HOSTED BY GEORGE FOURIE

138 – Building A Thriving Martial Arts Business For Generational Wealth

[powerpress]
Michael Scott shares the 3 core areas he focuses on for a fulfilled life, and building a martial arts business that fuels generational wealth.


IN THIS EPISODE:

  • Are Google Ads getting better results than Facebook Ads?
  • Having an exit strategy when retiring from your martial arts business
  • Your martial arts business as a vehicle to build generational wealth
  • Having an accountability partner you can trust and who supports your goal
  • Why have membership contracts
  • And more

*Need help growing your martial arts school? Start Here.

 

TRANSCRIPTION

GEORGE:  Hey, it's George Fourie. Welcome to the Martial Arts Media™ Business Podcast. Another great interview for you today. Michael Scott from CMA Campbelltown Martial Arts in New South Wales. 

So I've known Michael for a little while. We've been working together in our Partners Group. When you meet someone and they're not at the front of the conversation, but when they speak, you want to listen because it's always packed with wisdom. 

In fact, at the end of last year, we did something fun in our Partners Group and we gave out awards within the group, and Michael was named the Wisdom Whisperer, and just for that reason, sits back, observes the conversation, but when he speaks, it's packed with wisdom.

Now, Michael talks about the three areas that he focuses on in his life way beyond martial arts and actually how he has used his martial arts business as a vehicle to grow wealth and build generational wealth and talks about investment strategies and things that he does after that. So, you're going to love it. 

I loved doing this episode. Head over to martialartsmedia.com/138. You can download the transcript and all the resources. And please do me a favor, if you love this episode, share it with someone that you care about, a martial arts school owner or instructor. I'm sure they'll get a ton of value from this. 

All right, let's jump in. Michael Scott, welcome to the Martial Arts Media™ Business Podcast.

Michael Scott | martial arts business

MICHAEL:  Thanks, George, I'm not happy to be here, but I'm here.

GEORGE:  Hang on. I've got a guest on my podcast who's not happy to be here. Why is that?

MICHAEL:  Well, it's nothing to reflect on you, George, just I prefer to stay out of the limelight if I can. I like to sit in the background and gather all my information and make my decisions from there.

GEORGE:  Right. Perfect. And that is the entire reason that I've actually invited you to the show. So a bit of context and then we'll jump into things. So Michael, we've been working together for quite some time in our Partners Group, and in the last year we did something fun and we were giving out awards for just different aspects of value, which a lot of members in our community bring to the table. 

And for Michael Scott, we deemed Michael the Wisdom Whisperer and we thought the Wisdom Whisperer was appropriate for Michael, pretty quiet, sitting in the background, observing. But when he speaks, it's always of value, packed with wisdom of combination of the years in martial arts, building the business in the right way, investment portfolio, etc. 

I had to really twist the arm here to get Michael on, but I know it's going to be super valuable as it is when we spend time together each week. So thanks for making the exception, Michael.

MICHAEL:  You're welcome, George. It's funny, even though I say I don't like public speaking, I really don't like public speaking, but in my previous working life, I've completed Toastmasters speaking courses and all these other stuff to help you speak better in public. I still don't like to do it.

GEORGE:  Perfect. That's cool. So let's jump into some practicalities. I've got the first question I always like to ask. When it comes to marketing, and attracting new students, what's been your go-to strategy? Your strategy that's been most successful either recently or of all time?

MICHAEL:  Of all time, I would have to say referrals. I think referrals have always been a great way to gain new students from day one till now. That seems to be the best. If they're referrals, they're not a warm lead, they're a hot lead, They're ready to go. So for my money, as you've heard me say a million times, George, I'll pay $100 every day of the week to get a good referral, something that's of value.

Apart from that, having been in the game for a long time, I've seen the change in where our clients come from and it started off trading post ads to yellow pages ads to pink pages ads to local paper advertising, a little bit of radio advertising. And now we're down in the rabbit hole with Google and Facebook advertising. I did my stats the other day actually, and Google is bringing in more students than anyone else at this stage.

GEORGE:  Interesting.

MICHAEL:  We get more leads through Facebook, but we convert more through Google.

GEORGE:  I love that. It's very interesting how the dynamics have been shifting over the past couple of years. And if I had to add to that, I think when I started working with martial arts school owners, I was probably not even active on Facebook, but I learned direct response marketing through Google Ads and it was always the go-to place for me because I knew at that time it was the more complex machine to get going. 

But once you get it going, the maintenance is just a lot less because it's search-driven and not newsfeed driven. And the whole difference, for those of you that are listening that don't know, if you look at Google leads, you get the intent. 

