Rationale for Canceling Our Kickboxing

Once the evening rolls around, our karate school is buzzing with activity. Our kickboxing class is no exception. It appears like every other class with lots of students involved in a high energy workout.

But, is it really like every other class? On the outside, yes but on the inside, no. I hope that this article will help other business owners understand when it's time to call it quits on a poor performing service or program. Also, non business owner, you can think in terms of time. For example, is getting that second job really worth the time?

Some tough questions to ask

Could I make more money with different class in the time slot?
The kickboxing monthly tuition is almost half the tuition of the regular program. I think this says it all. I need to double the class size to make as much money as our regular program. Which takes us to question number two.

How is the program retention?
The retention rate refers to how many people stay with the program each month. High retention rates means that students are stay with the program longer. The retention rate determines how many new students you need to grow the program. The average kickboxing student stays about three months while my karate students stay for years. Bottom line, we need to spend more money and time in marketing the kickboxing.

Are we spending marketing dollars on a program that would give a higher return in another area?
Any way you slice it, we need to divide our marketing budget between the regular program and the kickboxing program. Two marketing programs requires either splitting your efforts in half or spending double the time.

Is the program capital intensive?
Our kickboxing program required us to purchase expensive standing heavy bags and exercise bands.

Does the program provide the opportunity for addition retail sales?
No, once they get the initial equipment, they do not require anything else. The regular program provides the opportunity for addition retail sales and services.

Is there the ability to upgrade students to higher value programs?
No, the kickboxing program is a kickboxing program. I am not saying that you could not develop something, but for me, that takes time away from developing the karate program.

In the end, I believe the change is not only going to be good for the program and business but it will free up some more of my time.

Book Review: The Richest Man in Babylon

I just finished reading the classic book, The Richest Man in Babylon: Now Revised and Updated for the 21st Century by George S. Clason. This personal finance book has sold millions of copies since it’s original release in 1926. It’s advise is still as relevant today as it was in 1926.

Unlike many dry and boring finance books, George Clason wrote The Richest Man as a parable with characters from ancient Babylon. The Richest Man in Babylon tells the Seven Simple Rules of Wealth. I love the simplicity of the rules.

Seven Rules of Wealth

1. Start thy purse to fattening
2. Control thy expenditures
3. Make thy gold multiply
4. Guard thy treasures from loss
5. Make of thy dwelling a profitable investment
6. Insure a future income
7. Increase thy ability to earn

Here’s some of the highlights of The Richest Man in Babylon
• Saving 10% of what you earn therefore fattening thy purse
• “All men are burdened with more desires than they can gratify.” As we grow the ability to earn, so does our desire to spend if we do not control thy expenditures.
• Invest 10% so that it works for you and make thy gold multiply
• Beware of get rich quick schemes. If it seems too good to be true, it probably is. Guard thy treasures!
• Purchase a home so that you are not paying rent forever.
• Think long term and build a passive income for when you grow old. Insure a future income.
• Constantly increase your value at your current occupation. Your employer will recognize your efforts and increase your salary. If they do not, look for a new employer. Therefore, you increase thy ability to earn.

The Richest Man in Babylon was enjoyable reading and offers some great time tested advice from ancient Babylon. I found the chapter on the real tablets from Babylon that researchers discovered very interesting. The tablets talk about a man’s journey to get out of debt. He lays out a plan for getting out of debt and the final tablet is about his day of debt liberation.

Making Tough Decisions

As a business owner and entrepreneur, we need to make tough decisions. Well, I made the tough decision to cancel our kickboxing program.

From a business standpoint, this makes complete sense. With our growing children’s program, we needed a new time slot for more classes. Since the kid’s program is where most of our profits come, we could not deny this opportunity for growth.

But…

I can’t help but feel sorry for taking this course of action. I build relationships with all the members of the kickboxing and I hope they understand the reasons for my actions. There I go, talking about reason, logic, and the rational. I know from past tough decisions that these things appeal more to the emotions and are much deeper.

I could tell by kickboxing student’s reaction that they were disappointed. I offered to let them into the karate program at a greatly reduced tuition.

They’re still unhappy and I understand completely because I am sad about it too. I loved the kickboxing class because I could jump into the class and get my workout too. Unfortunately, I cannot think of only my needs. We need to think about the needs of the program/ business first.

My next article will go further into the reasons for this change.

What’s your story?

One of my favorite blogs is Duct Tape Marketing. I recently read his post on Share your Story

I love this idea!

What is a story?
Duct tape marketing states, “stories are nothing more than fun, captivating, motivational, honest conversations that illustrate what makes you knowable, likeable and trustable.”

I already used it to some extent but now, I plugged right into my enrollment presentation. It works great because it builds an instant connection with my prospects.

Here’s our business story.
“I started the Martial Arts at the age of 9 years old. My parent drove me pretty far for me to take lessons. Well, I feel that I benefited from that early training in so many ways and that I can not imagine how my life would have been without it.

I always had the dream even back then to start a karate school in my hometown to help children just like me and give back to the community.

Well, in 2004, the gym that I taught karate closed and I still had the desire to teach. I thought it would be a great time to follow that childhood dream and start a school in my hometown.

I started teaching at a church auditorium and the school grew to the point that we moved to our current location. We continue follow our mission to help develop children and give back to the community."

Making Checklists

Yes, when I first started Maximum Impact Karate, I had what Michael Gerber terms in his classic book, The E-myth, an “entrepreneurial seizure”. I believe that my teaching skills would carry the business to great heights.

I was wrong. I struggled along as “wing it” in everything from my sales presentations to my classes. Slowly and gradually, I took moments of extra time to start systemize every activity.

