Should you rent your martial arts school premises or own it? Fari Salievski believes in the latter and funds his investments.

IN THIS EPISODE YOU WILL LEARN:

• What to do when nature takes it course and destroys your business
• How the concept of recurring billing started within Australia
• When you should consider owning your martial arts school premises
• Why hype is not always the best way to go
• When it's ok to drive your Ferrari
• And more

*Need help growing your martial arts school? Learn More Here.

TRANSCRIPTION

Are you owning your own building? That nice car that you drive, do you actually own it? If your school is so successful, your school should become really an avenue to invest.

Hi, this is George Fourie and welcome to another episode of Martial Arts Media Business Podcast, episode number 19. I have with me today Master Fari Salievski from KMA, a champion martial artist in Sydney, although they have several locations around Australia. An interesting martial arts business conversation, about ownership, owning your actual school and not renting, using your martial arts school as a vehicle to fund investments. We talk about 34 years in the business and how things have changed and brought things like recurring bullying and things that have obviously taken for granted today but getting that process started way back in the day.

Now, discussing the topic of ownership, I’d like your feedback. We talk about ownership, obviously the physical school, and that got me started on something that I haven't really spoken about, which is owning your digital assets, which is a very very important component when you build out your website and your Internet properties, but it’s one that is completely missed in most modern day training, so people don't really focus on it. But at the end of the day, if you’re building a business for longevity, you want to own digital assets, as you might want to own a building – or is it something that you do not agree with?

I know there could be a lot of contradicting opinions on that, whether you should own something or rent something. At the end of the day, is ownership really better? Yes, mostly, but some people say it’s not. So what's your take on that? Blow the show, and you can do that with every show basically and this one at martialartsmedia.com/19 – right below the transcript, you can leave your name and email address and fill in a comment and start a debate. If you have any questions, or something that you don't agree with or agree with, then raise that and let’s discuss and evaluate a few options.

I know for me in my marketing business, I don't own a physical location because I don't need to – I can work from home, which is awesome and that's the way I wanted to have it set up in the beginning, that I can work with remote staff and work with people from all over the world, which is what I do. I have only one person in Perth that I work with, everybody else is located in different parts of the country or different parts of the world. So that's from me, but when I talk about ownership, am I into digital ownership? Oh yes, I want to own every single property and put my primary content on a website that I own, and this is a topic that I’ll dig a bit deeper into and elaborate more on.

This episode, we’re getting right there, stuck into the business. You're going to get a lot of value from this, or it’s going to create contradicting opinions, who knows? If it does, whether it does or not, leave a comment below the show notes, martialartsmedia.com/19. That's it from me, please welcome to the show – Master Fari Salievski.

GEORGE: Good day everyone. Today I have with me Master Fari Salievski. Now, Master Fari Salievski has been in the industry a good 34 years, started the whole craze of fortnightly billing in Australia and a whole bunch of other things that we're probably going to touch on in this interview, so welcome to the call Fari.

FARI: Thank you, nice chatting with you.

GEORGE: Awesome. So I guess let's start right at the beginning – who is Fari Salievski?

FARI: Yeah, sometimes I ask myself that question as well. I'm still evolving, but I like to consider myself a martial artist, first and foremost. There are some people in the industry that know me as the guy that probably was the first to start marketing Hapkido and doing a whole lot of seminars in the early nineties. From 2000, people probably knew me as the guy that set up a whole lot of martial arts business seminars, but for me, it’s about being a martial artist first and foremost.

GEORGE: So let's go back to give everything some context. How did your martial arts career evolve, where did you start teaching?

FARI: I started teaching in 82. I started teaching for a man called Chang Wu Lee and that was in a city Redfern, and actually, I opened up my very own school in 1986, in New Town, a suburb of the city of Sydney.

GEORGE: And that was your first location?

FARI: Correct, yes. And eventually, that became a full-time school in 98 – if some Sydneysiders remember, there was a very big house storm that was the size of baseballs. The building that I was in was closed and I went from a full-time school to a part-time school. In fact, that school has now moved to Erskineville, the next suburb down.  Still a part-time school and at the time, I started to look for other locations. I had a part time Bankstown and a part time Liverpool school. in January 2000 I opened what still is and became my KMA headquarters.

GEORGE: Ok, great. Now, that's a long time ago. Working your way through and you've been doing this for 34 years, which is a lifetime for most people, how have things evolved? What were the first problems you encountered at that time and moving forward to now?

