The Dirty Little Secret Of Martial Arts Business:
I know some very,very successful (at least financially) martial art school owners, many I call my friends.
We talk about marketing, curriculum, staff training and all the usual stuff.
But we never, ever, no-way, ain’t gonna do it…talk about lesson liability.
Call it PIF’s, Cash-outs or Pre-pays, it’s money not earned yet.
You know, where you charge $4999 upfront for a 3 year program.
Here’s the part they don’t want to talk about: You get the 5k but you also OWE 36 months of lessons, OR YOU OWE THEM THEIR MONEY BACK.
What if they trained a year and you close? You owe them 24 months of lessons or a refund of $3,332, that’s Lesson Liability.
Got 50 students in that situation? You have a Lesson Liability of $166,600.
Got 5 schools with 50 PIF’s each? Yer on the line for $833,000….
That $833,000 needs to be shown on your balance sheet as a liability.
And you need to show it if you ever want to sell your school.
Run your school on cash out’s so you can stay open to teach the others who already cashed out? That’s called a pyramid scheme….
My point? Beware of getting yourself behind the 8 ball with too much lesson liability, and when the guru’s tell ya they makin’ a ton of money, ask them : Whats your Lesson Liability? I bet ya a beer they won’t tell ya…