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.
Email us at jimmyhong@blackbeltbanter.com
Black Belt Banter: Martial Arts Business Podcast
#6 | WAIT! Don't Open That 2nd Location Until You Listen to This Podcast!
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Should you open a second martial arts school location? This question haunts ambitious school owners looking to expand their impact and income.
The path to successful expansion requires meeting several critical conditions. Your first location must be truly thriving, not just surviving. Your staffing structure needs depth beyond just one or two good instructors – you need "bench strength," a pipeline of talent ready to step up without compromising your flagship location. Never move your primary instructor or yourself to the new location.
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In our sixth episode, we asked the question should you open a second location? Welcome to Black Belt Banter, the best podcast to help your martial arts 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, I'm going to put you on the spot. What is your immediate response if I ask you a question? Should these school owners open a second location?
Speaker 2:No, don't do it. Don't do it why. You know what you should do. You should buy an existing location. You should make your primary location better. You should consider all of the different options. I think that you know I've had multiple schools for a long time now and over 10 years closer to 15. And I think that it's important to obviously go through the cost analysis and the return on investment and from a liability standpoint, it just depends on where you are. I speak to quite a few school owners for over 10 years and they'll ask me because I have experience on running multiple locations and I don't have a primary location, they're all the same. The variance across locations, even financially and student body-wise, it's less than 15% variation. They're very similar across the year. I think that it depends on the market that you're in. I came to Atlanta wanting to have the opportunity to have multiple locations. When I was first looking to open martial arts schools, I had spent time with Grandmaster Bill Clark. I spent some time with Grandmaster Von Schmeling seeing some of the things. It's incredible. I peeked and looked at some of the schools Tiger Schulman's, mma up in New York, even Championship Martial Arts they actually blew up. I think they have 200 locations right now. That's Frank Silverman, mike Metzger Amazing operation.
Speaker 2:Just, you don't know what you're doing and you just sometimes do it. But multiple locations, you need a great instructor and sometimes you have to see what the ramifications are If you split your team. The quick answer is why? And you should have multiple reasons why it should be to create more revenue for yourself, and I know some people say I don't open more schools for me, I just do it to create more opportunity for my instructors. What a load of hogwash, in my opinion, then, don't open a school, just have them open a school. If it's about your instructor, why does it have to have your name on it? That's my opinion. I think that part of the reason why you open a second school is you want to make more money off your systems and obviously you change more lives that are not accessible to your area.
Speaker 2:I know that in Atlanta, during traffic time, like most metropolitan areas, traffic is just impossible. Now, if you live in an area where the drive time of windshield time is 15, 18 minutes, maybe 20 minutes, your pulling radius could be miles and miles. Two of my locations are less than two and a half miles away from each other and totally different markets. People would not. They can't that two and a half miles to drive across that side. It'll take 30, 40 minutes.
Speaker 2:It's impossible, it doesn't make sense and sometimes you have to ask is your model replicatable? Sometimes you have these big facilities and they have multiple programs. Maybe they have an aftercare model. Your startup costs are going to be so much different and what happens is you have to figure out your situation. But you should have a great instructor. I would never personally take my primary instructor from my primary location and move them. Whether that's me, whether that's my top right-hand instructor master, maybe you could move your number two and if your number two is the, you don't move them. You need a three. That's my opinion because it doesn't mean it's impossible, but it's highly improbable because you're going to divide so once and never move yourself. I found personally that I didn't make as much money as I did with one school until I had my third location. Two schools. I made less money and it wasn't even time I had two schools for years. Why is?
Speaker 1:that though, why did it?
Speaker 2:Yeah, I made the mistake, too, of buying a school that was it was literally an hour and 15 minutes, sometimes an hour and a half away. It'll happen. You'll get a call from a friend or referral from a friend hey, I'd like you to take over the school. You can just have it. What's wrong with it? And it's? Oh no, it's just the guy's retiring, he's tired and it's a lease liability. It's a liability in general. You're going to have to staff it. If you don't have really good profitability for years in your primary location, you shouldn't even think about your secondary location. Like, yeah, I'm doing startup ICOs in crypto and then, if they're not making any money, be like yeah, I'm doing NFTs. If you're looking at it as a gamble, you have to mitigate the risk and I just think that you have to really know what you're doing. And more literally means more. It means more headache. It means more opportunity. It means more headache. It means more opportunity. It means more liability. It means more upside and you should try, but it'll really test you.
