Transitioning to Contracts

[Oso]

Has anyone else gone from month-to-month or 'cash out' quarterly/bi-annual/annual tuition plans to contract only?

How did you present it?

How was it recieved?

[TenTigers]

depends-how big is your school? Do you have more than enough to float your costs if you cash out students, and then have a slow period, or drop-outs? Do you have a steady inflow of new enrollments? How good is your retention? All these variables need to be factored in before you cut your own throat with a quick-fix this month, which could end up killing you down the road.

[Oso]

In April I had 26 students enrolled.

It's not intended to be a quick fix but something I've been putting off due to ostrich syndrome.

We are just in the planning phase now and would like to implement for September.

Do you have more than enough to float your costs if you cash out students, and then have a slow period, or drop-outs?

No, that's part of the problem, we've got a real up and down due to using quarterly cash outs and we've had a large percentage of people deciding to take a month or two off in the summer...disastrously so.

Do you have a steady inflow of new enrollments?

so-so...some new strategies in marketing are also going to be tried.

How good is your retention?

fairly good I think but not as good as I'd like of course. honestly though, I can only think of 1 or 2 students that I've lost because of the way I teach or the basic program.

All these variables need to be factored in before you cut your own throat with a quick-fix this month, which could end up killing you down the road.

agreed, I understand that I may lose people who don't like the idea of the contract.

But, most of my problems aren't from new students, it's older students, who I believe will be back in a month, that have a track record of whimsically deciding to take a month off.

Bottom line is I'm trying to get some consistency to the cash flow...both the industry mags I get have had recent articles decrying 'cash outs' in general and have presented good argument for contracts.

I've thought that the simplest thing is to not try to convert old students but just bring new students in via contract.

[Three Harmonies]

As a teacher I totally understand why people use them.
As a student I cannot stand the ****! I prefer to control things, not have automatic withdraw and what not.
Jake

[Oso]

ok, well, these days most contracts have at least 60-day if not 30-day opt out clauses. so, no one is completely locked in.

also, pretty much all money transactions are going electronic these days...most banks don't even send each other the paper checks anymore. the day of cash and checks is soon to be over.

besides, the place I'm looking has the option of the student receiving an invoice and them sending in a check...it just costs more to do it that way.

so, essentially I can set it up so that there are several options for the student but the least expensive of them is eft.

[TenTigers]

contracts are the only way to go in my book-although I have a few cash students, and cash out from time to time as well.
I tell them that it is not monthly tuition, but monthly installments on a yearly MEMBERSHIP to the school. This way they see it as the same way they join a health club. They are not paying for the lessons, they are paying for the membership. If they take a month off, they still maintain their payments, just as they would their car payments, mortgage,insurance, health plan, etc.
Besides, when students take time off in the summer, sometimes they don't return so soon. When they rea;ize that they are paying nonetheless, they get their arses back in the kwoon pdq.

[Oso]

contracts are the only way to go in my book-although I have a few cash students, and cash out from time to time as well.
I tell them that it is not monthly tuition, but monthly installments on a yearly MEMBERSHIP to the school. This way they see it as the same way they join a health club. They are not paying for the lessons, they are paying for the membership. If they take a month off, they still maintain their payments, just as they would their car payments, mortgage,insurance, health plan, etc.
Besides, when students take time off in the summer, sometimes they don't return so soon. When they rea;ize that they are paying nonetheless, they get their arses back in the kwoon pdq.

good angle, thanks.

[Notintheface]

Well I have know a few people to treat there schools like health clubs. The offer the following


3 months up front 300 cash up front

6 months up front 600 cash up front

12 months up front 800 (4 months free if you act now) cash up front

Private lessons: whatever price per hour

They do this for the people who do not know if they are full committed with sticking to the program. These are the impulse buyers, summer beach body searchers, new years resolution, Just saw Iron Monkey and I want to fight like that people.

Then they have the: Those who want a membership so they can come and go as they please.
( Toss in a promotional uniform, water bottle, keyring what ever to give it that welcome to the gym feeling...maybe even a permanent locker in the school while those who are not members have to rent one daily)

6 month: Contract: 75 $ toss in a few private lessons for free of 50% reduced price (Deducted from a debit account, checking or credit card system)

12 month: Contract 65 $ toss in a few private lessons for free

(Deducted from a debit account, checking or credit card system)


Now remember these numbers are fictitious and are not a true representation of an actual business model's pricing plan.

