starting my own studio - buying existing TMA business

Discussion in 'School Management' started by 333kenshin, Jan 9, 2020.

  1. 333kenshin

    333kenshin White Belt

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    Hi,
    I'm a black belt karate instructor looking to opening a studio of my own to teach full time. I live in a large city that is already pretty densely packed with martial arts schools, so competition is a big concern.

    At the same time, I believe many traditional martial arts schools are struggling financially and in a slow-motion death spiral as the popularity of MMA rises and as modern tech, social media, and culture makes "traditional" studios hard to relate to, especially if run by a 1st-generation Korean or Japanese master with weak English.

    As such, I would like to identify and approach such struggling businesses to buy as a basis for launching my own studio. Being younger, US-born, comfortable with tech, and with broad enough experience in the world (lived abroad twice) to articulate the case for traditional martial arts to younger students and their parents, I think I can rejuvenating some of these struggling older studios, while still respecting the traditional teaching style of the old masters.

    The challenges:
    - how to identify such struggling schools
    - how to approach them with a deal that won't set them off

    Any suggestions would be welcome.
    Thanks!
    -Dave
     
  2. Christopher Adamchek

    Christopher Adamchek Blue Belt

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    I think this is a neat idea
    The main way i would think to do it would be to introduce yourself as a potential investor in the school and ask to sit in on some classes, take a few classes, and a private lesson or two to get a feel for them as an instructor and person before getting deeper in the details.
     
  3. Flying Crane

    Flying Crane Sr. Grandmaster

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    Why do you need to buy an existing business? Why not just open your own and start advertising to build a base of students?
     
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  4. ShortBridge

    ShortBridge 2nd Black Belt

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    I think it is a sensible plan, though not an entirely traditional one. In theory, it would need to be a karate school...ideally your variety of karate or it's just going to feel to the current owner like giving up. If you buy a TKD school and turn it into a Shotokan school, it's really the lease and the build out that you bought. There is no legacy for the instructor and the students (mostly kids I presume) would be starting over with white belts (which I might do as an adult, but kids and parents aren't going to like), looking for another TKD school who would accept their rank, or deciding to focus on soccer or band or something else.

    Traditionally, someone who taught under the current owner would take over and carry on. I imaging in some cases this involved purchasing the business and others maybe not.

    If there is someone teaching your style, who might be struggling and doesn't have a succession/exit plan, maybe you talk about going to work for them with the intention of buying them out and taking over at some point?
     
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  5. jobo

    jobo Grandmaster

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    if your buying a school, then what your paying for is the location, customer base and some worn out equipment, if its struggling then it has no customer base worth paying money, for

    if you turned the school round before buying then your just putting the price up

    im not sure the basic premise is correct, there's lots of schools that have websites ec that are also struggling, i think you'll need to try hard to find one without a facebook page
     
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  6. 333kenshin

    333kenshin White Belt

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    thanks everyone for the feedback!
    some replies to various comments...

    @Christopher Adamchek: great idea, characterizing the approach as one of a "potential investor."
    It avoids the word "buy", which connotes "sell", which connotes "selling out."
    Whereas "investor" suggests my goal is to modernize the infrastructure and methodology, while preserving the essential aspects of the art.

    @Flying Crane: let's say a studio needs 60 active students to cover its expenses, and 100 students to draw sufficient profit to meet the owner's needs. Then an owner who can't break past this gray area of 60-99 students might be technically in the black but not drawing enough salary to stay in business over the long run.
    For me, the amount of time and effort required to start from scratch and bring in the first 60 students is much greater than what's required to scale up an existing structure from 60 to 100. This is especially true considering the nature of herd mentality - most people are hesitant to sign up for an empty gym, so the first 20 students take disproportionately long. Getting over that initial hump is worth a lot.

    @jobo: my "modern" take on martial arts goes beyond simply use of tech for marketing. My approach to pedagogy and operations differs from the stereotypical man-of-few-words Asian male patriarch, while preserving traditional content.