People are more intent-based and so they're actually going physically to the search engine to search for something. Whereas Facebook, it's interruption-based, meaning you got to put things in front of the newsfeed for them to snap them out of their trance of looking at cats or procrastinating or doing whatever they're doing with a good irresistible offer for them to actually respond to.

And there's definitely pros and cons to both. There's definitely pros and cons to how they can work together. But the interesting dynamic for me is how it shifted from Google being always the player and then Facebook came in and Facebook is just the go-to lead source and it still is for a lot of people. But the mature system is Google with the mature ad platform.

And I know a lot of people are getting a lot of issues with Facebook and just pages being restricted or things being flagged because the AI isn't as dialed in where Google has really mastered this over time. And we seem to see the shift as people don't pay as much attention to Facebook and social platforms and how Google is becoming again this powerhouse. So it's interesting. 

So you did the stats in a comparison of actually who are members and who are not members?

MICHAEL:  Always. Yeah. Each month I go through and I look at where all our leads come from. So my CRM spits out a report of where all the leads have come from and then I just refine that report and I just click on a button and say, “Okay, now I want to know what leads turned into active students and just goes bang.”

GEORGE:  Nice.

MICHAEL:  So it makes life very easy for me in that respect. And the other area I guess, which I didn't mention, is the website leads, which is something we’re just starting to see a return. So as you know, you helped us tweak our website a little bit. 

We've just done a completely new website, so that's starting to gain momentum now as well. So I'll be interested to see where that goes as far as our leads and conversions over the next 12 months. Because we were one of the first martial arts, I guess, to have a website when websites first became a thing in Australia. 

But we didn't really do much with it. We just went to someone who created a little website for us and we just plotted along until now. And it's only now we decided, okay, well we've played with Google, we've played with Facebook, we've played with everything else, let's play with the website leads and see where that goes. 

So yeah, with your input, we've done a few tweaks to it and they've completed those tweaks for us. So I'm looking forward to the next 12 months.

GEORGE:  Love it. So take us back, because I mentioned that you've been in the industry for quite a while. Just give us a bit of an overview, your background, your story, how you got into martial arts and how everything's evolved to now.

Michael Scott | Martial Arts Business

MICHAEL:  I guess going right back, I started in boxing when I was 10 years old. That was mainly driven through my father who was ex-military. So he taught me the basic skills in boxing. And then I went to PCYC like everybody else did back then and just boxed regularly there. 

I did that all through school till I was about 18 I think it was. And I got bored with it, to be honest. I was looking for something else. And at that stage, Bruce Lee, all that sort of stuff was out. I always had an interest in martial arts movies, whatever was around. 

I go back to the early days of phantom agents and stuff like that, which was on Saturday morning. You may not even remember them, little phantom ninja guys, who jumped up and down in trees and spat little stars at people.

GEORGE:  Right. Yeah, I do actually.

MICHAEL:  But yeah, that's probably my first inkling into martial arts. Even when I turned about 18, I'd left school, started working, and had money on my own. A mate of mine rang me up and said, “I found this thing to do.” I said, “What do you mean you found this thing to do?” 

He said, “I found a martial art for us to do.” I said, “What's it called?” He said, “It's Hapkido, Hapkido, or something.” So what do you mean by Hapkido?” He said, “I don't know, that's what it's called.” And he said, “I'll read a bit about it.” 

And it just said, “I can't remember the spiel, but it's basically learned jumping, flying, spinning kicks, bone-crunching techniques.” And I said, “Oh, that sounds like us.”

So I went in, looked at the school, and set a day where I always watch two lessons. Joined in the third lesson and I've been doing it ever since. And then in the night, that was early, that would've been early '80s, I started doing that and still doing that to this day. 

And then in the early-mid, about '96, I got introduced to John Will with a seminar he was doing in Sydney with John Will, Jean Jacques Machado, and Richard Norton. And that was my first foray into what's now known as Brazilian Jiu-Jitsu. 

And I started training from then I just… After the seminar, I said to John, “So this stuff is cool.” I said, “Where I learned it .” He said, “From me.” I said, “Where do you buy?” He said, “Geelong.” I said, “How long does it take to get from Geelong to Campbelltown? 

I didn't know. I had no idea where Geelong was back then.” He said, “I'm in Melbourne.” I said, “Well that's a bit hard.” He said, “I'll come and see you.”

So that's where the relationship started. In the early days he came up and saw us four times a year. So I got access to him four times a year as well as he did whatever other Sydney seminars he did, I went along and did those as well. And I've been with John ever since, still plugging away BJJ as well. 