FARI: I have to say that in 2000 when I purchased, not leased, but purchased my premises, I made the big decision to change everything that I did. And I have to say that the building was a key part of that. In 98, with the hail storm, I learned in a very hard way, I learned to rely on loyalty, the martial arts teacher, relying on that just wasn't enough. The fact is, within a matter of two weeks of moving virtually across the road to a school gymnasium, I ended up with only 30% of my students. And in 2000, I decided to virtually go across America , I did a martial arts tour, looking at the very biggest schools. And I came back and I started billing. In other words, having students on direct debit.

GEORGE: Ok. Let's just go back quick – the hail storm, just to give it a bit more context for people who are not familiar with that. What was that about, what was the impact?

FARI: Well, if you look at the size of baseballs, basically destroyed the building. I was in the police citizen’s youth club – people will know that building for great famous boxers like Jeff Fenech, Kostya Tszyu, especially Jeff Fenech, who I still admire quite a bit, an Australian icon. They had the boxing room, I had the martial arts room. I was the guy that brought all the kids in especially, the PCYC movement is predominantly about kids. I had all the kids in that area and the fact is, at the time, the inner city was evolving and the PCYC headquarters in there wisdom believed there weren't many kids or weren't enough kids in there in the city.

I don't want to offend anyone, but they actually said the words to the effect of, gays do not have kids. And the money and real estate were pretty expensive even back then, the money that would generate by selling the building would open up a lot more centers in the areas where they believed there was a lot more kids. I was not the landlord and I found myself out on the street. I ended up across the road in the gymnasium, and that was a very tough lesson for me. Even though I was into property investing, I didn't own the commercial premises. And that was the big wake-up call for me. In hindsight, as typical as it was, that spurred me on to purchase and for me to become the landlord of commercial premises and guarantee my longevity in the martial arts.

GEORGE: Ok, and what did you base that decision on, because it sounds like you did that quite early, you decided you're going to purchase your actual premises.

FARI: We were out on the street about roughly August of 98. So I did not purchase until December of 99, it took me that long. I was operating out of part-time centers, we were ready to open in January of 2000 in premises I owned and I still own. There are quite a few different opinions on whether people should lease or people should buy, but I can tell you, that's why I'm a very good example of why people should buy – you're the landlord. Nobody can kick me out, and you know what? I've had two martial arts schools in that street competing against me, and the fact is, both of them are gone and I would doubt very much that anyone would be able to come in and establish themselves in the heart of Liverpool city. If they do, it’s going to be a very expensive bill for them to rent and compete with someone that's not paying rent.

GEORGE: Right. Would you see that as the biggest advantage, it’s a financial competitive edge? Because obviously, the purchase can be quite expensive initially.

FARI: The purchase, regardless of the price – the fact is that the first school that was across the road from me, what they were paying in a week was less than I was paying on my monthly repayments as a loan, that's the fact. And I remember the words to the effect of, my opposition school – you're an idiot. Well, you know, I would argue that I think you're the idiot for paying a hell of a lot of money when you could have bought it and you didn't realize there was an absolute bargain across the road. I bought it not to compete with anyone: I bought it because it was great real estate deal. And in the end, the person that said I was an idiot, ended up moving out in less than two years.

GEORGE: If you could give anybody advice on purchasing their premises, or premises where they would like to move in, is there any sort of pointers, some key point that you would look at before you take that move?

FARI: Obviously, you need to start at a part-time location. You need to crawl before you can walk and walk before you can run – that's the goal. Back then, I didn't know really anyone that actually owned. Now I know lots of people that actually own their premises, and I sort of compare that very much to the four minute mile: nobody believes you can break the four-minute barrier and the fact is that once one guy did it, within a few months, there were a half a dozen guys that did it. But before that, nobody could do it. It's very much the same in owning your premises and that's why I find it quite fascinating, I’ll always get guys, especially some of the business advisors, business gurus, martial arts business gurus in America, they're quite openly bagging owning your building, and I don't understand why they would actually do that.

There are benefits in owning, there are benefits in leasing, they're not going to understand leasing and I can’t understand it's much easier, you can pick your location, but you know what? I picked my location and I bought. If you can buy and become the landlord, always buy. At the end of the day, if you look at what I bought it at and what it’s worth now, even if it was not a bargain then, even if I got ripped off back then, it’s still a bargain compared to today’s prices, that's a fact and that's real estate, especially in Sydney. You're always going to move forward, you're sitting on a financial nest egg and you happen to spend a bit more money on it. I've got air condition, to put value above the $35,000, I'm happy to spend it because I own the premises. And that's just one example.

