Focusing on the right numbers in your martial arts business? There’s one number that could be killing your profits. Master Fari Salievski shares his views.
IN THIS EPISODE YOU WILL LEARN:
- The one statistic that almost all martial arts school owners ignore
- Having yearly goals vs. weekly goals
- Would you spend $1,500 per phone call to retain a student? Maybe you already are!
- Justifying the cost and value of your martial arts classes
- As the martial arts business owner, this needs to be under your control
- Bigger profits equals better facilities, better equipment and a better service
- And more
*Need help growing your martial arts school? Learn More Here.
And I don't want my students to feel just as another number: I want them to know that I care enough.
Hi, this is George Fourie from martialartsmedia.com and welcome to the Martial Arts Media business podcast, episode number 23. Today, I have a repeat guest, Master Fari Salievski and this is an episode you want to listen to. And it might hit home for you, it might not – it might ruffle a bit of fathers, it might make you feel a bit uncomfortable if you're in that boat, but I can tell you what: if there are some complications in your business and there are some things that you're struggling with, this episode can be a great breakthrough for you. And especially also on paying attention to numbers, statistics, a lot of things that a lot of martial arts business owners are not paying attention to. So this is going to be a great episode for you.
So for me, back in the swing of things after a short little getaway, a nice little vacation break. If you listened to or watched episode number 22, go check it out on the website at martialartsmedia.com. We stayed at this nice little remote spot, which was very relaxing, nice beach views – a few storms, which was OK, but a good time to relax, which is a good thing, because the New Year has kicked off on a very high note for us: a lot of martial arts school owners coming on board and we're really looking forward to helping a lot of school owners with their lead generation and creating a few success stories, which is really exciting, so go and check that out.
And I guess on that note, I want to bring attention to something that we've just completed for our today's guest, Master Fari Salievski: if you go to his website martialartsforlife.com.au, go and check it out and let us know what you think. We spent a lot of time on revising the message that he was trying to get across, pretty much trying to compact all that experience, 34 years of experience into his website, to deliver that message as the front of the KMA champion martial arts brand.
And look, a website's got a few core functions: it needs to differentiate yourself from the pack, obviously it’s there to generate leads, to collect phone numbers and phone calls and online inquiries. It’s about you getting your message across to your students and to your prospects. I’m sure the reason why you ventured on your own and didn't stay with your martial arts school and decided to do things your way, was because you wanted to get a certain message across and you wanted to do certain things your way and I guess represent your values, of how you want to dedicate yourself to your martial arts journey and passing that on to other people.
And that's an important key to a professional website and look, it’s not the text stuff. And this is where, I think people get a bit confused about the professional website: yes, one kid can do it for $500 and somebody's going to charge $5000 or more. And what is the big differentiating factor, because the tech is all the same? Well, the differentiating factor is, does a $500 website get your message across to your target audience? Does it sell them on the benefits, on the reasons of why they should take the step and join your program and start training with you? And that is where the big art comes through, with professional websites.
But just to give you a tip: if there's one thing that you want to change in your marketing, go and look at your website, because at the end of the day, your website is where people end up. Yes, people talk about using fancy tools for landing pages and so forth, but if your landing page is not converting on the first interaction with your brand, then what are the people going to do next? If you made an impression, they might log back onto go look you up and what are they going to do?
They're going to go to Google, they're going to type in your martial arts school name, and where are they going to end up? On your website. So yes, it’s good to have landing pages and all these flashy things that you can use within your different ad campaigns, but at the end of the day, your website needs to represent your brand, be professional and be able to convert, be able to take orders, and more. Take orders, take phone calls and take online inquiries with ease, especially on a mobile device.
So yes, go have a look, we're pretty much polishing up the final touches on Fari's website – martialartsforlife.com.au and have a look and see what tips you can get from that, especially with the wording and the copy. And look, this is not something you can really duplicate, because Fari's message will be different to your message, so if there's one thing where we spend a lot of time on is getting that type of message across to people, extracting the message from the martial arts school owner and putting that onto paper that it can be communicated 24/7 to your prospect.