And I like anything in martial arts, any weapon, any style. If I can learn something, I'll learn it. I don't have any preconceived ideas of one style or one person's better than the other. 

And then I started, I think it was about '92. I left my instructor just not really left him. I left the organization because they were all teaching in small scout halls and school halls and that type of thing. And we'd already moved to a full-time premise. Well, it wasn't really, well it was a part-time to full-time venue.

So there's certain things we wanted to do. We wanted to do our own marketing, we wanted to do our own T-shirts and cups and we were just all excited about putting everything out there. 

And back then they had a little committee that he had to go through and I just said, “Well, this is a waste of time.” He said, “You guys are operating with 20 students. I've already got 90 students in three months.” So, I said, “I'm heading out if you're going to try to restrict me there, I'm going to do my own thing.”

So, I walked out, did my own thing, and that was '92, that's where it all started. I had a partner back then, Steve, you might know Steve Perceval, he was a partner with me, but he only stayed a partner for about 12 months. 

And then he went off and did his own thing. And then I moved to… It's '93, let's see, about '94, I moved to the premise I'm in now. And in 2000 I bought it. They wouldn't let me buy it until 2000.

So I bought it just prior to the GFC and that's how I got into it. I'd been working in marketing and I'd owned different businesses previously. And my company where I'd worked a long time for got taken over by someone else. 

They said my job was no longer a position there. So, I went and I looked for other positions and I thought, well, the position I had was just near home. I did a lot of travel, international, national, but the office itself was five minutes from home.

So when I started applying for other positions, they were all inner city and North Sydney and they're a nightmare to get to. So, I just said to my wife, “I don't want to work anymore.” So, she said, “What do you want to do instead?” I said, “I'm not sure. I think I want to run the gym full time.” 

She said, “What do you mean do it full-time?” I said, “Oh, I'm going to go sit with the accountant. I went and sat with my accountant, went through all the numbers.” She said, Look, you've turned other small companies into million-dollar companies for other people. Do it for yourself.”

So I left and I started doing the gym in '90, whatever it was '92, I started the gym. So I was probably about 12 years later, I went full time and haven't looked back since. That's pretty much how I got into it.

GEORGE:  Love that Michael. So I want to, something you touched on that you did quite early is you bought your premises. So you mentioned, so it was five years, right? Is that about a five-year window, a six-year window, and then you bought it?

MICHAEL:  We moved into the building and I leased it from '93 I think it was, or '94 we moved in, on a lease, but I wanted to buy. I offered the owners straight away, I said, “I want to buy, I want to buy, I want to buy.” And they kept saying, “No, no, no, no, no.” 

Until 2000, just prior, must have been February, 2000 because I think GFC came in July, 2000. So about February, 2000, they finally said, “Yes, we'll sell it to you.” And I said, “Great, I'll buy it.” 

I didn't know how I was going to buy it because my wife was eight and a half months pregnant with our first child, just about to give up work going back to a single income. But we did, we just bit the bullet and said, “Yep, let's do it.” And haven't looked back since.

GEORGE:  I know you're a big property guy and numbers guy. What was your thinking at that time? Was the numbers and the property, was that always a thing that started early or how did you evolve to putting all the emphasis and focus on buying the property and then we'll talk about what followed from there?

Martial arts business wealth

MICHAEL:  As soon as I moved out of home, I never rented. I bought my property straight away. So, I never believed in paying dead money. I just called it dead money. Rent to me was dead money paying someone else's mortgage for them.

So it used to burn me every time. I had to pay for the gym rent every month. So, it was always my goal to buy it. That was from day one. Having an interest in property from an early age, I knew that at least in the Sydney market, the property doubled every 10 years.

Property values double on average, some a little bit earlier, some a little bit later, some a little bit more, and some a little bit less. So, I knew if I didn't buy it, if I let it go for another five years, 10 years, it could be out of my reach at that point in time. So that's why I really wanted to buy it and I knew it'd just keep going up in value anyway. 

And my wife and I, because she was going off on maternity leave, we knew we'd be on a fixed income for quite a while. We just took out a fixed-interest loan. So, it was high, but we knew we could cover that cost and we knew that cost wasn't going to go up, so that's what we did.

GEORGE:  Walk me through your thinking a little because if I look at a lot of school owners today, the goal is growth. We're going to open this school and we're going to open the next school and the next school and expand the organization. How long have you been in the business?

MICHAEL:  30 years.

