
Anyway, under the seriousness ofthis, we're probably facing a
pretty significant economicdownturn.
I think some of you guys arefeeling it right now.
I think a first quarter, a fewof our locations, about half of
(01:29):
our locations, have felt alittle bit of a downturn here
and so forth.
So I've been through several ofthese economic downturns.
The first one I went throughwas in 2001, right after 9-11,
and it rolled into 2002.
And that's kind of what startedthis huge decrease in interest
rates across the country andthere was a huge economic boom
(01:51):
right after that.
And then there was anothercrash in 2007, 2008, right with
the housing crisis and so forth.
And I went through that andthen, more recently, went
through COVID.
We went through that the wholething with COVID and navigating
that difficult time for allschool owners in the country,
and then we rebounded after that.
(02:12):
So now we're kind of goingthrough another interesting
weird run of economic downturns,with the president enacting
tariffs and high recession.
Was that not recession?
Was that the inflationary typethings that are going on in our
economy?
And people are feeling it intheir little bit.
(02:33):
So I just wanted to give yousome ideas that I use to get
through the other things andwhat I've said to my staff and
so forth.
If, more than ever, you need tolook at your better business
practices, give out betterservice, provide more value, and
when families sit down to seewhat they need to cut out of
their budget, you need to reallymake sure you're providing the
(02:56):
value that you asked for, andwhat I mean by that is that the
kid has to be excited aboutcoming to class and the parents
have to really, reallyunderstand why they're taking
their kid to your class.
It's not just another activity.
It's something that's helpingJohnny become better, becoming
more confident and also havingJohnny become a lot more
disciplined in their life.
And you've got to be makingsure that the kid is following
(03:17):
through and you are exhibitingyour level of leadership and
having that child do that typeof things level of leadership
and having that child do thattype of things Also just making
sure that kid is inspired tolike test or get to the next
belt or go to the nexttournament, and he's always
training towards something.
So just making sure you'reproviding that type of
attentiveness and service to thepeople that are there.
(03:40):
The other thing, too, is thatit's super important at that
time is to have a little bitmore empathy for your student
base.
Like I remember, at one of theeconomic downturns, this family
came in and they said, hey,we're going to have to quit.
I lost my job and we don't knowwhat's going to go on and I
just don't think it makesfinancial sense for us to keep
coming.
(04:00):
And I said what, why don't youkeep coming for free?
And when you guys are back onyour feet, we'd love to just
make it up on tuition and we'llfigure it out later.
So the last thing I want to doas your teacher is provide
additional stress in your life.
This should be a stress-freeenvironment.
So keep coming.
(04:20):
I've had people cry in my office, thank me profusely, and I want
to be on the good side of that.
Just yeah, I understand thestressfulness of losing a job
and going through economichardship.
Help them out.
Help them out and they, in turn, will be really, really
appreciative students on thelong term.
And I just can't stress to youenough that that simple act of
(04:42):
kindness has paid back.
Later.
I remember this family ended uppaying back, you know, wrote me
a check for the back tuitionand then later on upgraded to
the next program and thenreferred four people from their
neighborhood.
So that's not why I do it, butI'm just telling you it's just
one of those things that youwant to be working with your
students in, that in thattimeframe Sometimes they just
need tuition modification.
(05:03):
Hey, in the short term, youknow, I may be losing my job or
whatever and then I'll justsimply ask what's a tuition
that's good for your budgetright now, and so we will reduce
the tuition for them and helpthem out if they need it, and I
think that's a really importantkey element of making sure that
they're still involved withtheir program and they're going
(05:24):
to help out in other ways in theschool.
The last thing I really want totalk about is you've got to
market more.
There is going to be a segmentof the population that they're
struggling to make rent slash,mortgage payments and things
like that.
They're probably not fit to bein your school.
Now, if you do find someonelike that that is struggling
(05:46):
financially and their childstill wants to be there, I work
something out with them $10 amonth and they help out at our
picnic or something like that,or $20 a month.
They help out at an event thatwe're doing Just something and
we work with them in someaspects free.
So you have those elements ofthe population that they're
(06:07):
going to bring their child.
They just are having a hardtime and so forth.
But there's a fair amount ofthe people in the population
where you could triple the priceof eggs and it's not going to
bother them.
You could $20 a gallon in gasand they'll be fine.
There is a population of peoplethat one of our students had a
boat and it was a really niceboat and we all went out and he
(06:31):
was taking us out and he had tofill up the boat with gas.
And this is circa 1997 or so1998.
So talking about gas pricesback then, well, to fill the
boat was $550.
So I can tell you how big theboat was and I was like, hey,
(06:54):
should I pitch in for the gas?
That was a lot of gas.
And he looked at me and goes MrLee, you don't get a boat like
this if you can't afford the gas.
And I was like we're just ondifferent levels.
Thank you for taking us on theboat ride.
He just sat down with me.
You know, and I say that isbecause there's people out there
(07:16):
that they just they're they'refinancially doing.
Well, whatever they're doing,and and if you give good service
and it's something that theirkids want to do and something
that they're doing, they're justgoing to roll with it and keep
paying their tuition and be withit.
So the trick is, how do youfind more of those people?
So you've got to market tothose events and so forth.
(07:36):
One of my favorite kind ofhidden marketing tools is I find
out huge events in the city.
There's a diabetic society ofyour city or sickle cell anemia
fundraiser or breast cancersurvivor events or so forth.
So there's a lot of events thatare being held in your town and
(07:58):
when those events are beingheld, I send three or four gift
certificates for them to auctionoff for a month of lessons and
a uniform valued at $200.
And they get to auction thatoff and they get to keep the
proceeds.
So I auction off birthdayparties very simple thing, but
once again, using the boat guy.
We need to find more boat guyslike that and they're out there,
(08:20):
but you just got to work alittle harder to find them and
so forth.
So you're going to find allspectrums of the people that you
need to market to and it'simportant that you work with all
of them in whatever issues theyhave, as they're getting going
in your program.
But especially, like I said,during the economic downturn,
(08:42):
you're going to have to work alittle bit harder in your
marketing and have a little bitmore empathy in working with
your student base.
Remember, you have a number tohit.
That's your budgetary number.
You need to hit that number,whatever it is, and just get
there.
How you get there is doesn'tmatter, just get there.
And you have many differentstrategies to get there.
And then you have a profitlevel and you just got to get
(09:03):
there and you have.
You have a lifestylerequirement that you need to hit
.
You need to make a housepayment or requirements for you
to live.
Make sure you guys get there.
I mean that's that's incrediblyimportant, but many different
ways to get there, but make sureyou are there.
