When I was young something was planted firmly in my mind – I didn’t even recognize it – are you ready? Bigger equals Richer – More Sophisticated equals More Substantive – More Students equals More Profits – More Staff equals More Results – and, More Revenue equals More Profits.
You know what happened ? I added more and more locations – more and more staff – focused constantly on Getting the Gross Up.
You know what happened? The bigger I got – the harder I worked. I started finding out that you can gross $200,000 in a month – and, guess what – still not make any money after all the staff, landlords, advertisers, and insurance bills are paid. It’s really a bummer to sign that many checks – and, really not have that much left over.
You know what I’ve figured out since? If you have a school running nicely with two full-time people and you add another full time – with no other changes – everyone just does 1/3 less!. If you have a high profit operation running in 3,000 square feet – and you add 3,000 square feet (to keep up with the “big boys”) – with no other changes – you know what happens? That’s right – you just run the same number of students through a LOT MORE EXPENSIVE facility – and, now this is the kicker – everyone assumes that you are A LOT less successful – because the school just doesn’t look very busy anymore!. Sure, everything else being the same – a HIGH gross is way better than a LOW gross – it’s just that revenue doesn’t equal profits and, size does NOT equal success.
Anytime you make a decision to increase your square footage, add a staff member, or upgrade your facilities – make sure you have all the steps in place to make sure that these changes effect not only the “top line” – ie. Revenue but also the “bottom-line” – what’s left over. In fact, if you figure that bigger facility, larger staff, or facilities upgrade will just add enough to your gross to pay for the extra expenses – DON’T DO IT!. Bigger is almost by definition – more complicated, risky, and difficult to manage.
Our industry is replete with well intentioned school owners who – when they had a nice thing going – screwed it up by:
1. Adding a second location;
2. Turning their nice little school into the “Taj Mahal” of karate schools;
3. Hiring everyone who asked for a job;
4. Taking up golf, tennis, or jujutsu – and, leaving the school in the hands of the “employees” expecting the results to stay the same.