GEORGE:  30 years? Right. In 30 years, and you've gone the other direction. You've kept one location, you've built it highly profitable, but then you've taken the profits and you've built up this property portfolio and investment portfolio on the back end of your marginalized business. 

Was the motivation ever to expand the one martial arts school and go in that direction or where do you feel you sit on that spectrum?

MICHAEL:  I'd still like to have a second location, third location, and fourth location. But finding the right people to do it is very, very difficult. And a good friend of mine, an associate of yours, Fari Salievski, he's got quite a successful martial arts school. 

I consider him one of my mentors from early on in the business side of martial arts and he has multiple schools, but he doesn't own any of them. He just owns the one he's in. And I asked him the question many, many years ago, I said, “Why haven't you got yourself a second or third location? You can afford it.” 

And he said, “You just triple your headaches and you don't triple your profit.” So all his schools, all the individual schools are owned by the people who run them. I've been waiting for one black belt to come to me and say, “Hey, I'm moving out of the area. I want to open a school.” But it hasn't happened yet, still waiting for it.

GEORGE:  Got it. Now in the reverse of that, you've got your son, Ethan, who is a big part of your business, right? Stepping up to basically run the school.

MICHAEL:  Yeah, I guess in any business you need an exit strategy. So my goal was always to combine my business as both an exit strategy for me and a generational vehicle of wealth for future generations of my kids. And I just hope to God that one of them was interested in it. 

Martial arts business wealth | Martial Arts Super Show

Luckily, they're both interested in it. Ethan works full-time in it as of now, funny enough though, I asked him if he wanted to open a second school and he said no. Now whether that comes from my input on it, I'm not sure. I'd be interested to see what he does down the track.

But I guess he can just see that the work that goes into running one business, whether you want to branch out to two, I know a lot of people do it successfully. But yeah, just for me it's just something that's never really grabbed me to own another and run a second one as my own. 

But to have an instructor who had an interest in it, I'd be happy to own the building. They can pay rent, do all that, I'll put the systems in there. But everything else, the day-to-day running would be up to them.

GEORGE:  Got it. So, do you mind walking us through your investment strategy? I know you've got a bunch of properties and you mentioned now as well you'd be happy to buy the building of a school and have somebody in there as well. 

So, again, thinking on the property route, walk us through your investment portfolio and how you go about generational wealth and how you are working towards that?

MICHAEL:  Okay. I think I've spoken to you before, but probably not in this environment. I have three areas that I look at. So one is my current self, which means where I am currently in life with my family, my boys, and everything else, which means I need income to pay for current things like day-to-day living, mortgages, school fees, holidays, cars, and all that sort of stuff. 

Then your future self. So, my future self is something I work on for when I'm no longer… Not that I won't ever stop working, but I'm no longer reliant on the income from the business.

So I need to create a way that I have an income that the business doesn't have to cover me and then I need generational wealth, which is a way to create wealth for future generations. So in my retirement, when I slow down, when my wife and I slow down, we're not going to eat into or affect that generational wealth that will just stay there and that'll be the boys' problem to figure out once we're gone.

GEORGE:  Got it. So do you mind leaning in a level deeper on how you approach those three things?

MICHAEL:  Yeah, so they're the sort of three, I guess three stages of life that we all go through. So I guess I've broken it up into three stages of life and I'm probably not the first one to do it and I've probably gained this, gleaned this from someone speaking seminar or something I've heard, but it made sense to me. 

So they're the three stages of life and then I have three areas to work with. My first area is my business. So my business looks at my current stage of life, my future life, and my generational wealth. So it can sink into all three areas. And then I have my self-managed super fund, which is a whole subject on its own and it looks after future self and generational wealth. 

And then I have my private investments and they can look after all three areas as well so they can look after my current self, future self, and generational wealth. So that's how I structured my financial position if that makes sense.

GEORGE:  Yeah, perfect. So what investments do you prefer? Let's start there and then we'll go from there.

MICHAEL:  I like property. I like tangible things. I was caught up in the global financial crisis. So my wife and I had… We lost 50% of our super overnight in one fell swoop. It was just gone. 

And I know within five to seven years it recouped itself as a whole. But that scared me because I thought well they're just taken from me. If I wanted to retire on that day or do something on that day, half my assets just went out the window. So that was 2007, 2008 I think somewhere around there.

So at that point in time, my wife and I went and started our own self-managed super fund because I said well, no one's going to control my super except for me so that was the start of the self-managed super fund. And then the first thing I did was I transferred my building into it.