Speaker 1 (09:19):
Well, I remember during the COVID five years ago,
to what COVID two, three years?
I remember what you said.
It was because obviously, covidaffected all of us.
But you said that COVID madeyou change your business and
your schools lean.
You made it so lean, you cutthe bloated budget, you cut your
(09:44):
payroll, you cut your staff andyou just made that school so
lean.
That was one of the benefits,advantages, of coming out of
COVID.
And now you're even operatingbetter because of the changes
you made and you had to adjustfrom that last economic downturn
.
Speaker 2 (09:59):
Yeah, so plug for ASSA, reckitt Sabadim
Association do.
Our annual conference and thatwas my big talk last year was I
call it the one person show.
I run our academies.
Basically it's one person and alot of part-timers that help us
run the school and it's abetter model and I kind of
followed it off of Starbucks.
(10:20):
I looked at Starbucks and I said, man, how is Starbucks running
from 5 am in the morning andthen they run till like 7
o'clock at night?
It's not one barista, there'sno one barista sitting there at
5 am and then he's there till 7o'clock at night closing down
the spot and they have threedifferent types of managers that
(10:42):
work there and all thesedifferent managers take shifts
and there's a team of 25different part-timers that work
at that one Starbucks atdifferent timeframes and so
forth.
So that's kind of the model Ihave is that I'll have one
person running the school andthen I'll have 10 to 15,
sometimes 20 helpers andvolunteers and teachers helping
(11:07):
us out in that time.
So that was kind of our bigshift in helping our schools run
a lot leaner during those times.
Speaker 1 (11:16):
When we came out of COVID and slowly got back to
business as usual, did you keepthat lean shift or did you go
back to your previous?
Speaker 2 (11:28):
No, 100%.
We kept it this way and we madeour procedures a little easier.
Anybody can enroll anybody.
It's not like, oh, you just gotto talk to the headmaster about
our tuition and so forth, soour enrollment procedures are a
lot easier.
It's like we talk openly aboutour tuition.
It's not like, psst, come here,I need to talk to you, can you,
(11:49):
jones, can I talk to you in myoffice this way?
And then all the parents in thebackground are like, ooh, he's
going to talk to you about money.
Speaker 1 (11:57):
Yes, I remember when you said that because you had,
it was years ago you said everytime you talked to a parent to
go back to the office, all theparents in the lobby knew what
that meant.
It meant that they were goingto go in there either for an
upgrade or enrollment orwhatever.
So you start changing it up,you would invite the parents
back there but then, instead oftalking about upgrade, you would
(12:19):
just talk to them about theirkids, their progress, how
they're doing what they need todo and that kind of changed the
culture of parents didn't alwaysassociate going back to your
office as a, as a enrollment setup, as a money time.
It changed them into oh, itcould be this, it could be that.
And I remember you said thatwas a big change that you did
(12:39):
and adjusted to that.
Speaker 2 (12:40):
It was huge.
I mean because, like I said,you're like how many times can
you say can I talk to you in myoffice?
Can I talk to you in my office?
Do you have a second?
Can we touch base?
There's just so many ways youcan do that, and now, with being
able to send payment linksonline, being able to write an
email and do follow-up, you cando enrollment, you know,
(13:04):
anywhere.
I think recently one of my guysdid some tuition over online
and so forth on a Sunday and youknow it was just very easy and
we weren't even open.
So it's a great way of runningthe school.
People are used to makingpayments online and doing stuff.
So these are all very importantthings that you need to add to
(13:24):
your policies and procedures andbe a little bit more
streamlined as a business.
But there are things that Ithink that, if you haven't done
this, you should really sit downand say what do I clearly need
Right?
Do I need more people on thefloor?
Yeah, that would be great tohave through.
Like, people don't even knowwhat they need right now, so you
(13:44):
need to write.
Do I need three people on thefloor?
Do I need a front desk?
Do I need someone helping mewith beginners, what?
What do I need?
So you should really sit downand say this is what I need and
then you kind of have a jobdescription for each of those
and saying, okay, this would bea volunteer, this would be a
paid person, this would be apaid teenager, this would be
(14:06):
nice to have a sophisticatedadult to run this.
I have an adult that works forus who's one of our black belts
Great guy.
He used to run a dental officeand so helping us at the front
desk is easy peasy.
It's a type one of school, it'snot that difficult and he does
a really good job.
I have another lady that worksfor the Milwaukee County Courts
(14:28):
and awesome.
She has a really awesome job ofteaching on the floor.
She is also a really goodadministrator, and that's.
Another thing is make sure yourpart-time people don't work more
than two days a week.
Make it fun.
Don't be like I need you fivedays a week for six hours each
time after you did your firstfull-time job.
Don't don't.
It should be fun, like I wantthem to be there and they want,
(14:51):
like they're happy to be thereto help out and they're they're
in their happy place.
It doesn't feel like a job.
And so making sure that your,your, your volunteers, your
helpers and that's another thing, I, one of my rules, is that I
don't have any of my people workmore than two days.
To me, I think anything morethan that.
They, they don't, they're notas fulfilled.
(15:11):
I mean, it's like me hangingout with you, jimmy.
I can't do more than like a day.
You know anything more than aday with you.
It's just like second day isdiminishing returns.
Speaker 1 (15:25):
And the third day is like why am I even here in the
same room with you?
Speaker 2 (15:28):
And that's not a week , it's like a day a year.
So people are like he's so mean, he's so mean.
Speaker 1 (15:33):
Why is he such a jerk ?
Well, going back to that, goingback to the part-timers, you
have to understand that thesesenior rank high belts, they are
sitting on the sidelineswanting to go in, wanting to be
part of the staff, wanting to bepart of the team.
(15:53):
So it's not like you're goingthere, hey, can you help me.
You're honoring them by saying,hey, look, I I see your
potential, I think you could dothis great.
Well, how would you like to bepart of the team?
It's, it's an honor for them.
So they don't see it as asecond job or part-time.
They, they, they see it like ohmy gosh, I can't.
I'm finally, after all theseyears, I'm finally getting part
(16:16):
asked to be part of the team.
I remember one time time I hada Senior Bell teaching class and
I got busy in the office orsomething.
I forgot what it was, and thatinstructor it wasn't even an
instructor, he was a Senior Bell.
Speaker 2 (16:31):
Come on be honest, he was just no, no, no, no, no.
There's something that's wrongwith this story.
Speaker 1 (16:42):
You weren't busy in the office, you were playing
Minecraft.
Speaker 2 (16:44):
Minecraft and Roblox, the two big 12-year-olds that
instructor Wait wait, this isback in the day it was Angry
Birds.