GEORGE: Definitely. I look at it from the marketing side of course, but when you look at digital assets, which is something that's very neglected in the internet space, people might rent their website on a different platform, or invest all their assets in social networks that they don't own as such and I see it as a big problem in the longevity of your business. There were things like MySpace back in the day, where everybody ditched their websites and moved all their digital assets to MySpace and we all know what happened to that. And when you don't own your actual assets, whether digital or physical, you're always going to be at that risk where you don't have the control, you're playing on someone else’s field basically.

FARI: Well, that's why I find it amazing that there are people recommending from the outset, this is the only way, this is what you do. And the fact is, the reason they recommend leasing is because they're leasing. And I sort of question, is that the advice you're giving because it’s the actual best advice, or is that the advice you give to justify why you're leasing your premises?

GEORGE: Interesting. So let's jump pack to the billing side. It's something that's kind of taken for granted today because I guess it is the norm, but you did touch on earlier that you toured America and you had a look at bigger schools and then you took away that concept – can you elaborate a bit more on that?

FARI: Look, the focus that having a good mix and a focus that allows you to concentrate on teaching, even to this day, I say to potential new members, why we do billing or we do pay it in full. The reason we do that is because I do not want to spend time collecting fees – I want to do it right now and then I want to focus on you as a student. And it’s simple, and we ask them: would you like me to spend more time collecting fees, or would you like me to spend more time on teaching you, or teaching your child? And obviously, the answer is, I want you to focus on teaching. And for that reason alone, they're the only options we offer. We do some casual classes, if it's a workout class, for example, that's only on the workout classes that we have a casual option, and even then people are purchasing in groups of ten.

It's always what is best for the school, best for the business unashamedly, and in the end, it's best for the students, because let's face it: in our example, we own the premises. That's a huge commitment, we invested heavily in not only the premises but in the equipment. But by investing, we made a commitment. It’s not wrong to ask from members to make a commitment in order to start. We're in the martial arts business, were not playing ping pong, it’s not a seasonal sport. So for me to change habits, for me to make someone better than what they were before they came in, I need a commitment, and billing, or pay it in full, and I say both those things – pay it in full, it’s not wrong for me to ask people, OK, I don't want to do direct debit. What other option do I have? More than happy for you to pay in full. Why? Both of those things will give me my goal of a commitment. I have a minimum 12 months – if you want to train at our school, it’s 12 months commitment minimum.

GEORGE: So what's your take on the whole billing industry as such within the martial arts areas? What are the options and so forth?

FARI: I think there are advantages and disadvantages to everything out there. Ultimately, it’s what's best for you. I don't believe that you should be getting your business advice from your billing company for example, and that's just my opinion. If for example, a billing company would not want you to do a pay it in full, why is that? What would you think they would not want you to do a pay it in full?

GEORGE: They don't get the billing fees.

FARI: Correct, there’s no commission. There’s a whole lot of things that they want you to incorporate in the billing. To me, that's biased advice. And obviously, it's not in their interest. For me, each to their own, I just don't believe in giving a percentage of the business. There’s a lot of ways of collecting fees and paying a percentage, it's very much like a franchise and again, I think it’s good if you're smaller and you're not turning that much over but if you start turning over a decent amount of money, and that percentage can add up. And you might say, that percentage is tax deductible – fantastic! So is my new car that I can by every year. So are those trips, so is my next property. So where do you want to spend your money? Well, I have a very different view on where I want to spend my money.

GEORGE: For someone that wants to take on a billing company, is there anything else they should be assessing to evaluate their decision of who to go with?

FARI: For me, it's what's best for you. I prefer a transaction fee myself, a flat transaction fee. My student pays that, be it ¢0.50, be it a dollar, be it a $1.95 – on top of your fee, it's very transparent. If your fee is 60 a fortnight, for example, you get 60 dollars a fortnight on your account – simple. Anything above that is the fee – very simple to understand. A hundred students at 60, you just got 6000 – simple. The moment I start doing percentages, I really can’t justify paying a flat percentage unless it’s a franchise.

GEORGE: So Fari, how do you feel the industry has evolved – good or bad, from when you started?

FARI: Look, I think having opened the door for the business of martial arts, now I think people have gone a little bit too over the top. And it’s quite ironic because one of the pet hates of school owners is splintering. And what I mean by splintering is you build a student up and you take all that time to develop that student, he becomes a great black belt, he works for you, and then that loyal martial arts black belt that you built up to be a great instructor to help him build up great relationships in the school, then decides to become your competitor, not far away and take your student base.

And probably that's the pet hate of every school owner, is splintering. But you know what? I've done the same thing in the business of martial arts. So many want to be this representative, that representative, I'm going to bring this guy and that guy. There is already a wonderful base of people and organizations – why reinvent the wheel? At the end of the day, the people that have started to have actually done quite well. So what's happening is that the next generation of people, how they can make some noise, is a whole lot more hype. And unfortunately, there are some that are getting caught up with the hype.