Hopefully, Ross could spin some advice this way.

[Black Jack II]

If your using a martial arts contract can you sell the payment stream to a accounts recievable brokerage??

Might be a good idea to get some of that cash up front at a discount.

[Oso]

i've posted this before but here are my current rates:

85/month
75/month if paid quarterly - 225
65/month if paid every 6 - 390
55/month if paid every 12 - 660

if two family members join then they each get 10 off per month at any of the above rates.

college students w/ current ID also get 10 off.

never had a taker beyond the quarterly.

I like the angle of the Annual Membership paid in installments.


Black Jack...right now I don't have anything to sell...no contracts yet...as I understand it that's the only thing you could sell...or use as collateral for loans.

[Notintheface]

85/month
75/month if paid quarterly - 225
65/month if paid every 6 - 390
55/month if paid every 12 - 660

if two family members join then they each get 10 off per month at any of the above rates.

college students w/ current ID also get 10 off.

So I am taking this as if they signed up for 12 they would pay the lump sum of 660 up front correct?

The problem with this is the same problem Health clubs face. They have dry spells. That is why around Christmas, after thanksgiving, New Years resolution time, and the start of the summer body rush they offer special deals and prices.

Say there normal year on contract is 1200 for gym fees

what they do around the above time frames they will offer 3,6, and 12 month buy rate that is slightly cheaper than the pay by month contract. The impulse buyer would look at the cheaper cost and usually go with that.

So they would set something up like this....(This is my friends business strat)

Come in with coupon A and sign up for a NEW membership.

3 months just 300

6 months 550 OMG a 50 dollar value

12 800 dollars omg a value

now this is where it gets pretty cool. Usually the sales pitch goes through and people usually sign up for either the 3 month or the 6 month because it is cheaper and they are impulse buyers. These people do not stay for long thus they do not take up gym space. So the wave of impulse buyer is usually charted like the following:

Sept Oct end after thanksgiving (Influx of membership where the person rarely takes up gym space)

Thanksgiving to New Years (Influx of membership)

Jan to April ( April beach body month influx of members)

May to June ( medium amount of influx of beach body seekers)

June July August ( Even flow of members joining and leaving)

now the above is not hard fact or science... It is what was explained to me from a health club owner.

To supplement his influx of membership dues. He sent out flyers to Police stations in the area, schools, fire houses, Church org, and things of that nature offering discounted rates. Then he made a deal with the high schools in the area to hold their weight lifting class in his gym at a really low reduced rate.

Allowed the PAL to use his hardwood floor room to host a kids martial arts/boxing class. He took that as a tax write off for charity.

Sent out flyers to local colleges and tech schools adverting reduced prices.

the important thing you and your students have to understand that Business is Business and friends are friends. They have to pay you on time so you can keep the school running and replace that ratty old banana bag. You are offering a service and they need to understand that. You can be friends but don't let that friendship jeopardized the betterment of your school.

The less you have to worry about dealing with collecting dues and keeping things a float the more motivated you will be when coaching your students.

[Oso]

So I am taking this as if they signed up for 12 they would pay the lump sum of 660 up front correct?

correct.

The problem with this is the same problem Health clubs face. They have dry spells. That is why around Christmas, after thanksgiving, New Years resolution time, and the start of the summer body rush they offer special deals and prices.

yep, I've done the same...but I don't have the capital base to hit any newspapers and rely on flyers.

ftr, I spent about 1400-1600 one year on print advertising. zero return.

the important thing you and your students have to understand that Business is Business and friends are friends. They have to pay you on time so you can keep the school running and replace that ratty old banana bag. You are offering a service and they need to understand that. You can be friends but don't let that friendship jeopardized the betterment of your school.

agreed and that's mostly how it works. I've said before that AVL is a wierd town and others have said 'people are the same everywhere' and I would agree that the people that are going to buy in to the empty promises of most mcdojos are probably the same here and if I did that I'd not be worrying about rent.

I feel like I'm stuck between 'markets'

I don't teach kids below 7.