And I'm going to leave that there, I want to get into this episode with Master Fari Salievski, this is an excellent episode: it’s going to challenge maybe a lot of your belief systems and look: if you do the same thing that you've always done, you're going to get the same results. So you've got to make a few adjustments and changes. If something makes you feel uncomfortable, that's what you've got to be paying attention to – there's a reason it’s making you feel uncomfortable. And look, that's where growth comes, experiencing a bit of discomfort. But hey, as I said: I'm going to leave it there. So welcome once again to the show – Master Fari Salievski.
GEORGE: Good day everyone. Today I have with me for round 2, Fari Salievski. How are you doing today Fari?
FARI: Always good, every day above ground is a good day, so good to be here.
GEORGE: Awesome. We’re going to dig deeper into a few things that we maybe sort of touched on. The last episode we touched on different things about recurring billing and ownership, owning your school, versus renting your school and a bunch of other topics. So in this episode, we’re going to dig more into numbers.
GEORGE: All right. So, I guess just to start, a big thing that we look at when we set up websites and we look at the online marketing stuff, we always want to determine what is the lifetime value of a customer. In martial arts schools case, it would be the actual student, how long are they going to be a student for, which kind of determines what the financial value is of them. And then, we can sort of determine, OK, if that's the value that the student brings in, monetary value, then this is sort of a percentage that we can use for marketing cost.
FARI: Exactly. And look, bottom line is that it’s all part of keeping stats and being aware of your numbers. And today's talk is going to be really how far are you taking those stats and the most important statistic of all: are you avoiding that?
GEORGE: OK, cool. So I guess there's a lot of numbers to pay attention to in your business – where do you really start?
FARI: Look, for me, the main number really is the number of active students, number 1. How many new students did I get this week, how many did I lose this week? I do that weekly and then that gives me my overall numbers at the end of the month. During that week also, I have a look at what I'm spending. I want to know, not only those numbers that I just mentioned but also what am I spending, what am I left with each day and I'm going to have every two weeks, I want to know what I've spent, how I've spent it and how much profit is left at the end of the day.
GEORGE: OK. Digging deeper into active students and losing students: what sort of actions do you take? You assess it and then what do you do from that point?
FARI: The reason you want to know that is because I like to have a weekly goal, right? People might have a yearly goal, but I like to have a weekly goal. I don't mind even if I'm staging it right now, that's the honest truth. But what I don't want to do is go backward, right? I need to be aware of the numbers and what I'm spending, what it’s costing and so they're my essentials. But today I want to go into the most essential statistic that I pretty much guarantee no one ever keeps and I guarantee there are people out there that are spending thousands, if not tens of thousands on a particular result and then looking at it as an expense of business, but they're not monitoring the performance of that money that they're spending, which I find crazy.
GEORGE: All right. So, let’s open the can of worms here and let’s dig deep into that.
FARI: All right. Well, let me give you an example: one of my clients, this is not that long ago, and we’ll just round off the figures for argument’s sake. There's a little bit more, but I’ll keep it simple. He's spending $6000 based on the percentage of the billing amount, OK? And $6000 he's paying for the service, which is great, right? You're happy to pay for a service. And my question to him was, why are you paying that amount of money for that service? And really the main reason is that people don't pay, I want somebody else to chase it up.
And I said, beautiful, good. And I said, OK, let’s use last month as an example: how many people did not pay? So he actually had to look that up and that particular month, there were four people where their payment kicked out, which is pretty good, four people. So in effect, to have those four people chased up, and he said, it’s done by the phone – awesome. And I said, OK, so that's $1500 a phone call.
FARI: I mean, I’ll do that phone call for you for half the cost if you want me to, but we’re paying $1500 a call! But wait: my next question was, because I don't really mind spending money: it’s about maximizing the use of that money, so my next question was, OK: you spend $1500 a call for four calls: out of those four calls, how many of them succeeded in fixing the problem? In other words, that person might have closed their account, they might have moved on, they might have had financial difficulties that month – it happens. But how many of those four were actually sold? Because you're paying $1500 a call to that purpose, you agree?
FARI: Well, the client that I mentor had no idea of one, what it was costing per call, two, how many clients were chased up, but the craziest thing was – no one ever monitored the success rate of that call. Which to me is crazy. I mean, if you had a staff member that you're paying $1500 a week, because, for arguments sake, if you're being billed monthly – this was actually $6000 bi-weekly, in other words, you're paying a staff member $3000 – for that $3000, would you monitor that performance?