Speaker 1:I have over the years with our network, my network. I actually know school owners that reduced from multiple locations to removed one if not two of their locations just because of those issues whether it's staffing, whether the price arises, and they're just too spread out. They've actually reduced instead of expanded and they're happier their. Their life is happier right now because they're doing that.
Speaker 2:So if you want to have a second location or go to three or go to four, it takes a special breed and it takes a little bit of luck In martial arts all these years. You see these amazing parents and their kids are jacked up and then you see these bad parents and the kid's amazing. You're like dang, how is that possible? But you also have to give your kids a little bit of freedom and a lot of responsibility, and I think that I've been fortunate with staff because the amazing masters that we have that can literally run their own schools and do their own thing. They have had some freedom, but they are so responsible. When I go into the schools I apologize and I say thank you, Thank you so much. And they're like hello, Guan Zheng Nim, this and that, oh no, you're doing it all. You guys are amazing.
Speaker 2:So if you want to have, you have to have a special staff person. That maybe the overlap of succession. After a successful instructor there's succession, Maybe there's not enough, there's too much overlap. So you need to make money from your school. So you need to open a second school. Then you need to develop a third instructor to replace them. You got to figure something out. But yeah, 100% agree, Cruise control is tough, Cruise control is tough, Cruise control is tough.
Speaker 1:100% agree that staffing is the number one primary requirement before you open your second location. And don't make the mistake of opening that second location and thinking that you can your staff into that. You got to make sure that your staff is already trained. They know the game plan, they already have the system. But you're going to get into deep waters if, if you open that location thinking you could train them on the spot as you go, then you're going to get headaches from left and right. We're not saying, we're not saying don't open this. We're all multi school owner. So our answer is definitely not no, you should definitely, definitely do it, but you should do it correctly, to, to, to not make the same mistakes as master Tony did, as I did or as you're going to make mistakes and I know this is sound like I'm trying to talk you out of it.
Speaker 2:I'm just trying to be honest. And to open a second location, you're going to have to systematize the things that will maximize your primary location. So, whether this is how I look at it, you should build your school as if you're going to open a second location, even if you don't want to. That way, you have the healthy option too. So to open a second location, you can't just have one good staff member, a second one, a third one. You need a perpetual pipeline. So that means that if I had one school and I had 200 students, I would want at least 25 to 30 to 50, ideally to be red belt and above and certified first degrees. I would want to have maybe enough profitability where I can pay. I have maybe enough profitability where I can pay $4,000 or $5,000 a month at least to two instructors at my primary location, and then I have 10 part-timers that make a couple hundred to $1,000 a month working part-time, and then I have maybe 10 or 15 black belts behind them that are willing to be part timers and two or three of those part-timers are willing and competent enough to be full-timers. So you have to have the pipeline. They call it a bench strength. Your bench needs to be strong because it creates accountability and that accountability mechanism keeps me in check. If your full-time instructors remind you that they can go and have a school without you, it'll make me a better present owner. If I have part-timers that are as good as full-timers, that are willing to step into that role to be a full-timer, it makes my full-timers in check. If I have black belt instructors that are waiting for a part-time position to open up, it just creates healthy accountability. And you know what I've realized in life? The people with the most level of accountability at times real accountability they behave the best. So having that pipeline is a very important thing because it's not as simple as a system or a person. You have to have an ecosystem of people, because we're a service industry, and then you need a great location. So I've talked to quite a few people recently. Business is booming when people are opening up multiple locations the second, the third, the fifth, and when they run it by me.
