Black Belt Banter: Martial Arts Business Podcast
Welcome to Black Belt Banter, the best martial arts business podcast for instructors, school owners, and entrepreneurs who want to increase their profits and generate substantial revenue. Whether you're running a single studio or scaling a multi-location empire, we break down the strategies, stories, and systems behind profitable martial arts businesses. From student retention and marketing hacks to leadership, curriculum, and community building, we cover it all. Tune in for weekly insights from Master Chan and Master Jimmy Hong, who’s been in the trenches and come out kicking.
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Black Belt Banter: Martial Arts Business Podcast
#5 | Can Small Schools Generate Mega School Revenues?
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"Too much month, not enough money?" This might be the reality for many small martial arts school owners, but Master Tony Chung proves it doesn't have to be. In this eye-opening conversation, Tony shares how he generates over $2 million annually with multiple locations that are all under 2,000 square feet - a stark contrast to the 7,000-12,000 square foot "mega-schools" often showcased as the industry standard.
With average class sizes of only 8-10 students and a curriculum designed for quality over all else, Tony has created a system where martial arts excellence drives financial success rather than marketing tricks or sales tactics. His closing ratio remains deliberately modest at 30-40%, because as he puts it, "We're not for everyone." Yet this approach supports eight full-time employees, 30-36 part-timers, and provides benefits.
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In our fifth episode, we will find out if small schools can generate mega school profits. Welcome to Black Belt Banter the best podcast to help your Marshall School increase profits and generate substantial revenue. I'm Jimmy Hong and my co-host is Master Tony Chung. Master Tony is an accomplished school owner generating over $2 million annually with multiple locations. He also works in the film and television industry as an actor, stunt double and fight trainer. His more recent works include Cobra, kai, will Trent, the Tulsa King, the Naked Gun Movie and so many more. Master Tony, welcome, and I'm just so excited to discuss this topic with you today because this topic can small school owners generate mega school revenues and profits. I think it can resonate with a lot of our listeners, myself included. Is this possible? What say you, master Tony?
Speaker 2:Hi, thanks for having me. I appreciate being here. Thank you to you and Master Chan Lee for just providing the time. I've been running schools. I'm 46 now. I've been running a location under my father since I was 16. And then I've run my own location since I was 18 and made all the mistakes that you could possibly imagine and there's a lot of different models that can work in business. And I remember specifically I think I was 29. I thought the day I was going to get the key and then my dad's like, go make your own boy. And I was like, excuse me. My dad's like, yeah, this is my dojo, Go make your own. And then started my journey. So, flash forward.
Speaker 2:I ended up in Atlanta, Georgia, after bouncing around for quite a few years, about 15 years ago, and I didn't have any money, so I just started with a very small school.
Speaker 2:Even to this day, my schools are around 2000 square feet Um, and just focusing on metrics and just figuring it out as I go along and I'm just trying to, I don't know exactly how many martial arts schools are in the country. This, the theory is that there's anywhere between 30 to 50,000, but I don't know if that includes kickboxing gyms, or even boxing gyms and wrestling academies, but maybe I don't know at least brick and mortar martial art schools to the effect of what we would know like taekwondo, jujitsu, taekwondo karate. There's got to be at least 25,000. That's a good. I guess that would be an average of 500. Is my math right? 25,000. Hold on, I got to use my calculator here. 25,000 divided by 50 states, yeah, that's about 500 schools a state on average. I think in Georgia there's about 650, maybe even more, just in the greater Atlanta area. So when I came here it was just what I could afford. So I just want you to know that I've had the riches to rag story.
Speaker 1:Well, your story is fascinating, Master Tony, because, yes, we were similar in that we were that 1.5 generation where our master was a grandmaster, coming out, immigrated, trying to provide a better life for us, but my father had to. After college, I didn't want anything to do with the Taekwondo Dojang. My father had to persuade me, force me, whatever the word it is and I finally got into it.
Speaker 1:And then, once I got into it, I was like, oh, I can make a career out of this. I can like this is fun in the classroom, but not only that. I can make revenues that I'm accustomed to and that I want to do with my aspirations. But your story that's where our story changes. A lot of my friends they have that similar story as me that was passed down from their fathers. But you and what I love about you, master Tony, is that you didn't have that. You had to start on your own, basically with no funds, no initial money to start, and without the help of support from your father and family. And you went out and you did it on your own and came this way, which is much better than the rest of us.