Would you check some balances, and the answer would be yes! But these people are paying someone else outside of their business to do a straightforward task, but there's no monitoring. Or if there was, he wasn't monitoring, he wasn't keeping a track of it. He just let that be a part of the cost of the business.
GEORGE: So what's the alternative, how do you go about fixing that? I mean obviously, the short answer is, you can employ someone to do all that following up for you, but how do you eliminate that cost?
FARI: Well, number one is, it’s not necessarily eliminating: it’s a matter of maximizing the benefit of that money. So for me: look, in this case, it averaged out at $3000 a week. For $3000 a week, if that was me who was getting a $3000 expense a week, I would be paying that person for 8 hours a day, for argument's sake, 5 days a week to do not only that phone call but to do a whole lot of other stuff. And for $3000 I could buy myself a lot of marketing, I can buy myself a lot of student service; I can buy myself a whole lot of things that will actually help the business.
GEORGE: OK. Where's the real root of this problem? Is this a way of billing, is this where money is coming through the business?
FARI: Yeah, look, ultimately, it’s a billing issue: how are you doing your billing? If you're paying a percentage of the collection and the people that pay that percentage – which is generally a much higher amount, it’s a percentage of your gross. If you're paying that sort of percentage, the reason they're doing that is because they believe there is a hell of a lot more service, and I'm not questioning that service: I am simply advising, are you keeping stats on the cost of that service?
Do you have checks and balances to make sure? In this case, four calls? I want to know how successful those four calls were. And I want to actually, physically – they may get reports, they may get feedback, whatever. The fact is, it’s not something people are very diligent with and keep abreast of. And I don't care if you're doing a $100,000 every two weeks, or if you're doing a $1000 every two weeks – it’s irrelevant. I’m paying this amount of money – am I maximizing the benefits of that cost? And what is the real cost? You understand my point?
GEORGE: Yes, yes for sure. So is there any more on that side of numbers that we can elaborate on, or are there any other numbers that you also pay attention to?
FARI: Look, that's the biggest number, because whatever you're paying and it averages out weekly, the fact is that I can have a staff member look at a whole lot of numbers for me, and that can be their job, to simply look at the number. And sure, a high level of student service. I mean, really: if I'm paying that amount of money, I would rather pay someone in a full-time job to do that and then some, which will make my life a hell of a lot easier.
GEORGE: For sure. So how do you have that setup to avoid that?
FARI: Look, I have a very simple solution: will there be one person, or will there be four people in a month, or will there be ten: bottom line is, I'm in a relationship business. For me, I don't expect anyone else to do that. If somebody has an issue, they might have financial difficulties – I care about my students. I want to help them over that little financial hurdle, whatever that may be. If I cannot fix it, no one can, that's the bottom line. And I don't want my students to feel just as another number: I want them to know that I care enough that I want to fix this issue here and now.
Let’s fix it: it could be an oversight, it could be just a little bit of cash flow issue, it could be much more. But it also could be that the student just wants to quit. I've been there, 34 years of my life in what I do. I don't think it’s too hard for me to ensure good relationships and ensure that I'm on top of it and I don't think it’s too hard for me to make four calls every two weeks, or five calls a month, whatever. I don't think it’s beyond my list of duties that I should not do as the owner. If anything, I think as the owner that's what you should do, because, again: you're the one with the relationship, I'm the Master instructor.
I believe that I'm in the best position to fix that then and there. Let’s not let things get out of hand. Some of those people leave just because of a misunderstanding and they're embarrassed about money or they just don't want to pay you for whatever reason. It could be very simple, but as the owner, I'm going to know here and now. And you cannot beat the value of a good relationship. I care about my students and I want my students to know that I care.
GEORGE: Excellent. We’re talking a lot about numbers and I guess it’s good to just mention the point, something that you mentioned in the first episode and today and it’s still a relationship business. It’s martial arts first.
GEORGE: And it’s a relationship business. I was speaking to Kevin Blundell yesterday and the thing that he mentioned was, if you're earning a $1, then you are in business and there's no way around it. If there's money coming in, you're still running a business at the end of the day.