Speaker 1 (16:55):
Angry Birds.
That instructor was supposed toonly teach the warm-ups and
then it was.
But then it got.
He was 45, no, I'm sorry, 80 to90% through the class.
And then I came in because Ihad to finish.
So right now I came in to teachthe last 20% of their class,
(17:16):
which I did.
And then after the class hecame.
He's like, oh my gosh, I waslike why, what's wrong?
So sorry that you had to handlethe class.
He's like no sir, no sir, Ialmost, I was almost able to do
a whole class by myself and Irealized, oh, he was looking
forward to teaching that wholeclass.
(17:38):
He never done the whole classhimself.
He was almost there and Iinterrupted him.
So that was the mindset.
My mindset was like, oh, Ididn't want him to do the whole
class, but he was like sohonored that he almost got to do
the whole class and next timethat's what he wanted to achieve
was be able to start and finishthe whole class himself.
And that was to your point ofthe mentality of these
(18:00):
part-timers wanting to come in.
They're enthusiastic aboutbeing part of the team.
It's not a job for them at all.
Speaker 2 (18:09):
And let me be clear you can't just throw them on the
floor.
We're like oh, you've been withme for five years.
What did you class?
That is the worst thing.
You've got to have a leadershipclass and what drills that
you're going to be teaching andyou work out with them and they
have a clearer idea of how tocommunicate.
Some of these sophisticatedadults are going to be way
(18:32):
better than you Like.
A while back in one of mylocations we had an attorney who
was witty, loved Taekwondo,taught really good classes.
Everybody enjoyed their timewith this person.
So you'll have people that arethere.
Another one of my locations hadonce a week.
We have a master who teachestwo classes a week and she's
(18:55):
been in Taekwondo over 40 years.
She's been in Taekwondo longerthan I have and she is amazing.
She's a really good teacher.
She's a teacher by nature andthen she has done enough classes
that I can just give her hey,this is what we're working on
this week and put together alesson plan, and she's one of
the most popular people on ourfloor.
So just making sure you givethem some direction and and
(19:18):
that's another great way I wastalking earlier about giving
better service.
Imagine, if not, that this isgoing to happen.
But imagine if you were able togive one leader, one helper per
student and they're alllearning their stuff and getting
motivated and understandingwhat they need to do for their
next rank.
Wouldn't that be justover-the-top service?
And then, on top of that, everyinstructor checked in with the
(19:40):
kid and like, did you make yourbed or were you good in school
and not able to interruptclasses?
Or making sure that the kidfollowed through on what he
needed to?
Not because you were byyourself, but you've had a team
of people that you've assignedthe helpers to that they can
also follow up with thesestudents and helping them reach
(20:00):
their goals.
That's another layer of greatservice.
So just making sure once again,if you're going to go through
an economic downturn, it's justa matter of you to look at what
can I do to make my place just alittle bit better in all areas.
Speaker 1 (20:18):
Do you, master, sean, do you do anything in terms of
preparing, in terms of moneymanagement expenses or costs in
preparing for this downturneconomy, or do you wait until
that situation arises and thenyou adjust accordingly?
Speaker 2 (20:42):
is one you should, if you can get a line of credit
just to cover your expenses andthat's kind of your oh crap fund
, so that keeps everythingrolling and I think that's
important.
The second thing is you shouldhave at least 60 days of
expenses covered in youraccounts.
Ideally should be six months,but 60 days.
That gives you that, so youhave a layer of cushion with
(21:03):
that.
Third, cut out the unnecessarythings.
I think those are very, veryimportant.
We are making internaldiscussions right now to pre-buy
uniforms before these tariffshit.
So we're looking at that,looking at opportunities of
savings.
I like last January, I bought aboat ton of boards and I can
buy $10,000 worth of boardsbecause we break boards in our
(21:25):
academy and we've got them at adiscount.
I think the person was tryingto finish out the year strong
and gave me a deal.
So, making sure you get gooddeals that way.
So just making sure you arelooking at potential deals for
yourself and and and doing it.
Um, I've been looking at a car,uh, for the longest time maybe
(21:48):
since 2020, since the pandemicand and kind of been like is it
a good time to buy, is it?
Oh, and these car, the carprices have just been crazy and
we've, we've, I.
I just found a deal on aplug-in hybrid car last December
and the guy just gave us agreat deal at the end of
December.
And my point being is there aregoing to be opportunities, if
(22:11):
you can, to buy things at abetter cost, because everybody's
going to see this economicdownturn.
If you can do it, do it, and Ithink that's a very important
thing.
So that's a great point, masterHong.
Master Hong, you're a goodmoney manager.
What advice would you give aschool owner?
Speaker 1 (22:29):
I would say the line of credit.
I absolutely agree.
It's important to secure fundswhen you don't need it, then
during the time you need it,because then you have the time
to submit the docs, theapplication, work with the banks
or whatever.
You're working to secure thefunds, even to a point of, if
you have equity in your house,do a HELOC.
(22:49):
But you have to have thediscipline to not touch that
HELOC.
So if you can't secure fundsthrough your business, then you
have to look creative as a HELOCor something, but make sure you
don't touch it unless it's anabsolute dire situation.
You can't open up a HELOC andsay, oh look, I have $100,000
now I'm going to go buy that carI wanted for the last five
(23:10):
years.
So whether it's a line ofcredit, a loan or whatever, you
got to secure it now inpreparation, and if you don't
need to use it, hey, that's evenbetter.
You don't have to use it, butknowing that it's there, it's
going to keep your mind, yourmentality, and you're going to
be able to sleep at night, notworrying about making rent and
payroll for your business If thedownturn hits or if it hasn't,
(23:34):
if it affected you already.
A lot of people say cash outs,but cash outs, you have to be
disciplined.
With cash outs you can't cashout a certain percentage of your
students to pay for expensesbecause you're just going to
cash yourself out of business Ifyou don't have.
(23:58):
I have learned in the decadesthat we're in this business
there's all sorts of types ofmartial arts school owners.
There are college-educated MBAdegrees.
Who has the acumen and thediscipline from financial
management to businessmanagement to somebody who
(24:18):
barely finished high schooldoing this fly-by by the night
and fell into Taekwondo becauseA they loved it, but also they
didn't have any other careerpath.
That's as good as this.
So their knowledge base islimited in terms of what they.
And then once they get a holdof a chunk of money, they don't
know what to do with it.
They just use it they don'teven pay themselves in a proper
(24:40):
way from their business and justuse it for their personal
expense and they get themselvesinto a dire situation.
So there is no one type ofschool owner.