Now, I have write procedures for everything from phone calls to enrollments.

The final touches are creating Checklists for each job and developing a master schedule. I have the basis for the master schedule. The Master schedule is a sequence of tasks divided between first week, second week, third week, and fourth week activities.

This month, I worked on creating checklist for each of these activities. For example, the picture below is my new student checklist.

Using my master schedule has two advantages. First, it keeps me on tack. The master schedule details all the required and important activities for the month. Once I complete everything for the week, the rest of my time is free time. It’s that easy.

The second advantage of a checklist is that activities become easier to delegate to my staff. I can hand them the checklist and they can complete the tasks required.

It’s incredible how much time this has freed up for me.

I'm Back

I’m back! My wife, Ester and I moved into a new home last week. I was unable to blog because we were so busy and we did not have an internet connection. Getting everything back together is a huge undertaking!

We meet a few challenges. First, we meet challenges getting the appliances installed. The appliance store informed us that they back ordered our cloths washer and dryer. After one trip to the Laundromat, we decided this was a top priority.

Second, our plumbing is this new tubing called Pex. I found that most plumbers won’t touch the stuff. The builder referred us to a plumbing company to install our dishwasher and said, “Tell them we referred you”. I did just that and they quoted me a price of $450. I thought “What!!! That sounds high”. So I proceeded to call every plumber in the phone book, I received quote $159. That’s more like it! I guess the other quote was the builders special. Thank god that I follow my purchasing policy.

Finally, THE INTERNET. We planned to switch to Verizon FIOS service for the internet and TV. I started calling them Mid-December to schedule new service. The sales representative gave me a phone number to call to setup service. I called 9 times and left detailed messages. I finally called the main number on December 4 and scheduled installation for December 23. It really bothered me because now we needed to wait for 2 weeks after moving in to receive these services. I cancelled the installation with Verizon (I waited for 45 minutes to get a representative) and we went back to Comcast.

Why tell you all of this? In the life of entrepreneur, the lines between your personal life and business life fade. When I worked for a company, the line between work and home were perfectly clear – now, everything is gray.

Save Money with a Purchasing Policy

Do you have rules for purchasing items? Whether it's our personal finance or business finance following specific purchasing rules will save you money and find better services.

A good purchasing policy assist you find the best value for your money - notice I didn't say the cheapest service. I found, in most cases, basing decisions solely on price will cost you money in the end. By best value for your money, I mean looking for services that best fits your needs.

My wife (Ester) and I are moving to a new home so I've set up services with many new vendors.

My purchasing policy has two simple rules:

1. Get three price quotes for each item or service - For new services, I call at least three to five vendors to interview them. For items, a little research online or a quick trip to a few stores should do
2. Wait at least 24 hours on any purchase over $100 - Quick, on the spot decisions will cause many errors and wasted money. Many services will attempt to offer a deal if you sign up right away. I combat this sales technique upfront by telling the sales representative that I will not make a decision today and that all special offers need be valid for 24 hours.

Okay, now that you created a simple purchasing rules to live by, it's time to interview the vendors. The interview will help you decide on the best vendor. Here's some tips for interviewing.

• Write down questions in advance - To get a fair comparison, ask all the vendors the same questions.
• Take notes -After you interview a few vendors, the interviews start to blend together. Taking notes separates all of the conversations.
• "Is there any question that I should have asked but did not?" - This is one of my favorite questions. Since you are not likely to be an expert in the field that you are researching, this question prompts the sales representative talk about what defines them from the competition, gives you good questions to ask the next vendor candidate, and lets you know important information that you may have missed. For example, when I called some propane companies for my new home heating, I found asking this question that not all propane companies will service our tank if it leaks.

Through this interview process, I find many surprising deals. In the case of finding a Propane company for our new home, one vendor originally installed the underground tanks and delivered to most of our development, therefore offering special rates. I also got the best feeling from what the sales representative said. With prices 72 cents cheaper per gallon, we will save $720 per year on the average 1000 gallons that we will purchase.

My Simple 2008 Business Goal

Since the holidays, it’s been difficult getting back in the groove of blogging.

I read Leo's post called 7 Essential Tips to Make 2008 Your Best Year Ever at Zen Habits. His first tip is about having one simple goal. I agree with him that one goal refines your focus so hitting the bulls eye of your goal becomes easier.

With this idea in mind, I examined my monthly roll up statistics. Tracking specific areas of my Martial Arts business enables me to target areas for improvement.

Main Categories of My Statistics

• Inquiries (how many people contacted me)
  
• Introductory Lessons (how many people tried the program)
  
• Enrollments (how many people joined)
  
• Total Students (total number of members)
  
• Attrition Rate (percentage of cancellations)
  
• Student Value (the amount of revenues each student creates)
  

I took these statistics and compared them to my industries benchmarks. This year, my inquiries to enrollments rate went from 15% to 25% meaning that I improved in my sales presentation. The interesting part is that I improved despite the fact that tuition rates increased 20% since prior year. Lesson Learned: pricing is elastic and people are willing to pay more for better service.

Okay, on to my simple 2008 business goal, I realized that the number of inquiries limits my schools growth. If your average attrition rate is 5% (I was below 5% for the year), a school of 100 students loses 5 students per month. At a 25% inquiry to enrollment rate, I need to find 20 inquiries per month to sign up 5 new students. If I accomplish this goal consistently over the next few months, my school will grow to 100 students.

There you have it.

My Simple 2008 Business Goal = generate 20 new inquiries per month

If my attrition rate is better than 5%, I will reach my goal quicker.