Speaker 2:Ask me my opinion, because I'll do a search in an area and you'll do a census search to see what the household income is what the population demographic is. You want to pick a location and then you want to see what your market is. Generally speaking, I think the market is conservatively two to 3% and that means that if I have a room of a hundred people random hundred people and I say how many of you are looking to install a pool in your yard in the next five years, or if I say how many of you are looking to buy a car in the next 60 days, how many of you are looking to book a vacation in the next month Random questions About three people will raise their hand with any one of those questions. So generally speaking, a market for most things is about 3%, conservatively 2%. So when I do my market demographics I use 2%. So if you're in a serviceable radius of a good, decent, healthy market and there's 50,000 people in that area, the market is 2% of 50,000 or 1,000 people. If you open a school and you become the 20th school, your market share is 50. And I know you have an amazing school and you have the banners and the decals on the wall to prove it, but at the end of the day your market share is 50.
Speaker 2:And for me I would not go into that market. It happens all the time in Atlanta. People come here and they're oh wow, johns Creek, alpharetta, this is a nice area. Yeah, there's a bajillion schools out there and you're just going to have a. That's a bloody market. You're just going to have a. That's a bloody market. You're just going to. It's just it's. You're at a nice fishing spot and there's hundreds of fishermen.
Speaker 2:I would rather go around the bend and find a nice spot where it's a statistical advantage. You could go to an area where maybe the market is only 15,000 people and your market shares 300 and there's two schools there and you open a school and your market shares a hundred. Even better yet maybe one. There's two schools there and you open a school and your market shares 100. Even better yet, maybe one of those two schools want to sell, buy their school. If you buy their school, your market shares 150. Plus, you have an existing student base. If they have a hundred students, you could salvage 70 of them and you might pay. That's a whole. Nother conversation evaluating what a school is worth. It's not worth what it's worth between what somebody will pay for it and the actual valuation, which is based off of the membership minus the liabilities and whatever assets are transferable.
Speaker 1:You answered my question before even me asking is there a market demand in the area? And that's how you figure out that market demand. Is that two to 3% of that demographics and market Master? Is that correct? A two to 3% of the demographics and populations in that new market?
Speaker 2:Yeah, I like to use conservative 2% and you could say, okay. So once you pick an area, you got to find a location. And there's, the location is okay. What plaza are you going to be in? I hope it's not a warehouse. I know some people are. I wouldn't go to a warehouse personally, because how the heck are they going to find you? Most of the students that are at a martial arts school, they happened upon it. They weren't necessarily looking for martial arts. I don't want my sole surviving strategy to have to pay.
Speaker 2:Some of these companies are asking for five to $7,000 a month to do your social media. That's insanity To me. That's insanity. Oh yeah, but we use AI and we do this auto booking system and this and that Dude. That's nuts, okay. And some of them are asking for ongoing monthly recurring revenue, which is that's an equity partner with no liability. That's nuts. But anyway, I think you have to find a decent location. If there's one location and it's 2000 square feet and it's four grand and there's another location and it's 2000 square feet and it's 7,000, some people are like, oh, I definitely want to go to the $4,000 location, maybe.
Speaker 2:What is your business model? If your business model is where your average student value is $200 a month. If your average student value is not $200 a month, it needs to be close. It should at least be, in my opinion. And if you don't understand that question, because yeah, I charge $189. If you charge $189 and your business model is no cash and it's a 30-day cancel and your second-person family add-on is 25% off and your third person is 50% off, your average student value is not $189. Your first member is $189. So find out what your average student value is and how much is that $3,000 difference? If your average student value is $200, $3,000 divided by $200 is an extra 15 members. So think about that.
Speaker 2:For a second, if one location that the rent is $4,000 a month for that 2,000 square feet is not next to any restaurants, you're probably going to sign up three people a month, but you could do more. But let's say, if you're decent, you'll sign up three students a month and you do. You go to some community events, you get some referrals, but you'll get three students a month on average. You might have some months where you enroll six and some months where you enroll one or two, but you'll average three. If you go to the other location that is 7,000 a month for 2,000 square feet and it has a subway in it, it has a nail salon in it, it has a nice Mexican restaurant in it, a Chinese place, it has three or four different things and it's a nice local restaurant where some people on a Friday night or Thursday Wednesday they'll actually be a little line outside. Maybe it's a 15, 20 minute wait. Those are the local dives. You want to be in a local restaurant plaza You'll sign up, probably five, if not six students, so you'll get an extra two or three students.