Speaker 2:Thank you for that. But everything is by accident, it's by the grace of just fortune and favor, and I'm honored to be here to try to motivate some of you, even if it's one person that's listening to this podcast, when we sat down and we talked about putting this podcast together. It's a lot of work, everybody's really busy. But we kept circling back to why. And it's just, we all feel very lucky and fortunate to be friends in the industry, changing lives and ours in the process. And I think there's a lot of small schools out there that kind of understand that it's too much month, not enough money, and you keep seeing all of these ads or talks or this or that, and when everybody seems to have a secret bullet or some kind of crazy thing.
Speaker 2:So when I finally got set up in Georgia, I had a 16, I think it was 1200 square feet Cause I measured it from the inside. I don't know about you guys, but the landlord will tell you it's 1600 square feet Cause I measured it from the inside. I don't know about you guys, but the landlord will tell you it's 1600 square feet. I didn't almost touch the wall on each side, are you sure? And you measure it. And then I'm like dude, this is 1200 square feet and change, this is not 1600. And they measure from the outer walls to all the tenants on each side. Measure from the outer walls because there's enough margin that we're paying. We got to be paying more. It should cover cam, but it's just too much month, not enough money and for me wait, wait.
Speaker 1:What do you mean by that? Too much month? What does that mean?
Speaker 2:I have so many bills to pay and I have so much stuff to do and I just don't have enough money to get to the end of the month. Sometimes there's the month goes so fast. The first is coming again and rents do. But I'm talking about when there's too much month, not enough money. There's that you want to market. You know you want to do this, but you're teaching, you're cleaning.
Speaker 2:I read something recently that resonated with me. There's nothing original, by the way. There's no original ideas. There's just things that you haven't heard of recently. You've probably heard of everything by now, probably too much.
Speaker 2:I heard something recently about four things for success and these are the components. Right, there are other factors, but if you had to lean it to four things, there are four main ingredients to a successful business, and the first one is and they're not in any particular order, but the first one is artist or creator. So you have to be somebody that is, you're good at it. You're the guy or the lady. You're the artist or the creator in your field. It could be a painter, it could be a gymnast, it could be a martial arts school teacher, operator, or you're the technician. So that's a little different than design. So when I was at Macho, I was the spokesman, but I was also eventually I became the head of the R&D department. So, on one thing, somebody could have the idea or the vision of the direction of the company and then you need an operator or a technician to actually go design the parts, or the helmet, or the red man gear or the strapping system that attaches the equipment.
Speaker 2:And then the third component is owner of the business. Okay, because as an owner it's really about liabilities and tax implications and managing payroll and or just paying the bills, just getting your license done, getting the proper insurance, making sure that you have more gross, reasonable expenditures and hopefully some net. And then the fourth component is what we call the board. The board is your investor because you need money. And I used to think there was three things. I used to think it was you have to be a technician, you have to be a manager and then you have to be an entrepreneur. But I like the four strategy because an entrepreneur may have the good idea for a market opportunity, but they don't have the cash. So I like that fourth thing of having a board because the reality is you need money, you need capital.
Speaker 1:So I know a lot of players in the industry and all the successful high income earners. Their setup is this mega schools, seven to 12,000 square foot locations maybe not just one, but multiple locations, and when you think of successful schools, those were all the types that you see visibly out there. But your setup is so unique because you're averaging, your schools are averaging, you don't have anything over 2,000 square foot and you're making big numbers just like them and I didn't want to say this in the title because this is this thing that's blowing my mind but you don't believe in cashing out. So you are getting these revenues monthly, big mega school revenues operating in small school locations, without cash outs. I didn't know that was possible. And yet you're doing it day by day, month by month, year by year.
Speaker 2:Whatever your model is, some people use the metrics. So when I was finally set up at the 1600 square foot actually 1200 square foot school, you get going. Nobody came. I'm just sitting there. It's like you work really hard and you get all your stuff together to go fishing, you finally get the lines in the water and then you're just sitting there and you're not even catching a good time. Why do I do this? This is crazy. And do I go outside in my uniform and wave at people? As sad as that sounds? What do I do? I'm by myself. What do I do? I'm there literally nine in the morning to nine at night, and so I just started using my head. So I got paper out.