FARI: Oh, a 100%! I get people who have ten students, “I don't care about money.” What are you charging? I charge $3 a class. All right, well if you don't care about the money, and then charge them $3 a class. But I've got to pay for the hall higher. Ok, well – it’s a business then, whether you're charging a $1, whether you're charging a $100, whatever it is. The moment you charge, it’s a business. It’s not a charity and the moment someone pays me anything, I have an obligation to look after that person.
GEORGE: You can't do much for $3 a class, though.
FARI: Look, there are people out there, the fact is that they justify if you wish, their little philosophy of “it’s not about the money for me” by charging such small amounts. It’s not demeaning their level of service, it not demeaning their level of martial arts – they could be amazing martial artists, but for me, you need to be paying for your premises. And in my case, I wanted to one day own my premises, which I managed. I mean, there's people out there that are paying up to $70,000 – $80,000, $100,000 a year in premises, in rent – where does that come from?
That's one part of it, but also two, if you think about it, in the time when most people are having dinner with their families and their children, people are teaching martial arts. And if you've got a wife and children, you've got to ask yourself, is it fair that you're sacrificing the time away from your children, away from your family at dinner time for example, and you're teaching people that are strangers, you don’t know them. You're sacrificing that time, is it worth sacrificing that time for a $1? For $2? I don't think that's right.
If you're going to sacrifice that time, you'd like to say, “Look, it’s because I'm providing for my family, because I want to provide a higher level of service, a better level of service through facilities” and whatever, resources – mats cost money, things cost money, conditioning costs money. But also, to put a value on your time. It’s not just your time, it’s your family’s time. If you're not there, it’s your family’s time. What's that worth? I don't believe it’s worth $2, but I just think there are people in the industry, the fact is they'll simply say, “I'm not about money,” but I can tell you: if they could make a $100,000 in a month, they would do it tomorrow. I just think they don't have the know-how and the ability, that's a fact. And sometimes people just make a simple excuse to justify, but I would question that.
GEORGE: Do you think that's almost ironic? I say that because martial arts takes dedication, it’s not something that just gets given to you to earn your way to the top, whether it’s a black belt or whatever that is in whatever style you do. It takes a lot of persistence and determination to get to that point. Do you see it as almost ironic that a lot of martial arts business owners don't apply that same philosophy to business?
FARI: Oh, a 100%! A 100%! But again, you only do what you don't know and you only do what you know, both things. But unfortunately, what you don't know probably hurts you the most. Unfortunately, your circle of friends will influence you. It’s just like the bi-weekly, the fortnightly billing system: once upon a time, we were like in America where everyone charged monthly. You know why did they do that? Because that's what everyone else did and that's the standard.
Well, OK, it’s a standard, but who said that you've got to do it that way? So the people that are charging the $2 and that's all they know – that's their circle of influence. That's the circle of friends that they have and that's all they know. But I cannot tell you how many people that I've met that I've changed from that to going from your little scout hall to full-time premises, to even owning their own buildings. And if people think that cannot be done – I've built someone in their sixties that actually retired, that went from a little community hall to a full-time school, to actually owning his premises in his sixties, and he's a very happily retired man, teaching, enjoying life and being a property owner, so go figure.
GEORGE: Awesome. A few more things, just on figures: do you pay attention to different statistics, like conversion rates, how many students come through the door, how many people actually join?
FARI: Look, of course, yeah, and you need to be aware of them. As part of new students, if I break that up to the next stage is, those new students, if I take it one step back, it’s how many people actually have tried a class. If I go back further, it’s how many people called, have they called by phone or email? So in those stats, the reason I need to keep them is one, I want to make sure that people are contacting us. Because if I'm not getting any phone calls, if I'm not getting any emails for membership inquiries, then my business is going to die. So I need to have that sort of activity, I need to keep those stats.
For argument's sake, if ten people contacted me, be it by phone or email, out of those ten, how many people actually turned up to a trial lesson, or intro class, whatever you want to call it, I don't mind, but how many of them turned up? And from there, how many of them joined? So I need to be aware of that, because, number one is, if I'm not getting contacted, well then, you've got an issue right there.