There's this spectrum of schoolowners from very dangerous
don't know what they're doing,don't know how to manage their
finances to the other end.
And if you don't know how tomanage your finances and you
(25:04):
don't believe in yourself andyou're not disciplined.
You haven't been doing it allyour life.
You're not going to start now.
So don't cash out, don't get aline of credit just too monthly,
and save and try to survivethat way.
But if you are able to bedisciplined in your finances
separate from business topersonal then yes, these are the
recommendations that I would doCash out a certain percentage
(25:28):
of your student base, but thenuse a portion of that cash out
and pay for marketing to ensurethat you're replacing that
student's back, not just cashingout to pay yourself.
Speaker 2 (25:42):
And cashing out.
You're meaning paid in fulls tomembers, and I think I talked
about this in the previouspodcast but if you're getting 10
new students, you should onlydo paid in fulls on like 30% 30%
of those people.
You shouldn't be doing 90% paidin fulls.
That's my opinion.
There's other people thatbelieve in different right, but
(26:04):
you're right, it really has todo with the discipline.
Speaker 1 (26:07):
So the cash outs.
Having said that, you've got tobe careful with the cash outs.
If you use leverage and cashouts, it could be a very
effective tool, powerful toolduring this economic downturn,
for instance, along with yourmonthly tuition, and we should
have.
We're definitely going to havea talk about cashing out
(26:28):
students, because we could talkabout that forever, but we're
going to do a whole episode ofthat.
That's in the pipeline as well.
But just real quick numbersAlong with your monthly tuition,
if you're cashing out, let'ssay hypothetically, you're
charging $200 as your monthlytuition.
If you're cashing out, let's sayhypothetically, you're charging
$200 as your monthly tuitionyou cash out one of your
students for 18 months.
That's $3,600, 200 times 18.
(26:50):
That's $3,600.
You do that for just four ofyour students.
Four of your students is almost$15,000, $14,400 to be exact.
So you have $15,000 in yourreserves.
That is going to along withyour, if you're able to get a
line of credit or a loan or aHELOC or whatever, and you have
(27:13):
this chunk of money, includingthat $15,000, saved for
emergency funds on your badeconomic downturn.
You're going to be sleepingvery well at night and that's
the power of cash out If youcan't secure a loan through your
business.
If you can't, if you don't haveenough what's the word I'm
looking for in your house equityin your house for a HELOC then
(27:36):
the cash out could be somethingthat you could leverage and as a
tool to have a blanket as theeconomy turns downward.
Speaker 2 (27:48):
And it's important though.
I mean the money managementpart is a very important piece
of this.
If you overplay thepaid-in-fulls right, then you
don't have any recurring incomecoming in and that's not a good
spot to be in.
So the biggest thing is makingsure that you're having students
coming in and having newbusiness to cover the people
(28:12):
that you've got forpaid-in-fulls and so forth.
And I know it's a big.
It's a controversial kind oftopic in our industry about
paid-in-fulls or not doingpaid-in in fulls and so forth.
Um, I think you have to have alittle bit of both.
I think that's a very it's.
I think that's very evidentthat if a lot of the schools I
know have a good kind of balancein the paid in full, bit things
(28:35):
to monthly recurrent income andso forth.
So you know, once again, thebig wild card is the number of
new students that are coming inthrough the doors.
Speaker 1 (28:45):
Right.
And a last thing about thepay-in-fulls is that you don't
need to significantly discountyour tuition to get a
pay-in-full.
Let's say that number $200 atuition times 18 months.
You're asking, oh, the parentto come in and be like look, I
know you've been with me for ayear.
You want to make sure that youare upgrading the students that
(29:07):
are have been with you, becausethen they know you, they trust
you, they understand yourprogram, they understand the
value of your program, so youdon't need to give them a
significant.
Look, pay me in full for thenext 18 months and I'm going to
give you 40%.
You don't need to do that.
Think about a whole extra month.
Be like, look, give them amonth or add a month or two
months to that pay in full.
(29:28):
So if you pay in full with mefor the next 18 months, the
benefit is that we're going toadd two more months into your
program.
So you're going to be payingfull for 18 months but you'll be
here for 20 months.
But to them, 20 months means$400.
That's $400 in savings and youdon't need to discount heavily
for your pay in fulls.
And it's a win-win situation.
(29:49):
And your parent gets additionaltwo months of revenue that they
already know equates to $400 invalue.
Speaker 2 (29:56):
Yeah.
One last thing I didn't realize.
We're going to go into thiswhole pay in fulls discussion,
but you got to have that inreserves to pay back too.
So for some reason they move orthey're just dissatisfied with
what you're doing and so forth.
So you just got to make surethat you guys you're hedging a
bet a little bit here.
(30:16):
So it's not good to do a lot,but just enough.
So it's not good to do a lot,but just enough.
And the last thing is the otherthing I don't know is how good
are you teaching?
How good is your retention?
So if you're not teachingclasses, or you're just having
some unqualified person teachinga very bad class, or your
(30:36):
classes are not good, then youshouldn't be doing paid-in-fulls
at all.
You're going to be destined togoing out of business.
So there's an undercurrent ofmaking sure you understand this
and I said at the beginning ofthis podcast is that you have to
give great value and greatservice and that in turn
translates to better retention.
So the magic is done on thefloor.
(30:57):
The magic is not done in theoffice.
All right, not talking toanybody.
You've got to teach an amazingclass.
And another master that I reallyrespect Grandmaster Berlow,
master Chris Berlow basicallysaid he goes what did you do as
an instructor to earn the rightto be the person in front of the
class, right, right and.
(31:18):
And so there's some wisdomthere and saying is that, as a
teacher, are you training, areyou are you learning things?
Are you, are you doing all that?
I think that's a very importantpart thank you, master chan.
Speaker 1 (31:30):
Let's conclude here.
If you are enjoying our show,go ahead and rate and review our
podcast or youtube channel.
Our goal is to make our show assuccessful as possible and your
review will help achieve that.
Have a great week everybody.
Enjoy your Taekwondo, martialarts, karate, kung fu, jiu-jitsu
(31:51):
whatever you teach your style.
Have a great week and I lookforward to our next episode.
In this episode, our topic is Black Belt Strategies
for Surviving a Bad Economy.
Welcome to Black Belt Banter,the best podcast to help your
martial arts school increase inprofits and generate substantial
revenue.
I'm Jimmy Hong and my co-hostis Master Chan Lee.
Master Chan has over 2,100active students with multiple
(00:25):
locations.
He is well-renowned and highlyrespected by his fellow peers
for his business acumen inoperating martial arts schools.
Master Chan, what are thesestrategies and how do we survive
in a bad economy that's coming,if it's not already here?