Speaker 2:I'm old fashioned, I like to use paper and pencil. I try to isolate myself, try to stay off your smartphone. You try to stay off your computer, and I just sat there in silence with paper and pen, just a lot of pads of paper. So I try to create all these metrics and I wanted to build this financial business machine. That made sense and I started with the end in mind. I think that's Stephen Covey you begin with the end in mind and I said if I had a thousand students and that was the number if I had a thousand students and I worked backwards and just so you know, right now we have about 1300 members between all of our locations and our satellite programs. I just signed certificates for the black belt testing and we started with Don, number one, and then I signed Don's certificate, number 507 today. So in 15 years I do have systems Going back. I have this paper.
Speaker 2:I said if I had a thousand students, how would I teach them? We watch shows like my Lottery Dream Home and you hear about these lottery stories. What would you do if you won it? That's why most of the people that win the lottery, as we all know, lose it because they didn't have the skills to get it. So even if you were gifted money, even if you were gifted students, even if you were gifted stellar staff, a big, gigantic building in a great location, would you know how to manage it? And I didn't know that because I never had a thousand students. My father never had a thousand students, and so I just sat down with paper and I figured out all these metrics and I came down to a couple of Keystone metrics that are very common in the industry.
Speaker 2:Now, how many students are you adding a month, your addition, I guess the second one from there would be your churn or your attrition, the number of students you lose, which is usually a percentage To me it's a number of how many students you're adding. It's a percentage of how many students you lose over time, right? And then the third one would be your average student value. So if you do cash, if you have upgrade programs, if you're just monthly recurring revenue with a 30-day cancel, or you have no contracts and my first school people just drop an envelope of $75 and literally less than 50% of my students paid tuition no, I'm sorry, it was $50 a month and $75 for an entire family, unlimited. And whatever your model is, you take your gross revenues for the month, you divide by the number of students that are training in that month and that you get your average student value, which is the third metric.
Speaker 2:The fourth metric is your gross. Your gross is affected by all of the profit centers your enrollment profit centers, upgrade, if you have that, your equipment group, your events group, which includes testing, seminars, tournaments, any kind of event that you would do parents' night out, birthday parties and then your fifth profit center would be, in my opinion, your monthly recurring revenues, your tuition that's coming every month by way of your billing company or if they just pay you on Stripe. And then your sixth one is miscellaneous. If you have any satellite programs, are you doing any things that are just miscellaneous? And then you add those six profit centers together. That's your gross. And then you line item your expenditures, your rent, your utilities, your insurances. If you have payroll, your payroll. My payroll fluctuates between 70 and 80,000 a month.
Speaker 2:Just to give you an idea. It sounds great. And when things are good just to give you an idea, it sounds great. And when things are good. Business owners, we all know that we get paid last. We may get paid best, but we get paid last and in the bad months. For those that get to a level, I'm nobody. I have done okay for myself, but not to say anything. But my quick little plug is be careful with whom you yield advice that affects your life. Be very careful who you get advice from. What are you?
Speaker 1:going to do. You know what I mean. I can vouch for you because I saw your operations and I saw the size of your schools and you are extremely successful. Master Tony is being very modest here, but my question is to get that high revenue, high income? I know your monthly membership cost is not small. It's one of the highest in your neighborhood area and that is how he's able to generate. Isn't there a student limit on your small space? How can you get a lot of students? Or do you even have a lot of students because you only have a 2,000 square foot locations? How is that able to fill? And doesn't that limit you on getting past a certain student number?
Speaker 2:Yeah. So just to work backwards, my model that I built out, I wanted to have about 240 maximum, 250, I think, was the number of maximum students at a location. So when I had that idea, if I had, if I was gifted a thousand people, my dad was a military instructor in Korea. Tony, you need to teach these thousand soldiers and they need to be competent to a certain level and you have 10 years to do it. How would you do it? So I didn't know how to do it, so I sat down and I'd say I'd have to have this many masters, I'd have to have this many classes, I'd have to have six levels of training. I did it five days a week and it evolved. But basically, what is happening today at the academies, at my schools now is what I came up with 15 years ago, and the concept was I wanted the average location to maintain between 200 and 250 students with an average student value of $200 plus. And that has changed, obviously post COVID.