Speaker 2:So let's take that 2.5 students and if your attrition is 3% a month, your 50th percentile and I know it's not perfect divided by three means your average mean is about 16.67. So let's say your average student is a multiple of 12. That extra and I know the math is hard, but that extra 2.5 students a month it's going to yield you an extra 30 students by the time you hit equilibrium. And that extra 30 students times $200 is an extra six grand a month. So would I pay an extra $3,000 for rent to give me an extra $6,000 of revenue all day long?
Speaker 2:And I think that some people are too cheap. Some people are too cheap in the martial art industry because they don't have enough money. They shouldn't open up a school or a second location, not because they're not talented, but because they don't have enough money to do the right thing. They don't have enough money to get the right location, they don't have enough money to fire a bad employee because they're cheap work, or they don't have enough money to hire the right employee because they're worth it. It's just it's an unfortunate the have and the have nots. It's just you need about $100,000 of operating capital after build out and I know that's hard, but earn it, save it, find it, have it and then make the decision to build your school that in 10 years will be your golden goose that lays the perpetual golden egg.
Speaker 1:You are on a roll right now, master Tony, because you're answering questions right before I was about to ask them. Because, just to recap the answer to the question of should you open a second location? Is your first location thriving? Is your first location rock solid with you and your staff? And then, do you have a strong staff? Obviously you need to have a strong staff. You cannot do it without a strong staff and a pipeline of staff that's going to replace them as well. And then you discussed about the market demand in the area that two to 3%. And then my next question is you definitely have, you have to have capital to locate to the second location. You cannot siphon and you can't have $0 in a bank siphoning off from profits from your first location to supply your second. That's a recipe for disaster.
Speaker 1:And you just nailed it right there with your answer on the capital, and I know another important thing is and this is what you do so great, Master, Tony is that you have a scalable system in place. So whether you're going to second location or fourth, you're just implementing your system. Can you discuss a little bit about that?
Speaker 2:Yeah, this is what I would recommend now that I've learned. If I opened a second location it will be very close to my other location, or if I open a third location, it'll be somewhere close to one of my existing locations, and I would. There's all these apps and programs. Now you can map your members so you can get all of their address. You can export an Excel file and you can just plug that Excel file from your CRM or from QuickBooks or whatever you use. Or, if you don't have it, you just type it up on paper and just put it in, map your members and then look at the Google Earth or the maps and see what the natural barriers are. There might be a main highway that goes north and south, or a main road that goes east and west and you have a pocket of 30, 40 members that are coming from south of that road or east of that highway. Then you want to survey those students and find a good location, ask them if they would be willing to relocate, ask them to help plant that location, and what I do is I started with my Smyrna location and I got to a point where I had a waiting list on half of my classes and the mistake that I made up for when I eventually opened my fourth location and the third location. I'm sorry. I moved 40 members to plant that school, because if you start a new school and you have no members, it's very difficult, right difficult to get momentum. Because if you go to a restaurant and it's empty, what's wrong with this place? It's oh, we're new. Or our other location is there, oh, that's the location I want to go to and that's why we don't want to go there. We want to be far away. This is what you do.
Speaker 2:In my opinion, your primary location, you have a target. I would rather have a restaurant that has too much of a weight, that people leave and it's a hole in the wall. And then I opened another location and I asked some of those customers to move. Then, if I have a big restaurant and it's empty sometimes it's full, but an average part of the time it's 20% empty Dude, I think that you need to have a model where you're almost overflowing 30% of the time.
Speaker 2:Do you have a wait list? A true wait list, not a lie, not a sales gimmick. A true wait list, because you need to know what your targets are. Some people have no targets, I can't point to the ocean and say, swim. Most reasonable people would be like, okay, how far do I go? What do I get? How fast do I need to do it? And people need some metrics. Every great sports person watches the score and the clock, so you have to have isolated targets.