    @ShortBridge: I hear what you're saying in terms of most masters wanting to pass on the school to one of their direct students. But given the interconnected lineages of many TMAs, especially those involving kicks - TKD, karate, tang soo do, hapkido - and given that the cultivation of such universals as strength, determination, and resilience count for at least as much as school specific techniques or forms - I think there's decent room for fungibility across styles.
    But of course, there's the challenge of how to convey that to the master, and how to find such an open-minded master in the first place...
     
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  7. Buka

    Buka Grandmaster

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    Welcome to Martial Talk, Dave. Hope you enjoy it.

    And best of luck with your goal of opening a dojo. Keep us posted, bro.
     
  8. Flying Crane

    Flying Crane Sr. Grandmaster

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    Ok, but then How would you identify a “struggling” school that might be receptive to the idea? How do you know how many students they have, and how many they need, and whether or not the teacher even wants them? Honestly, if I had a school and someone came in asking these questions, my initial reaction would be “none of your business, and go away”.

    You don’t know if a school wants to be “profitable”, meaning he may be teaching out of passion and is happy to just cover expenses because he has another career that is his livelihood, and he likes it that way.

    I think there are two big issues that bring a student to a school: it teaches a method that they are interested in learning, and they have a good rapport with the teacher. If you change either of those issues, and the connection with the teacher is probably more important, then there is a high likelihood that the students will leave. Just putting any black belt in charge isn’t enough. If that also changes the school to a different system or even a different lineage within the same system, will likely result in a mass exodus.

    As has been alluded to in a prior post, the exception for the teacher is if the head instructor wants to retire and the senior student takes over as owner and teacher. He is known to the other students and there is an expectation of consistency in the hand-off.

    I also think that your point about the breakdown in communication due to language skills when the school is run by an Asian immigrant is misplaced. Firstly, there are A LOT of schools being run by non-immigrants who do not have the communication problems, so I think that point is largely moot. Secondly, people have a way of figuring out how to work together, and the students of said hypothetical Asian immigrant likely don’t have the communication problem that you think may exist. I don’t see this as a reason that a school might struggle financially, I don’t think the problem exists as you anticipate it.

    Really, I dunno about your idea. I think turning this into what is essentially a financial transaction is just not a great idea. If you want to teach, start with a small program through your city’s recreation program or a YMCA or something, maybe partner with an existing school to teach your program as well. This keeps your overhead low and builds a body of students.

    In my opinion, there are no shortcuts. If you want to teach and you are not in a position to inherit an existing school from your teacher, then you gotta put in the hard work of teaching with a small group and building your reputation. Don’t quit your day job in the meantime, and if your area already has a lot of schools then the competition will be tough, no getting around it. I don’t think that buying your way into an existing school is the way to go about it.
     
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  9. dvcochran

    dvcochran Senior Master

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    Welcome to the forum.
    If a school of 60 students is breaking even and you are thinking you can find schools with 20 or so students, the math does not work. Most of these schools will have long been folded. Nobody can sustain that kind of loss. I do not understand how you plan to purchase and operate multiple schools of different styles, and be an active partner. As others have said, if you are planning to purchase/lease the real property and be a silent partner, possibly. I have been doing this since 1989 but I started with a base of students as an active owner of a single school within an established organization. Not trying to revive someone else's failing business.
    There is already enough wrong in many of the martial art school models without consolidating active ownership of different style schools.
    You are correct that there has been contraction in the singular commercial dojo/dojang environment for some time. However, there has been expansion in the private/home/gym environments. It is very hard to compete with the lack of overhead in these models.
    You mentioned being in a very dense market; why do you think you can do better? How can you 'purchase' your competition and do better? I wish you the best of luck but your idea is full of holes.
     
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  10. hoshin1600

    hoshin1600 Senior Master

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    @333kenshin welcome to Martial Talk. Good luck on starting down the path to teaching and owning a school.
    However your thoughts about taking over an existing business is not something i would recommend. i think it would be a disaster for you. i agree with @Flying Crane.
    questions to ponder;
    how much do you plan on paying for a business? a valuation on a business is usually based on profitability over a period of time. to make up an example, in a business where the net profit is 10K a year, over a ten year span = a business worth 100K. if the business is not profitable then you are buying something that is a bad investment.