Speaker 2:But to give you some crazy glimpses up to red belt at our academy, you can only go once a week. Twice a week is not an option. And then, once you get your red belt, then you can go twice a week. So instead of doing eight belts to red, we did 16 belts. I wanted it to take for our tigers that were joining at three, four years old. I didn't want them to be testing in four years for black belt or so, because that just doesn't look good and when you scale when you're teaching, it's hard to replicate. My wife can Wait, wait.
Speaker 1:So I'm sorry, I'm sorry, I'm sorry. So wait, the students come. The beginners intermediates are allowed to only come maximum of one class per week.
Speaker 2:Yes, so there's multiple reasons. I did that so early.
Speaker 1:That's You're blowing my mind right now. Master Tony, One class a week.
Speaker 2:One class a week. We instituted that 10 years ago, going on 11 years ago, and there's multiple reasons for that. I wanted to increase revenues because I wanted to pay my staff properly and our revenues have to increase in order. Our profit has to increase in order to do that, but it was better for the student. I always start with what's best for the student and, in my opinion, getting your black belt in three years to four years for an adult is fine. For some kids it's okay. For some kids that are learning from some of my instructors that trained under some of my masters on their worst teaching day absolutely unacceptable. I do live graded testing. I wanted to create a system that can teach a thousand people. So I have eight full-time employees to 10. It fluctuates depending on some people move on, some people stay, some people have to fire people and then so it's between eight and 10. We only need eight, but if we were opening more locations, you need to have some of the pipeline, and they have 30 to 36 part-timers.
Speaker 1:And then we have all. This is all your locations together, not not one, obviously not one location. This is all together, so we're one academy with many locations to serve but um well, just going over the numbers, I mean your goal of 250 active student count and you're charging the highest in terms of tuition membership in your area, which is over 250 per month. I mean you're looking at 250 a month. At 250 active students, that's 62,500. You're looking at monthly and that's just tuition. That's not including your other five aspects of revenue.
Speaker 2:That's just tuition. That's not including your other five aspects of revenue. It's actually not quite that great on average, but we're always in the pocket. My worst location has always done over 400. And then I have locations that push success.
Speaker 2:But going backwards, when I had a 1200 square foot school and I made this plan, I was broke anyway and I had no time. I had no students, I had all the time in the world. I better create a plan. And then I created this plan, very intricate, not only a sales process, not only you have to have the curriculum, you have to. You remember the old Wendy's commercial where's the beef? And and I wanted to finish my point from before and I know I'm scatterbrained, so just if you're listening to this, this guy's a mess. He talks all over the place. Yeah, and I made it. It's crazy and I like to use what I call my success compass. So I have a metrics. I use an Excel spreadsheet. Don't use any software. Not that I'm talking bad about software, I'm trying to learn how to use some of these softwares but I literally use Excel spreadsheets. We use QuickBooks for our point of sale.
Speaker 2:When you create a plan, you have to know what to do with it. You have to execute the plan, you have to deploy the plan and then you have to have the pricing to allow you to pay everybody and pay the bills and have enough left over and build a war chest so you could survive hard times, because overhead is over $100,000. I don't even remember the last time my overhead was under $100,000 in a month before you make a penny. And I remember the first time we broke $100,000 as a gross and I was like whoa, we went out and ate Korean barbecue with the instructors and we're high-fiving and we're like, wow, we did it Great. And then it's been decades since the expenses were under $100,000. But it's all relative, just so you know. And with the macroeconomic economy, whatever you look at it, it's a tough economy. It's going to continue to be a tough economy.
Speaker 2:I think that you need to get really good with your numbers. I think you need to be very conservative with your expenditures. I think you need to be lean and mean. I think that some of you want to have instructors, but you need to be lean and mean. I think that some of you want to have instructors, but you need to fire almost all of the instructors that you have because they're probably not adequate. So you need to teach you. You either need to become better yourself, train them to be better, develop the pipeline and have a long-term vision right.