GEORGE:  I'd love to know more on that but just for our American listeners, that'll be equivalent. Super would be equivalent to a 401(k) if I've got that right?

MICHAEL:  A 401(k). Yeah. But I don't know whether they have the access, I don't know whether it's Americans who can manage their own 401(k) or whether it's just whatever the employer does with their super fund, that I'm not sure of.

GEORGE:  So, walk us through that process if you don't mind. And I know I'm asking the investment style questions, if there's anything you feel is not good to share, I mean you're more than welcome to retract of course. But if you go about, walk us through that process of you mentioned your property into the super fund, how does that work?

Martial arts business wealth

MICHAEL:  As I said, we took out a fixed-interest rate loan to buy the building and I think it was on a five-year fixed-interest loan. So we just said, “Yeah, okay, we're going to survive five years paying a high-interest rate.” But we didn't. We refinanced and paid it out within three years. 

So we owned the building within three or four years. So once we owned the building, we had some decisions to make. I mean it is paying rent to us which goes on top of your income, which you pay tax on, etc.

And I thought well we got a self-managed super fund with shares and sitting in there, which we can't do anything with. So I thought let's have some… I did some research on it obviously, looking to speak to a few people.

And I said, “I'm going to put the building in there then it's safe.” No one can touch it. It's in there forever and a day. The downside of putting it into a super fund is that you can't use the equity in it, that's just locked away in your fund.

So it has drawbacks but then it has advantages as well. That was the first stage. And I guess long term, if you're talking long term but self-managed super funds, once you hit 65, everything you draw out of it, it's tax-free. So again for me, I was looking at my future self and generational self, I guess.

GEORGE:  Right. Your property is in the super fund. So how did you then restart the investment cycle into different properties from that point?

MICHAEL:  So I have properties in and out of super. So I always look at both areas. Obviously, properties you're putting to super are pretty much there for life, properties you have outside of super, you can play with them, you can use the equity in them to get more, you can sell them, you can do what you like with them. So that's why I look at both areas.

GEORGE:  All right. So you've got a lot of experience in doing investments and working with property. What advice would you have for a school owner that's starting out, starting to see success with this school, and now they're looking at, right, well what's the next step for me? How am I going to start investing? Where would you start?

martial arts business

MICHAEL:  I guess it's hard because you don't know anyone's personal situation. And I guess the biggest thing too, which I didn't mention, which I should always mention is that everything I do is gold stamped by my wife. And you've got to have such a good partner because they've got to be 100% on board with what you're doing. And if you haven't got that it makes it very, very difficult.

So my wife's very good. I mean we've just finished doing taxes for the business and for personal and for self-money. I just hand piles of paper to sign as she just signs it all just because we have that I guess undivided trust between each other. 

But yeah, I know a lot of couples where one partner wants to invest, they're keen, but the wife's very reserved in investment strategies and unless you're both on the same page it just will not work.

So that's my first thing. If you're going to look at any investment, talk to your partner, sit down with them, go through it all, make sure they understand it. They might not want to be involved in it but as long as they understand it and they support you, I think that's a good starting point. 

And if they're looking at property, I have a guy who does all my property for me. I've recommended so many people to him that they now have properties with him as well. But I only recommend people to him that I know are the right people for him.

GEORGE:  Is that based on the type of property that he does or the more towards the type of person that you send to him within their caliber to make the investments required?

MICHAEL:  Definitely the type of person, the type of property he will match to them. I just make sure I send him the right type of person. Because he's a businessman, I don't want to waste his time with people who just want to go in and tick the tires and get some information and go somewhere else and get some information. 

Although before, as I like to sit in the background, one of my students invested with this gentleman first and he accumulated four properties with him. And I watched these four. I watched him grow from one property to four over a period of two or three years. 

I didn't invest with him or didn't talk to him until then. And being a student, a long-time student, he gave me all the data, he just gave me all his financials and said, “Here's all the financials, my own personal, my wife's financials,” everything with the properties involved in it. He said, “Go through it, have a look at it. If you're comfortable with it, I'll make an introduction for you.”

So that's pretty rare for someone to give you all that information anyway. Most people aren't too happy to share any financial data. But they gave me everything. I can tell you what his wife earned, what he earned, like everything. Because he was so confident in what he was doing that he wanted to show me how confident he was.

GEORGE:  It's why referrals are a good strategy.

MICHAEL:  100%.

GEORGE:  Having that level of trust from someone, I think it's just unbeatable on all levels.

MICHAEL:  Yeah. You can't go past it.