I don't teach crap ass Shotokan

I don't teach MMA (though I'm working on figuring out how to have a full-contact only 'class/curriculum' for those that don't want forms.)

I don't promise people that simply signing up and attending class will improve their life, grades, attention span or personal discipline.

I don't mystify the legends of CMA and I don't preach taoism or buddhism...or pacifism for that matter.

The less you have to worry about dealing with collecting dues and keeping things a float the more motivated you will be when coaching your students.

yea, the other thing that is going to happen with this shift, however it works out, is that all money matters will be handled through someone else here in AVL and the billing company.

[SoCo KungFu]

Not that my opinion means much. But just make sure that you aren't shooting yourself in the foot. I like to see MA schools succeed. Its a **** tough business. I remember my old sifu tried to teach me the business side of things and him telling me the average MA school doesn't last past 3 years.

Anyways from a consumer POV. When I am searching for a school in a new area there a few key things I look for. I always try to do research before I contact the school. Usually the first thing I look at is the instructor. Mainly experience. Simple things like tournies and stuff that they might frequent. After that a lot of teachers have a bio on the site and I'll check out things like passed career and stuff. Things like Police background, military and such that would lend to a "combat background" so to speak. I know it sounds a bit weird but I'm particular about my training (Hey its my money after all.) And a "martial" background is even more important to me if they don't frequent some sort of tourny scene (with competitive sparring at least) or they don't have some sort of indication that this is a major aspect of curriculum (sorry but I've seen WAY too many McDojo since I joined the military and travel every couple years.)

Usually the next thing I see is fee. If there is a contract involved the first thing I ask myself is, "Whats the deal that they gotta use a contract?" Then I go to the first things I looked at. If the sifu looks good, some sort of sparring or contact involved in the training, etc. then it tends to tell me its something with the students and either the training is more difficult or whatever and they don't stick. This to me actually makes me more interested. If however I don't see some things indicative to what I'm looking for in the areas I first looked, then I start to get scam alert.

Honestly I understand why schools are having to try these things to keep up revenue. Students are tough to keep. And I do have to say that my situation is biased against contracts because of my career. I'm just not going to buy into a financial commitment because I might have to leave at the drop of a hat and thus be unable to receive the service I pay for. That and I don't know your city. Florida is terrible because of the migrant residents. The northerners that buy up property but are only here during the winter months. They keep their land, but are only supplying to the economy half the year. It makes it tough here for everyone that is here year round. So I understand why some schools in this area have moved to a contract base.

Its just so typically contracts are the first blinking red light of McDojo that I just avoid them like a plague. And I'd hate to see your school suffer. But you know your market area so I think you'll be alright.

I do want to ask though. I remember you mentioning something like this before (I'm pretty sure it was you). You mentioned you were becoming frustrated with students not sticking around. You had your core, but most just come and go. And thats typical of most people who get into MA, they just don't stick around more that a few months to a year. So I want to ask, are you doing this because of the students? Or to keep your lights on? Both? Because if its just the students, contracting the impulse buyers (even if it keeps you door open) isn't going to solve that frustration. They are still going to leave after that 3 or 6 month contract.

I just say that because I'd hate to see another sifu become frustrated with this same issue. I remember my first sifu telling me on a number of occasions how much he wanted to up the intensity of the class. All the other students always commented how much harder he was on my brother and me. He wanted to do that with everybody and put together a good core group of fighters and such. But he would say he just can't do it because all the others would leave. And as much as he liked teacher my brother and me, we don't pay his mortgage. Eventually he got burnt out of teaching and sold the school It later closed down and now my friend tries to teach the 3 or 4 that still like to train. Nothing hard core though, they just can't take it.

Anyways, I know this wasn't really helpful post. I just wish you good luck. All the Pong Lai guys I've met have been cool and I'd like to see you all have successful schools and keep it real mantis style

[Notintheface]

Take your guys to a local park on the weekend and train them there with weapons flashing, if the law permits, pads a banging, and forms a flowering. Make sure to give it a wow factor and bring a lot of flyers. People will come and look and oh and ah. Have students ready to give out flyers.

yep, I've done the same...but I don't have the capital base to hit any newspapers and rely on flyers.

ftr, I spent about 1400-1600 one year on print advertising. zero return.

people that are going to buy in to the empty promises of most mcdojos are probably the same here and if I did that I'd not be worrying about rent.