Speaker 2 (00:46):
In the words of Christopher Walken it's very
important that we have morecowbells like birthday parties,
more birthday parties.
I'm just kidding.
Someone remarked like you guystalk a lot about birthday
parties.
Anyway, I hope that broke theice Every episode.
Speaker 1 (01:05):
I think we mentioned one.
Speaker 2 (01:08):
And what do we?
More birthday parties.
What's the secret?
More birthday parties?
You got bad staff.
Have more birthday parties.
Anyway, under the seriousness ofthis, we're probably facing a
pretty significant economicdownturn.
I think some of you guys arefeeling it right now.
I think a first quarter, a fewof our locations, about half of
(01:29):
our locations, have felt alittle bit of a downturn here
and so forth.
So I've been through several ofthese economic downturns.
The first one I went throughwas in 2001, right after 9-11,
and it rolled into 2002.
And that's kind of what startedthis huge decrease in interest
rates across the country andthere was a huge economic boom
(01:51):
right after that.
And then there was anothercrash in 2007, 2008, right with
the housing crisis and so forth.
And I went through that andthen, more recently, went
through COVID.
We went through that the wholething with COVID and navigating
that difficult time for allschool owners in the country,
and then we rebounded after that.
(02:12):
So now we're kind of goingthrough another interesting
weird run of economic downturns,with the president enacting
tariffs and high recession.
Was that not recession?
Was that the inflationary typethings that are going on in our
economy?
And people are feeling it intheir little bit.
(02:33):
So I just wanted to give yousome ideas that I use to get
through the other things andwhat I've said to my staff and
so forth.
If, more than ever, you need tolook at your better business
practices, give out betterservice, provide more value, and
when families sit down to seewhat they need to cut out of
their budget, you need to reallymake sure you're providing the
(02:56):
value that you asked for, andwhat I mean by that is that the
kid has to be excited aboutcoming to class and the parents
have to really, reallyunderstand why they're taking
their kid to your class.
It's not just another activity.
It's something that's helpingJohnny become better, becoming
more confident and also havingJohnny become a lot more
disciplined in their life.
And you've got to be makingsure that the kid is following
(03:17):
through and you are exhibitingyour level of leadership and
having that child do that typeof things level of leadership
and having that child do thattype of things Also just making
sure that kid is inspired tolike test or get to the next
belt or go to the nexttournament, and he's always
training towards something.
So just making sure you'reproviding that type of
attentiveness and service to thepeople that are there.
(03:40):
The other thing, too, is thatit's super important at that
time is to have a little bitmore empathy for your student
base.
Like I remember, at one of theeconomic downturns, this family
came in and they said, hey,we're going to have to quit.
I lost my job and we don't knowwhat's going to go on and I
just don't think it makesfinancial sense for us to keep
coming.
(04:00):
And I said what, why don't youkeep coming for free?
And when you guys are back onyour feet, we'd love to just
make it up on tuition and we'llfigure it out later.
So the last thing I want to doas your teacher is provide
additional stress in your life.
This should be a stress-freeenvironment.
So keep coming.
(04:20):
I've had people cry in my office, thank me profusely, and I want
to be on the good side of that.
Just yeah, I understand thestressfulness of losing a job
and going through economichardship.
Help them out.
Help them out and they, in turn, will be really, really
appreciative students on thelong term.
And I just can't stress to youenough that that simple act of
(04:42):
kindness has paid back.
Later.
I remember this family ended uppaying back, you know, wrote me
a check for the back tuitionand then later on upgraded to
the next program and thenreferred four people from their
neighborhood.
So that's not why I do it, butI'm just telling you it's just
one of those things that youwant to be working with your
students in, that in thattimeframe Sometimes they just
need tuition modification.
(05:03):
Hey, in the short term, youknow, I may be losing my job or
whatever and then I'll justsimply ask what's a tuition
that's good for your budgetright now, and so we will reduce
the tuition for them and helpthem out if they need it, and I
think that's a really importantkey element of making sure that
they're still involved withtheir program and they're going
(05:24):
to help out in other ways in theschool.
The last thing I really want totalk about is you've got to
market more.
There is going to be a segmentof the population that they're
struggling to make rent slash,mortgage payments and things
like that.
They're probably not fit to bein your school.
Now, if you do find someonelike that that is struggling
(05:46):
financially and their childstill wants to be there, I work
something out with them $10 amonth and they help out at our
picnic or something like that,or $20 a month.
They help out at an event thatwe're doing Just something and
we work with them in someaspects free.
So you have those elements ofthe population that they're
(06:07):
going to bring their child.
They just are having a hardtime and so forth.
But there's a fair amount ofthe people in the population
where you could triple the priceof eggs and it's not going to
bother them.
You could $20 a gallon in gasand they'll be fine.
There is a population of peoplethat one of our students had a
boat and it was a really niceboat and we all went out and he
(06:31):
was taking us out and he had tofill up the boat with gas.
And this is circa 1997 or so1998.
So talking about gas pricesback then, well, to fill the
boat was $550.
So I can tell you how big theboat was and I was like, hey,
(06:54):
should I pitch in for the gas?
That was a lot of gas.
And he looked at me and goes MrLee, you don't get a boat like
this if you can't afford the gas.
And I was like we're just ondifferent levels.
Thank you for taking us on theboat ride.
He just sat down with me.
You know, and I say that isbecause there's people out there
(07:16):
that they just they're they'refinancially doing.
Well, whatever they're doing,and and if you give good service
and it's something that theirkids want to do and something
that they're doing, they're justgoing to roll with it and keep
paying their tuition and be withit.
So the trick is, how do youfind more of those people?
So you've got to market tothose events and so forth.
(07:36):
One of my favorite kind ofhidden marketing tools is I find
out huge events in the city.
There's a diabetic society ofyour city or sickle cell anemia
fundraiser or breast cancersurvivor events or so forth.
So there's a lot of events thatare being held in your town and
(07:58):
when those events are beingheld, I send three or four gift
certificates for them to auctionoff for a month of lessons and
a uniform valued at $200.
And they get to auction thatoff and they get to keep the
proceeds.
So I auction off birthdayparties very simple thing, but
once again, using the boat guy.
We need to find more boat guyslike that and they're out there,
(08:20):
but you just got to work alittle harder to find them and
so forth.
So you're going to find allspectrums of the people that you
need to market to and it'simportant that you work with all
of them in whatever issues theyhave, as they're getting going
in your program.
But especially, like I said,during the economic downturn,
(08:42):
you're going to have to work alittle bit harder in your
marketing and have a little bitmore empathy in working with
your student base.