GEORGE:  Where to next with all this, you've got the business, and you've got the property portfolios building, where do you feel your business is headed in the next couple of years? On all spectrums, on just business growth, and on the investment side?

MICHAEL:  Like a lot of businesses, especially martial arts, I feel COVID really hit us hard. We've come out of it doing much better than a lot. But conservatively, I think it cost us 100 students and it probably cost us some growth that we're starting to since it all crashed. 

So it's reopening a new business. We've just been going for 12 months now. Although, we did have a database, a good database to start off with, which is better than a lot of people had. But I do feel it cost us 100 students and I think we'll start to recoup those over the next 12 months. 

So really I just want to get the business back into a good position. So for me, sitting around the 450, I always wanted to get the 500. I never made it to 500 students. So getting to the 400, 450 students is a really good solid base to do what I want to do.

We want to do some renovations, we want to redo our bathrooms, we're putting it, and we want to extend our mezzanine upstairs. We've got all that to do but have been a bit reluctant to do it just at the moment. I just want to give the next 12 months and just see what's happening.

Yeah, I think that's probably where we just really want to see the business. I mean it's just the numbers game with the business, our retention is really good. We do have pretty good retention but obviously, you still need the numbers coming in and anything the bigger you get, the more the numbers seem to leak at the bottom of it, seem a little bit bigger each time. We have to make sure we keep recouping those.

GEORGE:  What do you lean towards your retention and why is it so good?

MICHAEL:  I think it's 30 years in the business. We've refined a lot of systems. We're very systemized. Students know exactly what they're getting. There are no gray areas for them. We have a high standard across the board. 

Everybody knows that if you can't do what you need to do, you don't progress to the next belt level. There are no buts or maybes, our black belt gradings are renowned for being tough and anyone who gets through it deserves it.

And just keeping that high standard I think and a good culture, we have a really good family culture. Everybody knows that you can bring your 3-year-old to train, your 10-year-old, your 15-year-old, or you can train yourself as a parent.

And I guess being in business so long, we've got a lot of second-generation students there. I taught their moms and dads and now the kids are training.

GEORGE:  From speaking with you Michael, I know that you're very straight down the line in your systems and there are no gray areas. What is your stance on a few of those things? Let's say things that come up with students, there are excuses, or people don't want to commit. 

I think we've spoken about this within the contexts as well, how you go about that. Do you mind sharing a bit about that? Just your stance on where this comes from. There's no gray area and not tolerating excuses and everything else.

MICHAEL:  Oh I think it just comes from growing up, you know my boxing background. There were no gray areas, you just did what you were told, there's no about what, about these, about what? There's none of that. 

And then martial arts, my instructor was really tough. He was tough. What he did to us, he couldn't do now, he just couldn't do it. You just wouldn't be allowed. It wasn't anything bad, it's just a different era. 

Everyone training on the floor was 18 to 25 with this, the odd female and the odd younger kid that was it. It was a tough environment and you knew what you had to do to get to your next belt level and there were no shortcuts.

You knew if you messed up in your grading in certain areas you weren't getting your belt. We've put systems into place so the students can't mess up on their grading because there are tips involved and it's nice to go home to parents and go home to teachers. 

So we take away all the problems that could face us integrating before the grading happens. So anyone who's not going to get through the grading doesn't step up in front of us.

GEORGE:  Got it. And your stance on contracts throughout the business, how does this combine with this?

MICHAEL:  I'll go through that in a sec. Yeah, I think it's along the same lines, George. I think if you're going to be serious about anything, you need to commit to it. So, if you're not prepared to commit, I mean we do a minimum contract of 6 months. 

If you're not prepared to commit to something for 6 months, you're really not going to give it a good go. And even six months, the way I talk to parents and people about it, on average, you need to repeat a routine about 21 times to make it a habit.

So if you're doing a 6-month contract, you're training twice a week, you're doing about 26 lessons, 46 lessons, whatever it works out to be, you're maybe getting to the habit, and that's the problem if you're just doing short-term contracts or not contracts at all, it's very hard to get into the habit or even create a routine.

So we've been pretty strong on that stance. We still are. We've just introduced the month-to-month price, but we bumped it right up and it's really for the people who… It's not advertised, it's just for those people who we just know aren't going to get across the line on any contract they have contract phobia, whatever the case may be.

We had one the other day as grandparents, they are paying for their grandchild. Mom and Dad wouldn't pay for it. They just didn't want to commit to a contract. So it'll be right, they cost an extra 20 bucks a week and you can do it month-to-month as you get better. 

So we get an extra $20 a week and my guess is you'll probably be around in six months or 12 months anyway paying a higher price.