My next point is that, from that point, once they go into the trial class, if they're not turning up, well OK – you're obviously not handling that email or phone call very well and then, when it comes to their intro or trial class, if they're not joining up as members, then you want to find out are you doing the right thing. But even with that, I just find it amazing that people want to do three trial lessons. And sometimes people say, you know, I’ll give you two weeks, absolutely – I know if I want to join something, if I like something, I want to know here and now.
I just believe there are better ways of doing things. It’s not a hard sell, but again, people are doing things because somebody else has done something, or somebody's told them but is it the absolute best way? And the only way to find out is to keep those stats! Even on people quitting, yeah, people are going to move on, people are going to move to different areas – it happens.
But at what belt level do they quit, for example? And why is that important? There could be a belt level that you've made way too difficult or you're putting way too much pressure on them, for whatever reasons. You might have the instructor that's teaching the yellow belts for example, and he's just not on the ball. And you're not going to know if you don't look at it, because all of a sudden, all of your yellow belts are leaving. And all that instructor needed was just some underarm deodorant and a little bit of discipline – as an example.
GEORGE: Yeah, deodorant!
FARI: But you know, the point is that I need to be aware of it and they're the basic stats, they're the essential stats. But again, I see so many people in the industry that become obsessed with stats, I think overly sometimes. Keep the essentials, keep it simple, because somebody's got to enter these stats, but more importantly, somebody needs to digest them and see where it’s at.
And for me, I'm the guy with the numbers; I'm the guy that looks at it. Why? Because this is my business, I want longevity in this business and it’s not being money hungry, it’s just to be on top of it. And there are some things that are way more important to me than a staff member. For example, at KMA, you ring at any time of the day, evening – guess what? Guess who gets the call? Even if I'm not there, guess who gets the call?
GEORGE: You do.
FARI: Me! All calls will be diverted to me. And people say, oh, you should have people for that. Are you too poor to pay anyone? I just find that extremely offensive, I love what I do. No one knows my business better than me. In one minute of talking to you, I will know exactly what you want and I will be able to tell you exactly what you need. If you come into the school and I chat with you, the fact is that I have people that want them to try three classes. Three classes? I can spend three minutes with you and show you why you need this, why your child needs this – three minutes. And I call that the perfect intro.
And if you don't have the perfect intro, what is that one technique for example that really demonstrates the beauty of your arts? Whether it be Brazilian jiu-jitsu, whether it be Taekwondo and you're kicking, or kickboxing: what makes me see in a very short time that I need this, why this is so great? And also, two, why is it much greater than the next school? Because there's a lot of karate schools, there's a lot of Taekwondo schools, there's a lot of Brazilian jiu-jitsu schools – why should I join yours?
GEORGE: What's that unique selling proposition. What makes you stand out?
FARI: Yeah, your USP. But that USP needs to come out in your perfect intro and the perfect intro is not just talking yourself stupid till the sun goes down, but for me, it’s about getting as many senses involved for example. They need to feel it, they need to see it, not just hear it. Too many people talk, we’re in the hands-on business, people want to experience it. When you go and buy a car, the guy just doesn't talk to you all day – he gets you in the car. He gets you behind the steering wheel and you know what? People buy a Mercedes – why do they buy a Mercedes for? Because of the experience.
GEORGE: For sure. And if this helps the scenario, because the one thing that I've really picked up in this conversation, and I speak to a lot of business owners and there are so many approaches and I guess at the end of the day for you, the biggest lesson is to really track what's working for you.
FARI: A 100%!
GEORGE: Because where your strength lies, you have that strength and that experience, and somebody else might not have that. So I guess it comes to that of managing your strengths and really testing what works. We have a simple rule that we try to do with websites: we try to get a hundred people to a website and then we see what people did and then we take the same traffic source and we send a hundred people to a different version and we weigh the two up. In Google AdWords, it’s called beat the control: you're trying to put two things next to each other and see what works best and then you're trying to best the next better version. So your strategy is always to improve on your previous result, basically.