Speaker 2:So when your primary location is truly busy and you have a wait list and it makes sense and you map your members, you find a location that's drivable. I like having close location because we can overlap resources. My part-time staff can go back and forth. I never move my full-time staff unless I absolutely have to. My part-time staff, though, can go back and forth between locations because it's drivable and I can move students to plant that new location. It will save you time. My part-time staff, though, can go back and forth between locations because it's drivable and I can move students to plant that new location. It will save you time.
Speaker 1:Going from zero to 50 is harder, in my opinion, than going from 50 to 150. If you know what you're doing Fascinating I didn't even think about that is having that second location close instead of far away in a new market to overlap resources. Brilliant, brilliant.
Speaker 2:Oh, I need to make sure I attach my Venmo or my Zelle so you guys can, for the people listening, so you can send me some money for the great advice that cost me hundreds of thousands of dollars over the years to lose. It's such pain. As the best teacher, you know how it feels to open up a school with zero students that is literally an hour and a half, two hours away. It's, it is painful, years and hundreds of thousands of dollars of loss to discover and appreciate. So, having said that, sometimes my kids need to burn their hand on the stove, unfortunately, or get sunburned on the soccer field, even when I warn them. So if you're feeling the pain, don't feel, dumb man. I have been kicking myself in the butt, but that pain has served me well and it's okay. It's okay.
Speaker 1:There's a question I wanted to ask you. You've discussed multiple times about the average student value. Can you explain what exactly is this average student value and what's the formula for this?
Speaker 2:Yeah, absolutely. You take your gross revenues for the month and you divide by the number of students that you're serving and in order for it to be apples to apples, you just have to be consistent. You don't have to be comparably consistent. For me, when I track my enrollments, I track my enrollments by contracts. I don't count. So it could be one school got seven contracts or seven agreements. That could be seven families of three, that could be seven individuals. It doesn't matter. Because they joined together, they quit together. They joined singly, they quit singly. When it comes to average student value, you can use your active student count of people that are actively training. You can do your contracted student count and usually your active is around 70, 80% of your total count. But whatever you use it consistently, the hard thing is some of you have models where you're monthly and you allow freezes and summer's coming up. I don't know when this podcast is going to come out, but if you're in the middle of summer, if you've experienced summer and you offer that, you just have to keep that in mind. So when your revenue shrink, you're only going to count your active members for your average student value, because your frozen members aren't paying, so they shouldn't count against your gross for calculating your average student value. But just so you guys understand, your average student value doesn't have to be when I say it needs to be so it should be. It just depends. If my average student, for example, is paying $200 a month average student value and 75% of those members are coming once a week If you heard the last podcast, last episode of mine we talked about up to Red Belt they can only come once a week. So that affects the frequency because it comes down to what your floor plan is. Let's say you have a 2,000 square foot school and I think the biggest mistake a lot of schools make is their mat is too big and their lobby is too small. I think that you have to have a model planned out For me. I need a minimum of 800 square feet for my mat. I'd like to have 1,200 square feet or more, but I don't need more than 800. I know that sounds crazy, because my average class is 10. For my model to work which means because I have a flex schedule again referred to the last episode flex schedule means that I allow them to go to whatever class they want in the week. They have five options. Flex schedule means that I allow them to go to whatever class they want in the week. They have five options. So if my model says I have an average of 10 for that class to stay open and be maximized, some classes might have six during the week and that slot. Some classes might have 16, but it will average around 10 or so. It could have five or 15. It'll average 10. So one instructor teaching 10 kids.
Speaker 2:I personally don't enjoy teaching more than a dozen people. There was a time where at my primary location, when I was building the model out, I had back-to-back classes of 24 to 30 kids and you feel successful, you are successful, but it felt like a prison to me. There is no way in heck anybody's going to teach what I'm doing right now for what I'm willing to pay them no way. So I had to change the model and when I went to once a week it made all the classes go from 24 to 30 to 12 to 15, essentially because you're coming less and then you just play with it. Essentially because you're coming less and then you just play with it.