Speaker 2:I struggled for the first five years, from creating that plan on month one. I struggled. It was very difficult and it was very hard. So I just want you to know it was a riches to rags story and I was able to be blessed and fortunate and have enough favor to just fall on my back and just use my math just paper pencil calculator. And when one student finally walked in the door, I taught my butt off. You can't keep them all, but you just want to. Just, instead of changing the world, which was always my dream, I said I'm going to change someone's world. I'm going to focus on quality. I'm going to over-deliver. I'm going to make sure that, even though I have a contract, I'm going to make sure that I'm only as good as my last class. I could die after this last class that I teach and I'm good.
Speaker 1:I was just going to ask you how do you I think you just answered how do you convince parents to pay your highest tuition in all of the area compared to your competitors? And that seems like that's the answer right there. Once they see the value of what they're getting, they're willing to pay for the highest quality instructions. Is that?
Speaker 2:Yeah, yeah. So I've seen systems where people are okay, we do step one, we do this and we email them, we do an evaluation, we do this, we create the benefit. The benefit has to minus the cost equals the value. That's all great, but at the end of the day you may be not qualified for the job that you're asked to do, but you know that it's a hard job and nobody else could do that job. And I'm going to look at that boss, I'm going to look at that client, I'm going to look at that parent and I'm going to say I am going to do my very best and you have my word. Will you shake my hand? I will teach my ass off for your kid and I will try to drive you so much value. And it's great to advertise, it's great to have nice paperwork and fancy little presentations. Sometimes you know what makes Cobra Kai. It's not the stuff on the walls, it's not the logo, it was Johnny Lawrence.
Speaker 1:You know what I mean that show was fascinating, by the way, yeah, because we all in our generation, we all grew up with I'll grew up with Karate Kid, and that movie single-handedly turned my dad's school's trajectory around. I mean, after that movie opened, yeah, I remember going to the Karate Kid.
Speaker 2:The only movie my dad ever took us to was the Karate Kid and it was awesome. I got to bring my dad to the Karate Kid, to the Cobra Kai set. He got to be on the show and my dad wanted to go to the movies to see what all the fuss was about, because all these people started joining the school. And it's funny I was talking to somebody a couple weeks ago. Do you think this? Do you think that? And I'm like are you insane? You know that this is the golden years for the martial arts. Maybe 10 years ago, because I was confused and I hadn't really gotten my stride, man, it must've been nice to be back in the 80s. That's how you think. Back in the 90s, people weren't even that good and they have hundreds of students, dude, no way. If you've seen what I see, if you go see some of these school owners that are really getting it and they're not on social media, you know who the heck has. They're too busy getting it. You know what I'm talking about. For example, grandmaster Chan Lee. I am nothing, I am literally an ant, and he is the king of the forest, but he's very humble, awesome. That's why I follow him. That's why he's the president of a sock is. He's the man and it was evident if you heard the first few episodes of the podcast. He's the man. And at the end of the day, if a parent walks in and they talk to Grandmaster Chan Lee, they're going to sign up because they're not just looking for martial arts.
Speaker 2:People are looking for something. Especially in times like this, people are lost. People are driving up and down, clocking in, clocking out, worried about their kids Any parent I have four kids clocking in, clocking out, worried about their kids. Any parent I have four kids You're only as happy as your least happy kid. I will sell my house and my kidney and anything in between for my kid to be happy and successful. And if you have a martial arts school, if your instructor looks like a badass and is teaching a powerful class and is humble and is teaching a powerful class and is humble and it's just it feels like a mixture of Johnny Lawrence and Mr Miyagi that's worth everything and you should charge a fair price.
Speaker 2:Please don't think that I want you to figure out all these metrics and techniques to charge the most amount of money Like just so you guys know I drive a Kia. Okay, my wife drives a Kia. My last car was a Hyundai and it had 200,000 miles on it. I my goal is not to accumulate a Lambo, or I'm not trying to talk bad about other people in the industry. I congratulate them on their success.
Speaker 2:But to me, to me, to me it's grand grandmaster John Lee. I don't want to put him on on blast, but there's people like him that are amazing and they use their money for charities. They're making a difference? It's not, and if you're out there, I want you to know that you do not have to sell your martial soul in order to make a dollar, but you have to get better. You have to be martially better, you have to be a better teacher and you have to be able to verbalize that, and you have to have a little bit of capital. You have to have management skills and if you don't have it, hang around people that do. Most of the best advice I ever got came from people like Grandmaster Chonley. Never charged me for it If somebody's charging you for it. I believe in coaches, I believe in this and that, but there's no magic pill. There is no secret AI, this or that. All of those things are tools.