Remember, you have a number tohit.
That's your budgetary number.
You need to hit that number,whatever it is, and just get
there.
How you get there is doesn'tmatter, just get there.
And you have many differentstrategies to get there.
And then you have a profitlevel and you just got to get
(09:03):
there and you have.
You have a lifestylerequirement that you need to hit
.
You need to make a housepayment or requirements for you
to live.
Make sure you guys get there.
I mean that's that's incrediblyimportant, but many different
ways to get there, but make sureyou are there.
Speaker 1 (09:19):
Well, I remember during the COVID five years ago,
to what COVID two, three years?
I remember what you said.
It was because obviously, covidaffected all of us.
But you said that COVID madeyou change your business and
your schools lean.
You made it so lean, you cutthe bloated budget, you cut your
(09:44):
payroll, you cut your staff andyou just made that school so
lean.
That was one of the benefits,advantages, of coming out of
COVID.
And now you're even operatingbetter because of the changes
you made and you had to adjustfrom that last economic downturn
.
Speaker 2 (09:59):
Yeah, so plug for ASSA, reckitt Sabadim
Association do.
Our annual conference and thatwas my big talk last year was I
call it the one person show.
I run our academies.
Basically it's one person and alot of part-timers that help us
run the school and it's abetter model and I kind of
followed it off of Starbucks.
(10:20):
I looked at Starbucks and I said, man, how is Starbucks running
from 5 am in the morning andthen they run till like 7
o'clock at night?
It's not one barista, there'sno one barista sitting there at
5 am and then he's there till 7o'clock at night closing down
the spot and they have threedifferent types of managers that
(10:42):
work there and all thesedifferent managers take shifts
and there's a team of 25different part-timers that work
at that one Starbucks atdifferent timeframes and so
forth.
So that's kind of the model Ihave is that I'll have one
person running the school andthen I'll have 10 to 15,
sometimes 20 helpers andvolunteers and teachers helping
(11:07):
us out in that time.
So that was kind of our bigshift in helping our schools run
a lot leaner during those times.
Speaker 1 (11:16):
When we came out of COVID and slowly got back to
business as usual, did you keepthat lean shift or did you go
back to your previous?
Speaker 2 (11:28):
No, 100%.
We kept it this way and we madeour procedures a little easier.
Anybody can enroll anybody.
It's not like, oh, you just gotto talk to the headmaster about
our tuition and so forth, soour enrollment procedures are a
lot easier.
It's like we talk openly aboutour tuition.
It's not like, psst, come here,I need to talk to you, can you,
(11:49):
jones, can I talk to you in myoffice this way?
And then all the parents in thebackground are like, ooh, he's
going to talk to you about money.
Speaker 1 (11:57):
Yes, I remember when you said that because you had,
it was years ago you said everytime you talked to a parent to
go back to the office, all theparents in the lobby knew what
that meant.
It meant that they were goingto go in there either for an
upgrade or enrollment orwhatever.
So you start changing it up,you would invite the parents
back there but then, instead oftalking about upgrade, you would
(12:19):
just talk to them about theirkids, their progress, how
they're doing what they need todo and that kind of changed the
culture of parents didn't alwaysassociate going back to your
office as a, as a enrollment setup, as a money time.
It changed them into oh, itcould be this, it could be that.
And I remember you said thatwas a big change that you did
(12:39):
and adjusted to that.
Speaker 2 (12:40):
It was huge.
I mean because, like I said,you're like how many times can
you say can I talk to you in myoffice?
Can I talk to you in my office?
Do you have a second?
Can we touch base?
There's just so many ways youcan do that, and now, with being
able to send payment linksonline, being able to write an
email and do follow-up, you cando enrollment, you know,
(13:04):
anywhere.
I think recently one of my guysdid some tuition over online
and so forth on a Sunday and youknow it was just very easy and
we weren't even open.
So it's a great way of runningthe school.
People are used to makingpayments online and doing stuff.
So these are all very importantthings that you need to add to
(13:24):
your policies and procedures andbe a little bit more
streamlined as a business.
But there are things that Ithink that, if you haven't done
this, you should really sit downand say what do I clearly need
Right?
Do I need more people on thefloor?
Yeah, that would be great tohave through.
Like, people don't even knowwhat they need right now, so you
(13:44):
need to write.
Do I need three people on thefloor?
Do I need a front desk?
Do I need someone helping mewith beginners, what?
What do I need?
So you should really sit downand say this is what I need and
then you kind of have a jobdescription for each of those
and saying, okay, this would bea volunteer, this would be a
paid person, this would be apaid teenager, this would be
(14:06):
nice to have a sophisticatedadult to run this.
I have an adult that works forus who's one of our black belts
Great guy.
He used to run a dental officeand so helping us at the front
desk is easy peasy.
It's a type one of school, it'snot that difficult and he does
a really good job.
I have another lady that worksfor the Milwaukee County Courts
(14:28):
and awesome.
She has a really awesome job ofteaching on the floor.
She is also a really goodadministrator, and that's.
Another thing is make sure yourpart-time people don't work more
than two days a week.
Make it fun.
Don't be like I need you fivedays a week for six hours each
time after you did your firstfull-time job.
Don't don't.
It should be fun, like I wantthem to be there and they want,
(14:51):
like they're happy to be thereto help out and they're they're
in their happy place.
It doesn't feel like a job.
And so making sure that your,your, your volunteers, your
helpers and that's another thing, I, one of my rules, is that I
don't have any of my people workmore than two days.
To me, I think anything morethan that.
They, they don't, they're notas fulfilled.
(15:11):
I mean, it's like me hangingout with you, jimmy.
I can't do more than like a day.
You know anything more than aday with you.
It's just like second day isdiminishing returns.
Speaker 1 (15:25):
And the third day is like why am I even here in the
same room with you?
Speaker 2 (15:28):
And that's not a week , it's like a day a year.
So people are like he's so mean, he's so mean.
Speaker 1 (15:33):
Why is he such a jerk ?
Well, going back to that, goingback to the part-timers, you
have to understand that thesesenior rank high belts, they are
sitting on the sidelineswanting to go in, wanting to be
part of the staff, wanting to bepart of the team.
(15:53):
So it's not like you're goingthere, hey, can you help me.
You're honoring them by saying,hey, look, I I see your
potential, I think you could dothis great.
Well, how would you like to bepart of the team?
It's, it's an honor for them.
So they don't see it as asecond job or part-time.
They, they, they see it like ohmy gosh, I can't.
I'm finally, after all theseyears, I'm finally getting part
(16:16):
asked to be part of the team.
