The Dirty Little Secret Of  Martial Arts Business

10
40

The Dirty Little Secret Of  Martial Arts Business:

Lesson Liability….

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…

10 COMMENTS

  1. I remember going through this with a consultant back in the late 80’s. He said, “See, sell a Black Belt program and you make $1999 this month from one student”.
    I replied, “No, if I do that I make $55.50 this month (1999 divided by 36 months), I have just pre-collected the remaining 35 months”.
    He didn’t have a good answer.

  2. Hello, Neat post. There’s an issue along with your website in internet explorer, may check this… IE still is the marketplace chief and a huge part of other folks will leave out your excellent writing because of this problem.

  3. Thank you, I have just been looking for info approximately this topic for
    a while and yours is the greatest I’ve found out till now.

    But, what in regards to the bottom line? Are you sure concerning
    the supply?

  4. Amazing blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple tweeks would really make my blog stand out. Please let me know where you got your design. Appreciate it

  5. A formidable share, I just given this onto a colleague who was doing slightly evaluation on this. And he the truth is bought me breakfast because I found it for him.. smile. So let me reword that: Thnx for the treat! But yeah Thnkx for spending the time to discuss this, I feel strongly about it and love studying extra on this topic. If doable, as you become experience, would you mind updating your weblog with more details? It’s extremely useful for me. Large thumb up for this weblog post!

  6. I’ve been browsing online more than 3 hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. In my view, if all website owners and bloggers made good content as you did, the internet will be much more useful than ever before.

LEAVE A REPLY