Speaker 1:And if you strip all of that sales marketing, all of that stuff because I'm horrible at sales and marketing- which is so fascinating, on how your student active count with that small location with high grossing revenues and you don't market and sales like the mega schools, which is just fascinating.
Speaker 2:I don't have any program directors. Everybody is a master or a high-level instructor and they all teach. And it's just any program directors. Everybody is a master or a high level instructor and they all teach and it's just slow and steady. It's a Keystone metric of your billing check. It's charging a fair price, it's learning to say no. Some client that is asking for ABC one, two, three, our closing, just so you guys know, our closing ratio at our schools is 30 to 40% depending on the location and the season. So I know some schools Wait, wait.
Speaker 1:What is closing rate on what?
Speaker 2:30 to 40%. If 10 people come in, three or four of them will sign up. We're not for everyone. There are 650 martial arts schools, and the market is plenty big. I talk to almost every school owner I can. I saw one school owner at Costco the other day and just saying hi, because he had a Cobra Kai shirt on and he recognized me and recognized I was like oh, that's awesome, love to have lunch with you. I talked to every school. We're all on the same team, like a high tide raises all ships.
Speaker 2:You don't have to have a scarcity mindset. What you have to do, though, is you've got to be a competitor, and you don't have to be a competitor in the ring. I never was a national champion. I wasn't a. I was a decent fighter, but you don't have to be all that, but you have to train. You don't even have to create champions. You just have to help people progress, and it's not the kicking and the punching it's about you need to ask and find out and help deduce what your client wants and needs. You know, and then add to that you have to these kids when they test. They have to look good. At the end of the day, you have to teach them and if you find yourself, it doesn't matter if you have 60 students or 6,000 students. If you are worried that your testing is a demonstration of value and you're worried that people are going to quit, you have a serious problem with your program, because it should be a test, our Black Belt test. We fail students Every test. If a student is not ready, they fail, or we can wait to test. And I understand you want your closing ratios to be high.
Speaker 2:All this, but do you want to have a good month? Do you want to have a good this, but do you want to have a good month? Do you want to have a good season or do you want to have a good life? Because I'm at a point where I'm closer to 50 than I am to 60. My younger brother passed away a couple years ago almost, and I've realized that life is very short. You can't take anything with you, but what you leave behind is your legacy. And what is your legacy? Is it a car? Is it a beautiful school that you own the building? I don't own any of my buildings. I do not have a million dollar school. I have a million dollar payroll and you can do anything you want. Nothing against real estate and owning your school, but if you have a small school, anything is possible and that's why, that's why, and I just that's.
Speaker 2:It's what I'm adamant about. Anything is possible, but you got to do the work and there is no secret.
Speaker 1:There is no secret that's why this, this episode, just resonates, but I'm going to assume it's going to resonate with majority of our owners, listeners I'm sorry because they're in the same situation, you know, yeah, and the last thing I'll tell you is this if you had a drone's eye view of how close you were to success just by changing the dial to a different temperature or flipping a couple of switches?
Speaker 2:you don't need to. You don't need. I give up. I'm just going to follow this person. He'll tell me exactly what to do. That does not exist. That does not exist and I know it's difficult.
Speaker 2:But restaurants operate on a 5, 8, sometimes 10% margin. Martial arts schools if you're a single operator owner, operator you have 50% margins or more. Maybe it's less if you're not grossing very much. But with those margins it is so easy to really get to profitability right. And yes, the economy's tough, but there are some industries, like the food industry. They're getting hammered when food cost is already 27, 30, 33% of your gross. When food costs go up, it just hammers you.
Speaker 2:Just if you knew how close you were and again, this message is only for one person. I'm good with that, just like I was good with one person walking through the door and I was good not having a thousand students. And I had no idea that when I picked my head up from teaching those classes being buried in teaching the best classes that I can not hiding behind slogans on the wall or some marketing tactic or this or that, just teaching my butt off in a class. It didn't even have to be a good class, just I'm sweating, I'm doing my best and when a parent recognizes that you're doing the best for their child, they'll support you. And all you need is to get my average class at all. My schools has eight to 10 students in class six days a week, that is so low.