FARI: A 100%! And the best person to do that is the owner. My pet hate is, I see, and I hear the line, and it sounds really good: you should work more on the business than in the business. And it sounds like a really good line, it’s like you could disappear forever. And you should be able to disappear and have holidays and so forth, but don't make yourself dispensable because you cannot teach – I cannot teach anyone my 34 years’ experience.
I’m getting to a comfortable level when I can take time off, but at the end of the day, I'm the best man for a whole lot of jobs. And to work on the business, I need to be aware of those stats and I need to make the most of those stats and make the most of the money I spend and ensure that I'm getting value for the money I'm spending at the end of the line.
GEORGE: Awesome. Fari, great chatting to you again, I guess just to wrap it up: the big thing here is to just really pay attention. Pay attention to where your money is going and really maximizing your strengths, as we just discussed.
GEORGE: Test, I guess don't give up the checkbook is a big thing a lot of business owners also say, be in control of the money, the finances. Track the stats, see where things are going and then see what can be improved upon – does that kind of sum it up?
FARI: Well and truly, and I can tell you a very big school owner, a friend of mine, one of my best friends, and the fact is, very successful school and he was not aware of his very own business of what he was actually spending. And also, he was not aware of what was left at the end of each day. In other words, in business, we need to turn a profit. Don't be scared of the word profit, you need to turn a profit, because, with that profit, you might have to buy new mats down the track. You might have to replace things, do things, and improve facilities -whatever. You need money leftover in a business.
A business is not designed to just simply survive. It needs to help you grow. And to do that, you need to produce a profit. If you're not producing a profit, you're in trouble and the fact is, since all this consulting, like I said, he was very successful, having a good life, but was not simply aware, he now gets $50,000 a month. And I cannot be more proud, of netting $50,000 a month, and that was a person that had no idea of really – yes, they were doing OK, they were doing good, but he had no idea what the proper margins were and it shocked him when he found out that as successful as he appeared, with the numbers and the school and the lifestyle, everything: at the end of the day, he was in shock of the very little profit that it was producing.
So just by tweaking a few things, making a few little profit centres within the school and making people aware, guess what: $50,000 a month. And that school is not in Sydney by the way, just in case. Everyone always seems to be talking about one particular instructor who is amazingly successful – this is outside of Sydney and $50,000 a month. Does he deserve it? Absolutely. Does he do wonderful things with it? Absolutely, his students are amazing, talented. They look great, perform great and producing a profit. And you know what? If he needs to do something, buy the building next door, buy the building of the opposition – he’ll have the money to do it, well and truly.
GEORGE: Excellent. Fari, great chatting to you and if people want to reach out to you, once again, where can they do that?
FARI: Look, you can inbox me on my Facebook, you can call me via my Facebook, all my numbers and emails are there, but ultimately martial arts professionals, you mentioned a very good friend of mine earlier in the conversation, he's an active member. The fact is, the biggest schools in the country are all active members, and it’s not just coincidence or luck, they are the biggest for a reason and that's why we’re all together.
GEORGE: Excellent. Thanks again, have a good day and I'll chat to you soon Fari.
FARI: Have a great day!
GEORGE: There you have it – thank you Master Fari Salievski, and what did you think of the episode? What resonated with you, what didn't resonate with you? As I mentioned, just before we got into this, sometimes there are things that don't sit right with you, there's a reason for that because it’s challenging a way of your belief system, and that could be good or bad. It doesn't mean that it’s right, but if something makes me feel uncomfortable I want to pay attention to that and ask why. Is there a reason that I'm thinking in a certain way and could I make a few adjustments that are going to improve my business and improve me as a person at the end of the day.
So thanks again for listening: transcripts are available on martialartsmedia.com/23 and if you want to have a bit of a debate on any of these topics, you write below the episode. There's a place where you can leave a comment. Ask a question, have your say, whether that's on palm with what we discussed or not. Hey, a bit of controversy is always good, so I’d love to hear your feedback and if you're getting good value from this show, please head over to martialartsmedia.com/itunes. Open up the iTunes application and leave us a review – we’d much appreciate that. A five-star review will help us boost the rankings, but an honest review would be much appreciated.
And that's it – thanks for listening, we’ll be back again next week with another awesome guest and an awesome episode. You'll have to wait and see. All right, I’ll speak to you soon. Thanks again – cheers!
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