They don't have to be empty promises. What does your martial arts style have to offer them? What is the benefit of having you as an instructor? saying something like this is not an empty promise "Training in my martial art will help you lose weight, become fit and feel better about yourself" ( I am not an advertising adept so the wording may be poor)


I don't teach kids below 7.

You don't have to teach kids younger than 7 to be successful. Do you donate some to the local schools by performing a martial arts demonstration.? Invest in creating some grab bags with flyers, coupons and stickers to give the kids. Contact school PTA's and offer to speak about obesity and children and how martial arts will help in regulating children's weight. Set up a conditioning class for children.

Children and parents are weird. When a child becomes fickle because the class grows stale they then leave, plain and simple. Keep it fun and loose but grounded in reality. Pull out the basics for the kids and be creative in the manner how you teach it.

Pull out for example all the throws you know and then practice it a few times slow with them have them gear up and say ok we are gonna spar now only using the throw you just taught them. (Be careful on the choice of throws you teach them lol ). Make it a contest to see who gets the most throws by the end of their round and you keep track of it in a visual format for the kids to see. they will go above and beyond trying to make the technique work just to say they are the winner. (remember to to teach sportsmanship)

I used to also buy recycled sheets of paper and place them between holders and have them perform a team relay. People will see this as Mc dojoism but please bear with me. They would then perform several striking and kicking combination down a length of the room and at the end kick or strike through the sheet paper run back down to their team mate, tag them, and go to the end of the line. During this activity they would usually throw about 15-20 kicks, 20 hand combinations, perform some sit up and push up all the while being motivated by their classmates

I don't teach MMA (though I'm working on figuring out how to have a full-contact only 'class/curriculum' for those that don't want forms.)

You don't have to teach MMA to have a successful combat class. Do you have basic punches, throws, kicks, sweeping techniques? If you do then you can easily pull all that stuff and set up a curriculum for San Da.

Remeber that your clients are going to want all want different things from you but you have to decide how you want to run things without sacrificing what you think martial arts should be.

I don't know how many days a week you teach or for how long but check out the class styles and description I will list.

offer classes like this to attract different type of customers.

Adult This reflect the business side of me and not what I think is real and unreal when it comes to combat.

Kung fu for health- This class is focused on performing lots of pad work, body conditioning, endurance training, stretching, ect , ect..... Think of this like the training one does when getting ready for a fight without having to actually go fight. Keep it high impact, energetic, highly motivated, and positive.

Kung fu traditional: Your traditional stuff but have those who sign up the traditional class also be included in the "for health class" so during this class you can concentrate on forms, weapons training, techniques and what ever else is included in the "traditional"

San Da/ Sparring course- kicking, punching, throwing, blah blah blah.

Kung fu competition : Those who want to compete but don't want to fight. concentrate on getting them into competition shape.


All of this is off the top of my head, you would have to sit down and create a business plan and decide what type of clientel you want to attract, how are you going to meet their needs, what do you think you can offer that is better than the rest, ect , ect.

I don't mystify the legends of CMA and I don't preach taoism or buddhism...or pacifism for that matter.

You don't have to!

Believe it or not a lot of the MMA schools are learning how to run a gym from watching Mcdojo practices. They keep the integrity of their martial arts club but use the business practices which have been proven to be successful.

You may want to talk to Ross or anyone else who has a successful school, full time, to pick their brain. I have not successfully operated a school in close to a decade. Also think, do you want to teach MA and only do that for the rest of your life or is this just a part time thing.

[Notintheface]

[QUOTE]

Its just so typically contracts are the first blinking red light of Mc Dojo that I just avoid them like a plague. And I'd hate to see your school suffer. But you know your market area so I think you'll be alright.[/QUOTE

I know many MMA schools that use contracts, gym fee format, monthly format up front, and per class format very well. Contracts is just smart business practice. It is only associated with Mc Dojo because they were smart enough to use it first with any success. To be less Mc Dojoish if you feel that contracts are bad, offer a buy out clause to pay 50-75% of what is left on the contract.

You can also notify them that they can freeze membership but they still have to finish paying off the contract. Meaning, if they have 4 months left on their contract and have to leave the state they can freeze it and then come back later to finish off that 4 months.