I remember one time time I hada Senior Bell teaching class and
I got busy in the office orsomething.
I forgot what it was, and thatinstructor it wasn't even an
instructor, he was a Senior Bell.
Speaker 2 (16:31):
Come on be honest, he was just no, no, no, no, no.
There's something that's wrongwith this story.
Speaker 1 (16:42):
You weren't busy in the office, you were playing
Minecraft.
Speaker 2 (16:44):
Minecraft and Roblox, the two big 12-year-olds that
instructor Wait wait, this isback in the day it was Angry
Birds.
Speaker 1 (16:55):
Angry Birds.
That instructor was supposed toonly teach the warm-ups and
then it was.
But then it got.
He was 45, no, I'm sorry, 80 to90% through the class.
And then I came in because Ihad to finish.
So right now I came in to teachthe last 20% of their class,
(17:16):
which I did.
And then after the class hecame.
He's like, oh my gosh, I waslike why, what's wrong?
So sorry that you had to handlethe class.
He's like no sir, no sir, Ialmost, I was almost able to do
a whole class by myself and Irealized, oh, he was looking
forward to teaching that wholeclass.
(17:38):
He never done the whole classhimself.
He was almost there and Iinterrupted him.
So that was the mindset.
My mindset was like, oh, Ididn't want him to do the whole
class, but he was like sohonored that he almost got to do
the whole class and next timethat's what he wanted to achieve
was be able to start and finishthe whole class himself.
And that was to your point ofthe mentality of these
(18:00):
part-timers wanting to come in.
They're enthusiastic aboutbeing part of the team.
It's not a job for them at all.
Speaker 2 (18:09):
And let me be clear you can't just throw them on the
floor.
We're like oh, you've been withme for five years.
What did you class?
That is the worst thing.
You've got to have a leadershipclass and what drills that
you're going to be teaching andyou work out with them and they
have a clearer idea of how tocommunicate.
Some of these sophisticatedadults are going to be way
(18:32):
better than you Like.
A while back in one of mylocations we had an attorney who
was witty, loved Taekwondo,taught really good classes.
Everybody enjoyed their timewith this person.
So you'll have people that arethere.
Another one of my locations hadonce a week.
We have a master who teachestwo classes a week and she's
(18:55):
been in Taekwondo over 40 years.
She's been in Taekwondo longerthan I have and she is amazing.
She's a really good teacher.
She's a teacher by nature andthen she has done enough classes
that I can just give her hey,this is what we're working on
this week and put together alesson plan, and she's one of
the most popular people on ourfloor.
So just making sure you givethem some direction and and
(19:18):
that's another great way I wastalking earlier about giving
better service.
Imagine, if not, that this isgoing to happen.
But imagine if you were able togive one leader, one helper per
student and they're alllearning their stuff and getting
motivated and understandingwhat they need to do for their
next rank.
Wouldn't that be justover-the-top service?
And then, on top of that, everyinstructor checked in with the
(19:40):
kid and like, did you make yourbed or were you good in school
and not able to interruptclasses?
Or making sure that the kidfollowed through on what he
needed to?
Not because you were byyourself, but you've had a team
of people that you've assignedthe helpers to that they can
also follow up with thesestudents and helping them reach
(20:00):
their goals.
That's another layer of greatservice.
So just making sure once again,if you're going to go through
an economic downturn, it's justa matter of you to look at what
can I do to make my place just alittle bit better in all areas.
Speaker 1 (20:18):
Do you, master, sean, do you do anything in terms of
preparing, in terms of moneymanagement expenses or costs in
preparing for this downturneconomy, or do you wait until
that situation arises and thenyou adjust accordingly?
Speaker 2 (20:42):
is one you should, if you can get a line of credit
just to cover your expenses andthat's kind of your oh crap fund
, so that keeps everythingrolling and I think that's
important.
The second thing is you shouldhave at least 60 days of
expenses covered in youraccounts.
Ideally should be six months,but 60 days.
That gives you that, so youhave a layer of cushion with
(21:03):
that.
Third, cut out the unnecessarythings.
I think those are very, veryimportant.
We are making internaldiscussions right now to pre-buy
uniforms before these tariffshit.
So we're looking at that,looking at opportunities of
savings.
I like last January, I bought aboat ton of boards and I can
buy $10,000 worth of boardsbecause we break boards in our
(21:25):
academy and we've got them at adiscount.
I think the person was tryingto finish out the year strong
and gave me a deal.
So, making sure you get gooddeals that way.
So just making sure you arelooking at potential deals for
yourself and and and doing it.
Um, I've been looking at a car,uh, for the longest time maybe
(21:48):
since 2020, since the pandemicand and kind of been like is it
a good time to buy, is it?
Oh, and these car, the carprices have just been crazy and
we've, we've, I.
I just found a deal on aplug-in hybrid car last December
and the guy just gave us agreat deal at the end of
December.
And my point being is there aregoing to be opportunities, if
(22:11):
you can, to buy things at abetter cost, because everybody's
going to see this economicdownturn.
If you can do it, do it, and Ithink that's a very important
thing.
So that's a great point, masterHong.
Master Hong, you're a goodmoney manager.
What advice would you give aschool owner?
Speaker 1 (22:29):
I would say the line of credit.
I absolutely agree.
It's important to secure fundswhen you don't need it, then
during the time you need it,because then you have the time
to submit the docs, theapplication, work with the banks
or whatever.
You're working to secure thefunds, even to a point of, if
you have equity in your house,do a HELOC.
(22:49):
But you have to have thediscipline to not touch that
HELOC.
So if you can't secure fundsthrough your business, then you
have to look creative as a HELOCor something, but make sure you
don't touch it unless it's anabsolute dire situation.
You can't open up a HELOC andsay, oh look, I have $100,000
now I'm going to go buy that carI wanted for the last five
(23:10):
years.
So whether it's a line ofcredit, a loan or whatever, you
got to secure it now inpreparation, and if you don't
need to use it, hey, that's evenbetter.
You don't have to use it, butknowing that it's there, it's
going to keep your mind, yourmentality, and you're going to
be able to sleep at night, notworrying about making rent and
payroll for your business If thedownturn hits or if it hasn't,
(23:34):
if it affected you already.
A lot of people say cash outs,but cash outs, you have to be
disciplined.
With cash outs you can't cashout a certain percentage of your
students to pay for expensesbecause you're just going to
cash yourself out of business Ifyou don't have.
(23:58):
I have learned in the decadesthat we're in this business
there's all sorts of types ofmartial arts school owners.
There are college-educated MBAdegrees.
