“Be Careful What You Wish for…..” Pt. 2

In the last column I began explaining that most school owners who want to do multiple schools probably shouldn't and gave you a few questions to ask yourself prior to considering a second location.

Those questions were:

1. Why do I want a 2 nd location?
2. Am I capable of managing multiple locations?
3. Are my existing staff focused on our growth objectives – or, am I the only one worried about our numbers?
4. Am I capable of managing a large staff?

In discussing with my recent panel of Martial Arts Millionaires what the usual outcome is when a school owner opens a second location – I gave my opinion and got unanimous agreement.

That opinion was this: What usually happens is you get a school operator who is doing fairly well (probably because of his/her personality as an instructor) who decides that he will make more money running two schools and then opens a second location. In 95% of the cases what happens looks something like this: First location was grossing $20,000 netting $10,000. Second location opens. First location drops from $20,000 per month to $15,000. At the same time that location's expenses increase from $10,000 to $15,000. The second location loses money for quite awhile then grows to do $15,000 with expenses of $15,000. Now instead of taking home $10,000 per month the net profit combined is $-0-. Staff is up by 3 full-time people. Profits are gone. The owner works twice as hard for no money.

Gee, isn't that an exciting picture?

I'm really not trying to be “doom and gloom” just sharing with you that there is more to running multiple schools that being good at the activity of running a school. As a multiple school operator you really must be a systems designer, people developer, and staff supervisor.

Ok, so I haven't scared you away from the concept. Maybe you've watched me, Ernie Reyes, Bill Clark, Jeff Smith, Tiger Schulman or, some other chain operator and really want to move that direction. How do you get started?

First, Make sure your first school is very profitable.

Second, Really learn the WHY's of how things work effectively in your school. What makes an exciting class. What's the exact structure of your enrollment process. How can you systematize your marketing. Etc.

Third, Go to work becoming systems driven. Make sure your first school can continue to run profitably with you gone for a week or even for a month.

Fourth, Learn to be a teacher and coach of staff – not just your martial arts students. Go to work developing your people to be effective marketers, sales people and teachers.

Coach them on how to interact with different types of students and parents. Teach them how to work through service recovery and out of the ordinary situations.

Fifth, Become extremely goal focused in your school with all staff. Set daily, weekly, and monthly objectives for improving your school in every aspect. Really start “holding their feet to the fire” on achieving your weekly and monthly objectives.

Sixth, Create enlightened self-interest in your staff by establishing effective commission structures based upon results. Make sure that all key full-time staff members have a solid financial incentive and a real career opportunity to share in the success of your school.

Seventh, Create a “no excuses” environment for your staff. Make sure they are accountable and responsible at all times in their areas of responsibility. If you have people who are frequently allowed to miss work, make excuses for failure to accomplish objectives, or who are not truly held accountable then your problems will multiply when you are “off-site.”

If you've done all of these things you will probably begin to see a dramatic improvement in your school's results. Now if you still intend to open a second school it's time to start looking for locations.

Where should your second school be located?

There are many factors in this determination – but, one that few people think about is this:

It should be as close as possible without taking away market from the first school – and, in a location where much of your marketing efforts can benefit both locations. Do not go across town or across the state for your second school. Look to the next significant neighborhood and find a way to locate a second school that is geographically close but, which still pulls from a different neighborhood.