GEORGE:  As long as they're not in the contract, they're happy.

MICHAEL:  They're happy. Yeah.

GEORGE:  …To pay the extra two bucks for it.

MICHAEL:  We'll be the exception, not the rule for us. I still like the contracts, I like the commitment we have, black belts have been with us for 20 years. We still do their contract every year.

GEORGE:  Yeah, a hundred percent. I think sometimes there are people that downplay a contract. I see some gyms do this. But then again, all the love to the gym industry. They abuse the contracts that they have to say no contracts. 

And I see sometimes in their sales, in their marketing material, they advertise no contracts as a selling point. But then really, I mean if you can't commit for a short amount of time, is it really going to be beneficial? So, I think it's the value that you place in the contract.

Some people have been, it's a trigger word, something went wrong in a contract and they carry that weight for them through life. But I think it's really good to look at it in the positive sense of what is it that you… Does it tie in with your values of what you stand for? 

And I think that's something that you've communicated with us in the past. It's not the culture that you want to build of people that are going to try and quit. And so it does reinforce a commitment to doing the thing that you said you want to do. 

And I think it's something that is lacking in society just in general, people are very easy to go back on their word of committing to something but then just not sticking through with it. And I think it's good in a sense to remind people of the commitment they had to themselves because they're doing it for themselves and the contract could just be the thing that keeps them re-valuing their decisions.

MICHAEL:  Yeah, 100%, George. I think that society is very dangerous. It's like a transient society now and everything they do, they're just in and out, in and out. If something doesn't work, they just go to the next thing. And that scares me a lot. 

There's no resilience. That's the one thing that most kids and people who start with this, they just lack resilience in all areas of their life. And I think that's the one thing martial arts can really reinforce is resilience.

GEORGE:  Yeah. I had this reflection earlier and I think I mentioned it just talking about maybe it wasn't a parenting situation, but when we grew up we never had a choice. Your choice was limited, you had to do something or not.

In our case, growing up in South Africa, it's like you got rugby and cricket and emphasis on rugby and nothing else. And stepping into this new age and how kids grow up information is just, there's no shortage. How do you filter out the information?

So there's just too much choice. And I think the danger that social media and things like YouTube have expressed upon young kids is they see the result and not the journey. And so it's really easy to just see someone doing something at such an elite level on camera and you see it everywhere and you just… It's really easy to assume that I could just do that and it's really simple.

But then the resilience to actually get there is missing. The journey is missing when people see the results and not the journey and they try and apply and get the same result and they don't get it, disappointment kicks in, and okay, “Well, I'll just try XYZ.” 

I feel martial arts does help with that. You mentioned this is a concern for you. What have you seen that's a real difference in the way that when you started 30 years ago?

And there was this resilience, there was this more hardcore training and now you can't adapt those old strategies for the younger generation and obviously for some obvious reasons and things like that. But where do you feel things could adapt so that you can get the same results and that same resilience out of the younger generation?

MICHAEL:  I think we can get the same results. I think it just takes longer. I guess what I would say is, say one of my red belts nowadays would've been one of my green belts 20 years ago. The skill level would've been roughly the same. But we've had to mold our syllabus to suit the times. 

I guess when I first started training, we'd do walking, standing up a block, lower block and we did it up and down the gym for half an hour and we just do it because that's what we were told to do. But you couldn't do that now. 

You'd have half your student base walk out within a month. So you continually need to be creating something to keep them engaged. I think it's the great thing about martial arts, it has the ability to do that because you can do the same thing 10 different ways and the student thinks they're doing something different. 

So disguise repetition, but it takes work and it takes skill. And I think the other thing that we've noticed with the kids, which is sad to see, is that a lot of the basic skills that kids used to have are gone now. We have kids who come in who don't know how to jump, don't know how to climb. Even running, that is an effort for them.

And these kids aren't overweight or anything like that. They just haven't got the skills. When we were young, we were climbing fences, climbing trees, and we had monkey bars in our schoolyard. We climbed up and fell often. 

None of that exists anymore unless you're a parent who takes your kids outside to do something like that, the kids don't get exposed to it. It's all too dangerous at school now. So yeah, we teach kids how to climb up onto blocks and pads, and then how to jump off them and then bend their knees so they don't land on straight legs.

So a lot of the basic fundamental skills that are gone, you have to reteach the kids before you even start teaching them how to kick and punch. You need to teach them how to really walk and talk again. With respect to BJJ, the first thing that a new student wants to do with BJJ is to get it on the internet. 