    do you know how to put a valuation on a business? martial art schools dont have a P&L statements. if the school is "failing" then it needs to be fixed. do you have the business experience to know where the problems are? it is possible the problems are not something you could fix. anyone buying a business needs to have a solid plan on how to turn their investment into ROI. HINT; starting a MA business from scratch has a better probability of success then trying to turn around a failing one.

    what would you actually be paying for? the name, equipment, student base? i hope you do realize students dont learn at a school they learn with a specific teacher. they have no interest learning from someone else. the chances are pretty good the teacher will take your capital and rent a better space then what he has just sold to you and bring all the students over to the new place.

    what makes you think the land lord is going to rent to you? this should be obvious but most schools rent. they have a lease that must be honored and most leases have a non sublet clause. you would have to negotiate a lease with the land lord and without a solid reputation as a buisness owner there will be no interest for the land lord to lose a long term tenant for an unknown gamble. the flip side is that the dojo owner actually owns the building and in that case he has no incentive to hand the business over, in all probability the other tenants pay the mortgage and he is rent free.

    how will you rectify differences in curriculum? you will have no idea about the style these students are learning or their curriculum. you will not be authorized to teach that style, which will mean all students and their ranks and standings within the parent organization will be null and void.

    how happy will the advanced students be when you start teaching them a different style? they chose the teacher and the style they wanted to lean, they didnt choose you. it should also be obvious that not all karate is the same nor is all TKD the same. if you think martial arts is that generic you really have no business teaching yet.
     
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  11. dvcochran

    dvcochran Senior Master

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    No, not at all. But a great way to the poor house.
     
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  12. kempodisciple

    kempodisciple MT Moderator Staff Member

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    Are you suggesting taking over a school completely, or just giving them advice to turn it around? Either way, this seems much more like a business management concern than a martial arts one, which makes me wonder: you mentioned having a black belt in karate, but not your business credentials. What experience or education do you have that makes you feel you will be successful in this?
     
  13. dvcochran

    dvcochran Senior Master

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    I bet dudes next post will be about how he/she can turn our schools around and make us all millionaires.;)
     
  14. 333kenshin

    333kenshin White Belt

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    Hi folks,
    Thanks for all the comments and feedback, both supportive and skeptical - the latter makes clear the importance of providing sufficient context.

    As such, lemme add some detail about my background and the motivation for my question...

    My primary training is in Karate mixed with Tang Soo Do. I've dabbled in Capoeira, Wing Chun, Northern Shaolin, and just started BJJ last year, none to a level where I'd be qualified to teach.

    I've been teaching Karate for about 5 years, usually about 7 classes per week, 2/3 kids, 1/3 adult classes. Half the time I'm lead instructor, half the time I'm assisting a fellow black belt or my sensei. I've got enough positive feedback from parents, my fellow black belts, and my sensei in my teaching ability that if I went the traditional route of starting a studio from scratch - while never a sure thing for anyone - my chances of success would be no worse than the next person's.

    So why consider taking on the extra risk of buying, considering all the potential risks pointed out:
    • alienating students
    • alienating other black belts/staff
    • incompatible styles
    • paradox of investing in a business doing poorly enough to be up for sale in the first place
    All of which are valid points, and sufficient for me to drop this line of inquiry if my circumstances were normal.

    I didn't think it was worth going into the particulars of said circumstances in a question about buying a dojo, but maybe that was a mistake.

    Basically, what I'm trying to do is develop a secondary curriculum in tandem to the martial arts curriculum. Sorta like Mike Massie's mat chats, but beyond character development into actual academic lessons - spanning anatomy, psychology, physics, behavior science, history, art, linguistics, and pedagogy - and integrated into the MA lessons rather than spoken lectures. Unintrusive, to minimize disrupting the flow of training.

    Yeah I know this sounds wildly ambitious verging on eye-rolling, and how I go about about implementing such a curriculum is beyond the scope of this post.

    But one key aspect of this secondary curriculum is that it's primarily aimed towards advanced students. Beginners are too busy acquiring the basics of punching, kicking, and blocking to handle learning what an inverse square relationship is. By contrast, advanced belts have internalized the core material sufficiently that they can handle, and may even welcome the novelty of such value-added topics.