Speaker 2:So, whatever your model is, I think your original question was based off of your average student value. You just have to have a target. Your average student value affects your gross because your limiting factor is you can't have a hundred classes a day, depending on your class time slots. Some people do 30 minute classes, 40 minute classes, I do 45s. I'd like to get to the point where I offer a 75 minute class for some classes. So, depending on however many classes if you're having four or five, six, some schools have eight classes a day Look at your floor size.
Speaker 2:Ask yourself how many people do you want to teach. If you want to just have one school and you want to teach till the day you die, then you can maximize. I could fit 50 people on the floor, 100 people on the floor. But if you want a system that has an instructor that will be an inferior teacher to you at times because they're not the owner, they don't care, they typically are not going to be as vested then you need to have a system that will work with less factors or less components. But to answer your question, average student value matters, but it matters in relation to the other metrics. So I know that I answered your question. That brought more questions.
Speaker 1:Yes, because my next question then is what that number of average student value? Let's say that number is 200. What? How do you use that number to your system?
Speaker 2:Okay, so for me, I had the school. This is I'm going to speak of the current model that we're doing that I came up with 15 years ago. You want 250 people paying $200 a month, so you're doing $600,000 a year as a elite level school. So, to me, year one you do 120, year two you do 240, year three 360, year four, 480. And you live. It depends on who's running the school. You know what I found Once you have solid locations, solid layouts, it all depends on the quality of staff and it's not about how good they are at sales and marketing. It is a combination of sales and marketing acumen. But really, how awesome are they as a teacher? How great are they at developing a good culture of black belts? You just need 200 wonderful people. You need 200 families.
Speaker 1:Because you are zigging when everybody is zagging. You have mega school owners, multiple school owners, big seven to 12,000 square foot school owners trying to just maximize student active student count. Get them. They love that high energy of 30 to 40 kids in a classroom just packed with staff and them on the floor. But you are, you're going.
Speaker 1:You're going against the grain is what I'm looking for, the words I'm looking for. You want to teach eight to 12 students quality instructions and you're limiting them to come once a week because you don't want to overfill your class of 800, 1,000 square foot, small school location size and I think our listeners are more on your situation than the mega school owners. They do have 1,800 square foot, they do have smaller square footage and they're trying to get to we went over this trying to break that 100 student active count mark and they just can't do it. They can't. They're stuck at 80, they're stuck at 70, and they can't break that 100 student mark. You're saying that you don't need to have a big school with 30 students. You can make it and achieve that high grossing revenue with the smaller schools and set up.
Speaker 2:Yeah, for me, the reason we have contracts at my school there's multiple reasons. Obviously it's because you want them to commit, but I don't want a lot of flux in the classes. I don't want there to be a wave of people coming in, going out, coming in, going out. I want to teach these students. I want my instructors to really move them up. And imagine if schools right and I'm not even talking about Harvard, yale, oxford, I'm talking about elementary schools Imagine if these school teachers that have 20, 30 kids in a class and they're teaching them nine months out of the year, imagine if kids could change schools or just stop randomly and how the heck is the teacher supposed to teach them? It's already hard enough. It's crazy.
Speaker 2:And I've been there where my dad has this massive 10,000 square foot school with five acres. Do you know how long it takes me to cut the grass? When I was younger and my dad was old school, he wanted a push lawnmower. Literally, by the time I would have to mow the lawn or do some kind of edging or hedging or pulling weeds. Every day. You're doing something with a five acre property. We had indoor, outdoor training and he had two floors, showers, all that, foot baths in the front. It's amazing and everyone's always impressed. Yes, there was a season where my father had hundreds and hundreds and hundreds of students never a thousand, but hundreds and hundreds of students, but then average. After we built the school and after we had the momentum and then my dad opened some branch schools, that school had 120 to 150 schools students and it's not uncommon.
Speaker 2:I have seen dozens. I travel right, and I used to travel for Macho, I've traveled for you know tournaments and you to go see. I just go see people and I see these big, massive schools and when they tell me that they have 300 students and I'm not dumb, I can look around, I look at a couple of classes this school's got 120 students right now and then they're like, yeah, it's a little slow right now, and they show me some pictures and some videos and, yeah, I believe that they had six 800 students at one point. I would rather have a restaurant that is almost always packed and I have a season of couple years where I could have served hundreds and hundreds of more customers, but I chose not to, because when you own a business, it is not for a year or a four-year period, it's for decades ideally, legacy.