And that's the first thing I tell him not to do. So stay off online until you get at least six months under your belt and then just dip your toe in the water.

Because as you said earlier, they're seeing the end result of maybe 10 years of experience doing a technique and they think, “Oh that looks easy. I'll go and do that. And then they come into the gym, they try it on someone and they just don't work and they don't understand why it doesn't work?” Because it works on the video. 

And the analogy I always give them is I say, “Look, if I stood you in front of the mirror and I taught you how to do a jab, I'm pretty sure in an hour I could teach you how to do a reasonable jab. And in an hour, how many jabs could you do in an hour, let's say 500, it would be pretty easy.”

So now let's go to the BJJ mats, I'm going to teach you how to do an armbar. How long does it take to do 500 armbars? They can't calculate it. And that's the big difference between the standup and the ground. 

Out of the ground, you can teach repetitions pretty quickly. On the ground, you cannot. And the BJJ has got more videos out there than anything else.

GEORGE:  It's definitely great to have an abundance of information. But it's also dangerous in the sense of… And we find that in a coaching aspect that, and we do that in our Partners membership where we have a thing called the on-ramp, which blocks out the 130 other courses in the program that you just stay on the track that because you learn one step at a time, the right things in the right sequence.

I think it's super important and it's easy to, yeah, it's so easy to get distracted and see the cool thing and you think, I just want to do the cool thing. But the cool thing is I just need to learn the fundamentals before the cool thing.

MICHAEL:  Yeah, 100%. I see that as a big obstacle in martial arts today in all areas is the online presence of access to something so easy without doing all the fundamentals it takes to get to that point. 

If ever I'm watching a video on martial arts, I turn the sound off, I don't listen to them at all. I just look at their footwork, their hands, their hip movement, and that'll tell me all I need to know.

GEORGE:  Why do you prefer to keep the sound off?

MICHAEL:  They're great technicians, but they may not be great at teaching, especially when it… I mean, teaching on video is a whole other level than teaching in front of the class. And even a lot of the great instructors, I watch their tutorials and they're doing all the right things, but they're not saying it. So it's very hard.

You've probably heard of the terms invisible Jiu-Jitsu or Royal Jiu-Jitsu, it's all the things that a person does automatically without realizing they're doing it. Well, they know they're doing it, but they just do it automatically. It's built into their DNA now.

And to do a single move, they might be doing 20 different things they're not talking about, but unless you do those 20 different things, you're not going to get their result.

GEORGE:  Unconscious competence. Yeah.

MICHAEL: Yeah, 100%. I'm a visual learner anyway.

GEORGE:  Hey, love it. Michael, it's been great chatting to you. We've gone through a roundabout different aspects and I really wanted to connect with you because I know you've got a million things that you can share and I just wanted to really extract a few gold things. 

But any last words, anything to add before we wrap things up? If you are open to people reaching out to you, you're more than welcome to share details of how, if you prefer not, please don't because people might reach out to you. Any last words?

MICHAEL:  Look, I think for any martial arts school owner, obviously your school is very important. But also look at, I'm a big believer in what I just said. Look at the three areas of your life, where you are currently, where you want to be when you retire, and what you want to leave behind. And I think if you focus on those three areas, everything else will sort of make sense to you.

GEORGE:  100%. Awesome. Michael, thanks so much for doing this. Thanks for being on. I'll see you on the call during the week.

MICHAEL:  Thanks, George. Because it was not a pleasure, but it was fun.

GEORGE:  Awesome. It was great. Thanks.

MICHAEL:  All right, George. Take care.

GEORGE:  Thanks so much for tuning in. Did you enjoy the show? Did you get some value from it? If so, please, please do us a favor and share it with someone you care about. Share it with another martial arts school owner or an instructor friend that might benefit from this episode. 

And I'd love to hear from you if you got some good value out of it and you just want to reach out, send me a message on Instagram. My handle is George Fourie, G-E-O-R-G-E, last name F-O-U-R-I-E.

And just send me a message and I'd love to hear from you if you've got some value from this. And last but not least, if you need some help growing your martial arts school, need help with attracting the right students or increasing your signups or retaining more members, then get in touch with us.

Go to our website, martialartsmedia.com/scale and we've got a short little questionnaire that asks a few questions about your business to give us an idea of what it is that you have going on. And then typically from that we jump on a quick 10, 15 minute call just to work out if or how we can be of help, not a sales call. 

It's really a fit and discovery call for us to get an idea if we can be of help. And that's that, we'd love to hear from you and I'll see you in the next episode. Cheers.

 

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