Speaker 1:And with eight to 10, well, I mean it makes sense with the smaller square footage. But eight to 10 and you're grossing 50, 60,000 a month. I mean, I was a small space school owner. I'm sorry 40 to 50. But I was a small school space owner and for me, to get to that number, I was cashing out. I was cashing out 30, 40% of tuition, but you're able to achieve this without cashing out. What is your, you know? Why don't you cash?
Speaker 2:out. I do offer paid in full revenues. We just do not offer a discount. Our current agreements are 18 and 36 months. But when they do pay in full, which is a very small percentage those that can afford to pay in full, they value their time, so they'll only want to commit for a year To me.
Speaker 2:When people sign up for an agreement, for our value proposition, there's the amount you put down, there's the monthly reoccurring revenue amount, the monthly payment, and then there's the commitment length, and what we have discovered is that I do not want to give when.
Speaker 2:If my business model is in the pocket of a net of 30 to 40% somewhere in between there, if I offer a for every dollar that comes into the business, if I offer a paid in full person 20, 30, I've heard people do 40, 50% discounts and they justify it because they're like oh, my average student only lasts 10 months and my monthly tuition is this, so any dollar over that, whatever. But for my model I'm like no people that pay in full, they stay longer. So I want it to be fair. So if your commitment length goes down, then everything else has to hold. So it's just a mixture. So it's a bigger down payment than everything else has to hold. So it's just a mixture, so it's a bigger down payment, but I want to create a quality black belt in seven to 10 years. I've said that there's non-glorious things about the business. I don't love teaching tigers in my schools, but we do.
Speaker 1:I wish everybody Tigers you mean three and four years old.
Speaker 2:Yeah and I wish everybody could train every day, but that's not realistic. So we allow people up to red belt, up to red belt on your track. There's eight belts. It takes you there's eight belts to there's 16 belts, I'm sorry, 16 belts to red. And it takes you four years to get to red. And it could take you hold on, Let me do my math. I'm just double checking. It's three month cycles, 18 belts. No, I'm sorry, 16 belts. Three month cycles, yeah, 48 months, yeah, four years. And then it takes you at least another year and a half to go from red to certified first degree.
Speaker 2:And I tell people because a lot of people are like, oh, what are you going to learn? The red belt's not very good. And I said your martial maturity is like paying down your mortgage. On a 30-year mortgage you don't pay 50% of the principal down until year 22. So the first four years of your training is just to develop the basics and the fundamentals. But the last 50% of your development, of your skill set to black belt will be earned in the last year and a half to two and a half years of your training. And I like that because initial people that train that are five-year-olds, seven-year-olds, 10-year-olds, because the majority of our students are kids and most of our teens and adults are family add-ons that have aged up or joined because of their kid. So I just focused on kids and kids need a flex schedule.
Speaker 2:So in Georgia there's all kinds of sports. We have pretty good weather year round. We have all kinds of sports. So my schools are open five days a week. I have a class for every level offered every day and my curriculum is a rotational curriculum that changes by month. My lesson plan changes by week, so I have a flex schedule. So when you're a novice level student, you receive a schedule of five weekly options and you have the freedom, without telling us, to come to any one of those five classes at leisure. And if you miss one class one week because you're sick, on vacation or have a lot of school stuff or some sports conflicts, you can come twice the next week. So as long as they maintain four classes a month and those four classes will get them there. And it's not perfect because I know some people we have sparring on Tuesdays and Thursdays, breaking. On Fridays we do our self-defense on dude.
Speaker 2:You must not have kids or we have people now that have such strict schedules. I have a kid in wrestling, I have a kid in volleyball, I have four kids in soccer, my daughters. They have all these different activities. Of course they do martial arts too. What I love about the martial art class for my kids is they have a flex schedule. They have five options a week to go to one class and then once they get to Red Belt they go twice a week. Because my belief now is that maybe they can get just as much value going once a week for 75 minutes for the same price as they pay for going twice a week and just give them three, four options a week.