Who has the acumen and thediscipline from financial
management to businessmanagement to somebody who
(24:18):
barely finished high schooldoing this fly-by by the night
and fell into Taekwondo becauseA they loved it, but also they
didn't have any other careerpath.
That's as good as this.
So their knowledge base islimited in terms of what they.
And then once they get a holdof a chunk of money, they don't
know what to do with it.
They just use it they don'teven pay themselves in a proper
(24:40):
way from their business and justuse it for their personal
expense and they get themselvesinto a dire situation.
So there is no one type ofschool owner.
There's this spectrum of schoolowners from very dangerous
don't know what they're doing,don't know how to manage their
finances to the other end.
And if you don't know how tomanage your finances and you
(25:04):
don't believe in yourself andyou're not disciplined.
You haven't been doing it allyour life.
You're not going to start now.
So don't cash out, don't get aline of credit just too monthly,
and save and try to survivethat way.
But if you are able to bedisciplined in your finances
separate from business topersonal then yes, these are the
recommendations that I would doCash out a certain percentage
(25:28):
of your student base, but thenuse a portion of that cash out
and pay for marketing to ensurethat you're replacing that
student's back, not just cashingout to pay yourself.
Speaker 2 (25:42):
And cashing out.
You're meaning paid in fulls tomembers, and I think I talked
about this in the previouspodcast but if you're getting 10
new students, you should onlydo paid in fulls on like 30% 30%
of those people.
You shouldn't be doing 90% paidin fulls.
That's my opinion.
There's other people thatbelieve in different right, but
(26:04):
you're right, it really has todo with the discipline.
Speaker 1 (26:07):
So the cash outs.
Having said that, you've got tobe careful with the cash outs.
If you use leverage and cashouts, it could be a very
effective tool, powerful toolduring this economic downturn,
for instance, along with yourmonthly tuition, and we should
have.
We're definitely going to havea talk about cashing out
(26:28):
students, because we could talkabout that forever, but we're
going to do a whole episode ofthat.
That's in the pipeline as well.
But just real quick numbersAlong with your monthly tuition,
if you're cashing out, let'ssay hypothetically, you're
charging $200 as your monthlytuition.
If you're cashing out, let's sayhypothetically, you're charging
$200 as your monthly tuitionyou cash out one of your
students for 18 months.
That's $3,600, 200 times 18.
(26:50):
That's $3,600.
You do that for just four ofyour students.
Four of your students is almost$15,000, $14,400 to be exact.
So you have $15,000 in yourreserves.
That is going to along withyour, if you're able to get a
line of credit or a loan or aHELOC or whatever, and you have
(27:13):
this chunk of money, includingthat $15,000, saved for
emergency funds on your badeconomic downturn.
You're going to be sleepingvery well at night and that's
the power of cash out If youcan't secure a loan through your
business.
If you can't, if you don't haveenough what's the word I'm
looking for in your house equityin your house for a HELOC then
(27:36):
the cash out could be somethingthat you could leverage and as a
tool to have a blanket as theeconomy turns downward.
Speaker 2 (27:48):
And it's important though.
I mean the money managementpart is a very important piece
of this.
If you overplay thepaid-in-fulls right, then you
don't have any recurring incomecoming in and that's not a good
spot to be in.
So the biggest thing is makingsure that you're having students
coming in and having newbusiness to cover the people
(28:12):
that you've got forpaid-in-fulls and so forth.
And I know it's a big.
It's a controversial kind oftopic in our industry about
paid-in-fulls or not doingpaid-in in fulls and so forth.
Um, I think you have to have alittle bit of both.
I think that's a very it's.
I think that's very evidentthat if a lot of the schools I
know have a good kind of balancein the paid in full, bit things
(28:35):
to monthly recurrent income andso forth.
So you know, once again, thebig wild card is the number of
new students that are coming inthrough the doors.
Speaker 1 (28:45):
Right.
And a last thing about thepay-in-fulls is that you don't
need to significantly discountyour tuition to get a
pay-in-full.
Let's say that number $200 atuition times 18 months.
You're asking, oh, the parentto come in and be like look, I
know you've been with me for ayear.
You want to make sure that youare upgrading the students that
(29:07):
are have been with you, becausethen they know you, they trust
you, they understand yourprogram, they understand the
value of your program, so youdon't need to give them a
significant.
Look, pay me in full for thenext 18 months and I'm going to
give you 40%.
You don't need to do that.
Think about a whole extra month.
Be like, look, give them amonth or add a month or two
months to that pay in full.
(29:28):
So if you pay in full with mefor the next 18 months, the
benefit is that we're going toadd two more months into your
program.
So you're going to be payingfull for 18 months but you'll be
here for 20 months.
But to them, 20 months means$400.
That's $400 in savings and youdon't need to discount heavily
for your pay in fulls.
And it's a win-win situation.
(29:49):
And your parent gets additionaltwo months of revenue that they
already know equates to $400 invalue.
Speaker 2 (29:56):
Yeah.
One last thing I didn't realize.
We're going to go into thiswhole pay in fulls discussion,
but you got to have that inreserves to pay back too.
So for some reason they move orthey're just dissatisfied with
what you're doing and so forth.
So you just got to make surethat you guys you're hedging a
bet a little bit here.
(30:16):
So it's not good to do a lot,but just enough.
So it's not good to do a lot,but just enough.
And the last thing is the otherthing I don't know is how good
are you teaching?
How good is your retention?
So if you're not teachingclasses, or you're just having
some unqualified person teachinga very bad class, or your
(30:36):
classes are not good, then youshouldn't be doing paid-in-fulls
at all.
You're going to be destined togoing out of business.
So there's an undercurrent ofmaking sure you understand this
and I said at the beginning ofthis podcast is that you have to
give great value and greatservice and that in turn
translates to better retention.
So the magic is done on thefloor.
(30:57):
The magic is not done in theoffice.
All right, not talking toanybody.
You've got to teach an amazingclass.
And another master that I reallyrespect Grandmaster Berlow,
master Chris Berlow basicallysaid he goes what did you do as
an instructor to earn the rightto be the person in front of the
class, right, right and.
(31:18):
And so there's some wisdomthere and saying is that, as a
teacher, are you training, areyou are you learning things?
Are you, are you doing all that?
I think that's a very importantpart thank you, master chan.
Speaker 1 (31:30):
Let's conclude here.
If you are enjoying our show,go ahead and rate and review our
podcast or youtube channel.
Our goal is to make our show assuccessful as possible and your
review will help achieve that.
Have a great week everybody.
Enjoy your Taekwondo, martialarts, karate, kung fu, jiu-jitsu
(31:51):
whatever you teach your style.
Have a great week and I lookforward to our next episode.
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