DN: Hello Mr. Waldschmidt, how are we doing today?
KW: Pretty good sir.
DN: Thank you for taking the time to share your story with us. I know it’s an inspirational story, and I’m sure that the readers of Dojo Nation are going to like this one.
Let’s start with – you have how many schools presently?
KW: Currently I have two studios in the Bay area of California. We are about an hour south of San Francisco.
DN: A few years back, your schools were down in production. What year was that and what happened?
KW: I started owning martial arts studios in 1997 and we expanded to a second studio in 2001 – a 3rd studio in 2005 and a 4th studio in 2006 and we were just absolutely booming. In 2007 we hit our peak. We did $1.3 million. Things were going absolutely amazing. To be candid, I believe I got a little too big for my britches. Didn’t care about customer service at all, was focused on getting cash out and got really arrogant and believed that our program and our people and our systems were better than they were. I was basically thriving on a really good time in the economy. And then when the economy went down, we didn’t have any receivables because we had cashed everybody out. Our studios had dropped to a low point of a little over $300,000 in 2010 and that was with three locations. We had lost one of the locations. I was forced to sell it in order to create the revenue to be able to keep the other three open.
DN: Ouch! But that’s not an unheard of story. There have been several that followed that sales and marketing and cash out plan and got into big trouble. It was short-sided and enticing. It’s very easy to do, but unless you are a great money manager, it can really cause you problems.
KW: I was horrible with money management. You added gasoline and fire and you had an explosion.
DN: Most martial artists aren’t in martial arts so they can learn business. They are in martial arts to learn martial arts. Oftentimes we get into positions where we are not as educated as we should be and we can run into trouble, especially when we are enticed by large cash payments. That was kind of the trend back there for a few years and now people are seeing that sometimes that doesn’t work out so well.
KW: It’s so difficult if you aren’t a classic saver or know how to manage money. If you are good at investing, kind of like a Greg Horton type, then cash isn’t a big deal. But if you’re not, learn how to money manage first by saving the residual payments and the monthly installments, because it’s very difficult to make that up.
DN: So you had yourself behind the 8 ball. What steps did you take to get yourself back to the position you are at today?
KW: The first thing I did was sell one of my locations to my second-in-charge. My rent at the time for the four studios was just under $27,000 a month. So I took two of the studios and consolidated them. We got really lean. I had to actually go back and teach, which was really hard. My wife had just had our first and second daughters. I wanted to spend time with them, but we had no choice. I had to go and teach. It was around that time, or about a year later, that influential things happened. I took a seminar called “Secrets of the Millionaire Mind” with Harv Ecker, and a lot of top martial artists endorsed that book. It was absolutely incredible. It really changed my mindset about earning and creating money. The second was I became really good friends with Brandon Beliso and I really tried to go and see what he was doing. My third thing was that I wanted to surround myself with the best people. I immediately sent my staff t to Dave Kovar’s to learn about teaching. I brought Melody Shuman in to work with my guys. We joined HYPER. I became friends with Roland Osborne and Jason Morgan. I was just going in and trying to surround myself with really top-notch people. I became friends with John Cassidy, you, Greg Horton – the top people in this industry. You are the sum of who you hang out with or who you are inspired by. I just wanted to make sure that the people who inspired me were the very best of the industry. I listened and I took massive action. I’ve had incredible results since.
DN: I’ve always been fascinated by the fact that there are so many great resources out there. Like the people you just mentioned, and the type of people that these people are – the givers of our industry and the proven systems that they have – and people still don’t understand that we have these resources. Obviously you did and they started you on the right path. So how did your numbers grow after you started using these new systems and new information?
KW: Well, right after our low point of that $300,000 year, we immediately grew to $450,000 the next year. Then $600,000 then $750,000. Last year we did a little over $900,000 and this year we are already on pace for $1.1 million dollars.
DN: And that’s between how many schools?
KW: Just two. We are making more money now with fewer schools and less headaches. I actually do not teach at all in the schools unless I want to. I spend about one hour per month in my headquarter school, and I spend an average of maybe five hours a month in my second school. My staff is on task and completely takes care of the schools.
DN: With the benefit of hindsight, if someone is looking to grow their business in the next 18-24 months, what would be the first three action steps for them?
KW: First thing I would say is “Hey, if you are going to grow it for 24 months, grow it for 24 months.” I think one of the big mistakes that I made, and I see people making it all of the time, is they get very short-sided. What works today and will make me more comfortable today instead of having a plan and understanding that even if you have 10% growth – it may not sound like much but by the end of those two years you are looking pretty solid. Instead of, I want that cash payment and I want to feel better about myself now. And in 24 months you haven’t grown anything – you’ve basically walked in place.
Second thing I would do is really make sure that your customer service is solid and on point. On Facebook this morning, they were talking about prices and I was looking over what everyone charges for their memberships and I saw $50 per month. I don’t know what these people are renting or how they can make any money. We are by far the most expensive at $189-$239 a month. When parents call they will say; “That’s expensive” but when they go through our introductory process they go “That’s a really good deal!” So we really pay attention to customer service. When we failed, we failed because I thought I was bigger and better than what I was. Now I really try to go and approach it with humility. Really care about my students and really focus on their development and improvement. The adage that you aren’t competing against martial arts studios…you’re really not. You are competing on any dollar that the parent would spend on expendable income–what they are willing to pay for it. If you make yourself so much better than everyone else, they’ll invest their money with you.
DN: I agree completely. There seems to be a couple of camps there: one is sales and marketing, others say its retention and service. I think they are both right. But you need to find that balance. And people have a tendency to get unbalanced and there are very few things in life that work unbalanced.
KW: I agree, and I really believe even though it’s balanced it needs to go on the side of customer service. We’ve known each other for a while, and I know you know I’m a big supporter of customer service. Let me give you a quick story. In like 2007 when we were making that money, I was going into restaurants and I would immediately scan the room and think: “Is there any parents I have a problem with? Do I want to eat here?” Where now when I go into a restaurant parents usually go and buy me a drink, buy me dinner. So this lifestyle is so much better. One of the other cool things is we donate 5% of our profits back to our public schools. I’ve already donated over $33,000. The principles love me. The PTA and home school programs support me. When you have the schools, life becomes very, very easy and you get that because you are really focused on customer service.
DN: Yep, I agree. In conclusion you’ve taken a school that you were losing ground on and you turned it around. You did it through studying under some of the top people in our profession and by focusing on customer service.
KW: Yes sir. Life couldn’t be better.
DN: That’s great, sir, and we congratulate you on everything that you’ve done. Thank you for your time today.