Aussies, I think, in my view, we don't like the hype. I don't need to oversell to get more members. I don't need the hype. I just need a good product, all the essentials and we need to keep it simple, but they want to hype things up so much. I don't believe you should get a potential new student and lock yourself in the backroom not to be disturbed to sign them up. Really? What are we buying? Are we buying a house, are we buying a car, are we doing a deal that we don't want to be interrupted on? I’ll do it on the front counter. I want them to see where they're going to join. See that big crowd down on the floor? You're going to be a part of that big crowd. And you're not going to see that big crowd in the room out the back floor. All this hype, all this big sell, constantly looking to upsell in order to increase your sales for that month and turn your turnover.

Aussie schools and the fact is this: we now have a very good friend of mine, you've met him, and I won’t mention the name now because there’s obviously figures involved but we’re talking hundreds of thousands of dollars a month in turnover and that's not just turnover, but that's in straight out membership fees that they collect. And I would challenge any school in America that can do that amount of turnover, strictly on student fees. I mean, that is phenomenal. There are people that will get maybe half that in a month, but that will include upgrades and testings and products and things like that. But you know what? We don't need to sell anything else, we've created a base of success on straight out membership fees. Of course, you can do all those other things, but our focus and emphasis are not in sales, it's being on membership. Because you're guaranteed that you're getting paid every two weeks, or every four weeks, whatever it may be, you're getting paid on student fees – guaranteed. And you know what, to me, that's real success. I don't get too excited and try and turn my staff into sales people if you can understand that.

GEORGE: Do you feel this hype comes exactly from this, because the majority of the leadership I guess, comes from America with different systems. And I know there’s a vast difference, I moved to the States for sales years ago and I couldn't sell for the life of me in America. And then I learned the American way and then I moved back to Australia and people frowned at me in Australia and I had to adapt again. And that to me was such a key thing, there’s such a different way of communication. And when people are creating websites and things like this, that same principle applies, because that's our virtual communication.

FARI: A 100%. Look, your website’s going to reflect your personality and what you do. We don't need to be blowing trumpets and whistles – Australians, they want to buy. People came to the school to buy, they called you because they want to buy – you don't have to oversell. We’re really in the information business, there are the right things to say, the right things to keep it simple, but I don't need the hype because again – you come back from that Anthony Robbins seminar and you're all hyped up, right? Someone does a big sell and you're all hyped up. But how long does that hype last? When someone joins, I want that hype to last for the next 20 years. I want martial arts for life, ideally. If I'm all based on hype, you're not going to have the student for life. And people might say, the average student only stays four or five years anyway – well, that's fine. Regardless, they're not going to be there for hype, they'll be there even less for hype.

GEORGE: Excellent.

FARI: Anyway, that's just my view. It’s not there to downgrade anyone, but this philosophy based on not to over-hype, and again, I would challenge anyone that is against that or doesn't agree with it, because the fact is, the biggest schools in the world are here in Australia. The most profitable schools are here in Australia. Pure success and I'm not talking, I have 1000 students, or 2000 students came through my premises this week – great. What did those 2000 students that came through this week, what did that cost you? Are you owning your own building? That nice car that you drive, do you actually own it? If your school is so successful, your school should become really an avenue to invest. What have you invested?

And they'll always be trying to do something to generate more funds, but I can tell you: if your school becomes an investment or buying properties, you know what?

That's investment because you'll be making money in your sleep. And I would ask, and my question in finding whether be a mentor or whatever, I don't care what your business is worth, I don't care what you're worth – what do you actually own? If you stop working tomorrow, how long will you survive? And that's a big question. And the biggest schools in this country, the most successful, and I can tell you, it’s not the current generations, it’s the generations before. They're very old school, I can tell you, if they stop working tomorrow, they stop teaching or whatever, I can tell you, they will do just fine.

GEORGE: Let’s talk about success and let’s talk about your success – you have 16 locations yourself: what do you acquaint to your success?

FARI: Keeping it simple, don't hype. Try and minimize your debt, minimize unnecessary expenses. The fact is, when I was driving around in my Ferrari, and I actually think that that was the worst thing that I could share in the martial arts industry, because there's a generation of people now thinking if they open up a martial arts school, they can own a Ferrari, that's the goal. For me, it’s not about owning a Ferrari, or owning a Lamborghini: it’s putting yourself in the position to have the choice. Because there will be some people to say, I would never waste that sort of money – it’s fine, it’s good that you say that, and it’s probably a good advice, but the person that said you should never waste that money – are you, or will you ever be in the position to buy that Lamborghini or Ferrari? Are you saying that because you're a smart, intelligent person, or are you just saying that because you'll never be able to afford one regardless?