Speaker 2:And please don't think that if you copy and pasted the model that Master Chan Lee is running today or I'm running today or other successful schools, we're all in trouble. We're all in the same situation. You just might have a little less gross but you don't have $100,000, $120,000 in expenses. But there are school owners that I know right now that I could call and hear some real challenges that have overhead over a million dollars a month. I mean, could you imagine the amount of systems? So when you have one school and your overhead's $5,000, $10,000, that is not as hard as you think you amount of systems. So when you have one school and your overhead's five $10,000, that is not as hard as you think you could do it. You're built for it and it's not for money, it's for legacy, it's for changing lives, and yours in the process.
Speaker 1:But that's. This is exactly why we're wanting to talk to you today, because your system is so much different than Master Chalini's system set up, than Master John Doe's system over there, and there's not one way to get to that goal.
Speaker 2:No, it's just like fighting. Some people are right-legged, some people are left-legged, some people are counter fighters, some people are attacking fighters, some people they play the game different, but it all is a matter of strategy, pressure, endurance, strength and speed, of course, but more so your timing and your distance management, and I think that, when it comes to your business, you don't need to start teaching jujitsu or start offering kickboxing classes or start doing this. My school's open at two o'clock. Some of the instructors don't roll in there until three, and then our last class finishes at eight, and we're open five days a week. I offer health insurance to the employees. There's two to five weeks paid vacation.
Speaker 2:I would like to work for the company and the thing is that I started from a very successful position under my father and my uncles, and then I hit rock bottom when I was 30. You know what I mean, and it took me till I was in my mid thirties to finally get my stride. And it's crazy. And if you think you're too old, you can't tell me that I started doing stunts after 40. I threw a kicking video up online and a director saw it. I don't. I didn't like. Life is crazy. And you know what, if you do good work, if your food tastes amazing at your restaurant, people will find you. People will find you.
Speaker 1:Especially in this day and age where you can. You don't need to be in a high visibility shopping center. Especially in this day and age where you can, you don't need to be in a high visibility shopping center. You just need to be able to have good reviews online Google, business, yelp, so forth. But let's yeah sorry, Tony.
Speaker 1:No, nothing to be sorry for this. Let's, let's. It's just fascinating talking with you once a week. I mean, this is going to blow some people's mind. Once a week, you limit student attendance to once a week, charging the highest in your neighborhood.
Speaker 2:Let me clarify something I believe in once a week, so much I had to change the entire curriculum in order for it to work that when one of my masters that trained under me as instructor, that certified through me, teaches their class once a week, and when that four-year-old turns 12 and tests and there's 100 of them, those 112-year-olds learning from my masters that I taught directly, instructors that I certified through our system, they're teaching better and they have a better performing black belt at 11, 12 than if I taught myself 14 years ago a student two, three times a week, if I had a hundred of those kids that started when they're four and they were trying to test when they're eight. Because 12-year-olds are stronger and more seasoned and more mature than eight-year-olds. And I am of the belief that I don't want a school of black belts that are six, seven, eight. I want them to be more 11, 12, 13. It's give and take, so it's not doing what's right for the business, it's doing what's right.
Speaker 2:People grossly overestimate what they can do in a year and you grossly underestimate what you're going to do in 10. So imagine your school in 2035. What do your black belts look like? Because if they look like garbage, regardless of the photo in front of. We are a black belt, school Olympic champions, all that stuff. Forget about the photo. How is their low block? How is their bow, the depth and pace of their bow, their kick? Can they pass a guard? Can they have good timing and are they decent humans? Because, at the end of the day, if you cannot answer that with a handshake with a parent, they won't pay you even $50 a month for unlimited lessons, but they will pay you hundreds for the value that you can develop and provide.
Speaker 1:Awesome, awesome Master. Tony, thank you so much for joining our show. Let's conclude here, but you're definitely coming back. If you are enjoying our show, go ahead and rate and review our podcast or YouTube channel. Our goal is to make our show as successful as possible.
Speaker 2:Yes, please like this, Like this I want to have more likes than Grandmaster Chan Lee and comment, Comment like your favorite Cobra Kai character in the comments and I'll reply to everyone.
Speaker 1:And your review will definitely help achieve that. Have a great week, everyone. Have a great week, Master Tony. I look forward to our next episode.