Speaker 2:If you own a business, an academy, for decades, you need perpetual, sustainable, reoccurring success. I would rather turn away three golden years of money and not be empty. And I'm not saying all schools are like that, because I have seen some schools that are big and they stayed big. But if you think that a big school is the answer, it's a headache. It is a headache. You know how long it took to clean my dad's school had eight bathrooms. It's not glorious, it's very tough. It took just to mop the school. It took two hours. It's not easy. So, having said that, my schools are 2000 square foot, one person can clean the entire school in 30 minutes.
Speaker 1:That's amazing. A lot of times that's you, pastor Tony.
Speaker 2:Oh yeah, whenever I go to the schools, sometimes I'll just clean because there's nothing else to do, because if you have good systems and you have great staff that runs those systems, you're just there to help. You're just there to help. And yes, so the beauty of it and I know that this conversation has peaked and trowed don't open a second school. Open a second school. It's amazing. Don't open a second school. Open a second school. It's amazing, it's horrible. It could be whatever you want it to be, but it needs to be accurate to what your target is. I don't want you to just fall into it because you're like, oh yeah, just I'll try it out when you find the right location.
Speaker 2:It is a half a million dollars of liability and a lot of these new plazas that you're going to want to get into. They may be owned by a real estate investment trust. It's much different than it was 5, 10, 15 years ago. They're going to ask you for personal guarantees that not only you have to sign but your wife has to sign. They're going to ask you for soundproofing right, because they're a little more keen on martial arts schools and adjacent noise and soundproof wall installation is very costly and it's going to eat some of your square footage and it's going to be it's going to be expensive. This is going to be expensive. There's going to be some of these. I'm in the process of opening another location right now and talking about the difficulties of opening another location.
Speaker 1:Yeah, and I didn't want to say this that you said this first, Master Tony. But listeners, Master Tony is literally opening up another location right now. Know that.
Speaker 2:Yes, and so, having said that, this location is a Publix Plaza and the owner of the location is a real estate investment trust and they have thousands of properties across the US and just in Georgia I think they have 100 properties. So the way the lease read initially is a template. They could literally move me not just within the plaza at their choice. You can move a tenant to a different bay. That's comparable. They could move me to a different plaza and oh, absolutely not, you can't move me to a different city just because you decide to sell the plaza or something like that and you want to maintain your rent roll. So you know you're going to need to have the cash to get into these plazas and also to pay an attorney for 50 an hour or whatever to review the 10, take 10 hours to review the lease with you and to iron it back and forth with the leasing company. But just be have the right amount of funding and make sure that you are properly insured.
Speaker 2:But and I know it's hard but most businesses like a restaurant and if you look at, if you look at franchises, if you're just opening a regular Kumon or a code Ninja or whatever, they want hundreds of thousands of dollars to be there for you to operate the business, because you need operating capital, not just startup capital. Something to think about and I've been there because, mind you, some of you heard me say it before when I got started, I went $100,000 in credit card debt just trying to open and get my school started, and my first school was 1600 square feet. It felt like 1200 square feet. It's possible, but the key is to drive solid value and to charge what you're worth and to make sure that metric makes sense with something that has a scalable vertical and then, as that vertical is successful, then you could start spreading out laterally and open it, but then use some of your primary vertical to plant the next location that's what I think is best and try not to move your primary instructor or yourself.
Speaker 1:So here is the definitive. All right, listeners, here's the definitive answer to the question Should you open a second location? And that answer is yes, but you need to make sure your primary location is thriving, is doing rock solid. You need to have an awesome staff with pipeline of additional staff in place. You got to know your market demand in this new area and you have to have capital. Don't siphon off from your only location for this as you ongoing. You have to have capital, save up. If not, do not do it. And lastly, is your system scalable? Master Tony, thank you for joining us. We'll conclude here. 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 and your review will help achieve that. Have a great week. I look forward to our next episode.