And I'm not being cheeky, but that's just a fact – put yourself in the position where you can have that choice. And if you do buy it, don't go borrowing money. A car costs you money, it’s an expense. It’s extra money that you want to burn, be it for tax purposes or whatever. It plays money, but get yourself in the position where you have that play money, but only after you own some property, you've got some real assets, you've got a foundation for real success. The fact is, the rich person will buy and invest for example in a property, and a poor person will buy a car or home. Owning your own home is great, fantastic, but your own home is an expense. It's an asset – yes, you can use that to help you buy the things, but it's not producing an income. So my view of success is not what you see on face value. And I see people walking around, that have businesses valued at millions this and millions that – it might be values, it doesn't actually mean that you actually turn it over each and every day. I've now bought a Rolls Royce. Fantastic! Did you buy it in cash? Who knows, but the point is that Australians especially are a little bit more conservative.

The goal is always to own your own home and have the stable income. But again, I think people are getting caught up too much with the hype and success has become different things. Ultimately, to me, it’s to be able to live a lifestyle teaching what you enjoy and not have the pressure, financial pressure to do that – to me, that's success, because you can’t beat peace of mind. I don't want to be looking at my next student as, how much money will I make. I need to get the extra student to pay my bills, or buy my next car. You know what? I want that person to join because I actually believe this will be the best thing for them. Absolutely, no doubt in the world. And if they join, I have the platform and experience of teaching that in all our centers that we share in the success. And to me, that is success. But you know, to have the pressure, the hype – I honestly find that quite, quite sickening.

GEORGE: Excellent. So, before we wrap it up, I’d like to ask you, what's your goal for the next five years? You've expanded to 16 locations; you've been in the industry for a long time – what's the next step for you?

FARI: We have several locations under review currently. There is a process of becoming a KMA school, so we are not obsessively looking to expand. My goal, if you wish, there’s a natural growth of becoming a KMA school. It’s not something that we necessarily plan, but I think it's important for school owners in particular to give their black belts that want to grow themselves, that want to follow in your path, you need to give them an opportunity to be able to grow just as you have done. That's an important note because it's not to help you grow: it's to help them grow. Having a model where it's very much a win and making people feel like an employee, that's essential. And my goal is to very much for them to be in a position like I am and not feel like they're my employees. They're not my employees: I want them to succeed and achieve more than I have ever done, and I mean that sincerely.

GEORGE: Awesome. Fari, thank you very much for your time. If people want to learn more about you and get a hold of you, where can they do that?

FARI: Ok, we've got martialartsprofessionals.com, martial arts professionals for MARA, martial arts professionals represents the martial arts industry association in America. We also have a good local relationship with the MAIA here, but being the business arm, I try and link with, and again, not reinventing the wheel, but they're obviously in the US, but we bring some things in here, we help digest and localize it and provide a world of resources with local support. And the biggest schools in Australia have been and you know what, still are members. And to me, that's a wonderful network. And the best guys, the most successful guys do not swap and change guys. They've built on it and in building on that foundation, regardless of how much they turnover and have become not just the biggest in Australia, but have become the biggest in the world, which I'm very proud of.

GEORGE: Thank you very much for your time Fari, I hope to connect with you soon.

FARI: Have a great day.

GEORGE: Thanks, cheers.

And there you have it – thank you for listening, thank you Master Fari Salievski for sharing knowledge. We are going to come back for a second show and elaborate on a few topics and ramp it up a little. What I’d like to know from you: what did you like, what didn't you like. What do you agree on, what did you not agree on? Do you agree with the ownership; do you prefer the renting strategy? How do you feel about the show? If you go to martialartsmedia.com/19, the number 19, right at the bottom you can leave a comment. Share your perspective, share your opinion, we’d love to hear from you, start a debate – obviously keep it friendly and let’s have a chat about the episodes and how you feel about the matters and what else we should be covering.

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That's it – we’ll be back again next week with another great episode. I look forward to chatting with you then. If you have any business queries and you need any help with your business marketing, especially leaning into the new year, then get in touch with us. You can go to martialartsmedia.com and contact us there, or even better here, down on martial arts business plan for online media. That will help you get a bit of a perspective on the holistic view of marketing your business online and bringing in new members and reach out to us. Just reply to the emails that you receive, get in touch with us, we’re happy to have a chat and see how we can help you grow your martial arts business. Thanks and I’ll chat with you next week – cheers!

 

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