Expenses are often the most “expensive” overlooked statistic in martial arts schools. You always hear school owners boasting about how much revenue they generated, how many people they signed up and how great their school may be, but if there’s no profit then it’s just a lot of hard work for no pay.
This is why it is critical for you to always be tracking your expenses and looking for opportunities to reduce them.
Whenever I work with an instructor on improving a schools’ performance, one the first things I do is an expense analysis to determine the health of the school. Often times, by just examining the expenses and making adjustments you can quickly reduce the amount of money leaving the school. And every time you reduce your expenses, you automatically increase profits without any extra work!
What I’m going to share here with you is a very generalized guideline for what percentage of your revenue your expenses should be. I don’t know exactly where these numbers originated, but I’ve heard them again and again from successful school owners.
Again these are guidelines and not the end all, be all of where your expenses should be, but the closer you are to these numbers, the healthier your school will be financially.
Also keep in mind this is for someone operating a school with their own building or retail location. If you are in a different situation then you should adjust your numbers accordingly.
Here are the percentage guidelines for running a successful Taekwon-Do school:
Utilities & Insurance 2%
Pro Shop Stock 6%
Cost to Process Money 3%
Plug in your numbers and see how close (or far) you are to these guidelines.
If you notice, following this model your expenses add up to 50% of your revenue, leaving the other 50% as profit (money in your pocket) that you can choose what you want to do with.
Remember the purpose of a business is to make a profit and the more profit you can make, the better. Successful businesses make their profit buy making a difference for others and making others’ lives easier.
As a Taekwon-Do Instructor you are impacting the personal development of each and every one of your students, changing lives everyday. That is a service and gift that very few people can legitimately offer and you deserve to be well compensated for that.
About the Author:
Mr. Karstadt is the founder of 1 TKD Consulting and owns the longest running ITF Taekwon-Do school in Arizona, Karstadt Taekwon-Do in Phoenix, AZ with his father Master David Karstadt. He has been training since 1984, earned his Black Belt at the age of 8 and is currently an internationally renown intstructor teaching the culture, discipline, leadership and business skills of Taekwon-Do in classes and seminars to Instructors around the world. He has been a member of eight U.S. Taekwon-Do Teams and has traveled to 14 different countries competing in Taekwon-Do. He has won numerous medals at the World Championships and in international competition, most notably winning the 2004 World Championships in South Korea with two gold medals and the Men’s Team All Around Trophy. Mr. Karstadt currently resides in uptown Phoenix, Arizona with his wife and three children. Mr. Karstadt can be contacted by e-mail at firstname.lastname@example.org