    Hence the preference to buy a studio, whose advanced students will be able to start picking up the new curriculum right away, rather than start my own studio full of white belts who I won't be able to work on this new material with for years yet.

    And by the same token, my reduced concern over collision between MA style and instructors, since the value proposition I'm hoping to add would be a layer in addition to the existing curriculum, with minimal disruption.

    Hope that clarifies - and please keep the feedback, concerns, and suggestions coming!
    -Dave
     
    Last edited: Jan 10, 2020
  15. Flying Crane

    Flying Crane Sr. Grandmaster

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    Gotta be honest, I’m still skeptical.
     
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  16. JowGaWolf

    JowGaWolf Grandmaster

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    To be honest. It sounds like you want to be a martial arts business consultant and not a teacher. I'm not saying there's anything wrong with that. I just think you may be trying to be too many things at once here.

    The only way I would do what you stated is as a business consultant. If I was going to be a teacher then "rejuvenating some of these struggling older studios" is the least of my worries. People who want to teach tend to be highly focused on wanting to share their knowledge even if people can't afford it.

    Most TMA schools struggle simply because martial arts teachers often make bad business men. The passion for teaching often overrides good business decisions. Teaching and Martial Arts and running a business are 2 different things. People who have a passion for business and like martial arts will often thrive. Those who really don't care much about business but want to teach martial arts will often struggle. A person can be both, but only if they have a natural passion for business. They have to enjoy doing the business stuff as well as the teaching stuff.

    If the teacher doesn't like business then he/she should pay someone else manage the school, so they can focus on what they really want to do, which is to teach. But first they would have to get rid of that ego of the Teacher controls everything.
     
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  17. JowGaWolf

    JowGaWolf Grandmaster

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    I'm not skeptical

    If the school that you buy doesn't like this type of stuff then you have the wrong customers in your school. They will leave you school and you would have paid out a lot of money just to start from scratch. For example. If you purchased a Jow Ga school and said all of this, the students would leave, because that' s not why they got into martial arts.

    I'm not saying you don't have a decent idea, but you are asking a lot of from a customer who may only be a student because they get to exercise in a unique way after work.. Anatomy, psychology, physics, behavior science, are things that I taught i a martial arts schools but I didn't teach it to everyone. Out of 20 students only 2 were interested in stuff like that. The other 18 could care less. That's not what they were there for.

    You would be buying a school assuming that the current students actually care about stuff like that. You are opening yourself up for a big financial loss. If I were you I would either start from scratch or see if you can add an extra class in the existing school that you are teaching at so you can test to see if there is even a market that would like what you are proposing to teach.
     
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  18. Tez3

    Tez3 Sr. Grandmaster

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    An interesting thread with erudite posts, I even had to look up a word the OP used, nice! I don't have anything to add other than that because I have only ever trained and taught in martial arts clubs, all not for profit. MMA promoting aside I've never had anything to do with money, but am enjoying reading this thread.
     
  19. Flying Crane

    Flying Crane Sr. Grandmaster

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    I guess my skepticism comes from the fact that in order to teach those topics, one needs to have a fairly solid background in them. There are a lot of topics there, Anatomy, psychology, physics, history, behavior science, art, linguistics, pedagogy. It takes more than just having had one or two classes in something, to be capable of teaching it.

    I realize the goal is not to teach a university-level course in each of these topics. But still, some solid background is needed in order to teach it well, or even at all. One needs to know more than the simple equation F=MA, for example. Working something like that into a class session does not mean you are actually teaching physics in your class, does not elevate one’s teaching above a host of other folks who are all doing the same thing.

    So, what kind of background does the OP have in these various topics, that makes him believe he can integrate them into the curriculum in a groundbreaking and effective way, more so than the next fellow?
     
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  20. Tez3

    Tez3 Sr. Grandmaster

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    What are your reasons for that? Are you teaching children or would it be adults, because in any given group of adults you could have experts in any of those subjects. Your teaching children those subjects could conflict with what they are being taught at school ie they could have already covered the subject or not got to it yet.

    Do you have to register to teach those subjects or register your establishment because you would do more than teach martial arts?

    In the UK you'd only be allowed to teach martial arts in a martial arts class, childcare and teaching means you'd have to register for inspections etc.
     

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