How to Recession-Proof Your Dojo, with Mike Massie

Josh Peacock:

Welcome to the Gym Heroes podcast. I’m your host, Josh Peacock. Today’s show is brought to you by GymDesk, the easiest gym management software you’ll ever use. Take payments, create marketing automations, track attendance, and much more. To try the software out free, go to gymdesk.com/welcome. No credit card or painful sales call required. Our hero today is Mike Massie, of Small Dojo Big Profits, and MABSU fame. Today he reveals how to make your dojo or fitness business recession-proof. Without further ado, here’s Mike Massie.

Josh Peacock:

Welcome to the Gym Heroes podcast. Mike Massie, thank you for coming on.

Mike Massie:

Yay. Glad to be here, Josh. Thanks for asking me on.

Josh Peacock:

So we’ve talked before on another podcast, but for the people that are listening to this podcast specifically, can you give yourself a little bit of an intro on what you do in the martial arts world in the martial arts business world, so to speak?

Mike Massie:

Sure. So my name is Mike Massie and I’m the author of Small Dojo Big Profits, which I wrote in 2003 and released in 2004, I believe. So I started off as a martial arts instructor when I was actually a teen. I opened up a school with one of my instructors to get him to start teaching again, so I could train with him. And that was my first foray into running schools. And since that time, I had a 20-year career of running full-time schools. After I sold my first school about halfway through that 20-year stint, I wrote Small Dojo Big Profits, and segued into doing martial arts business consulting for martial arts schooling. So I kind of fell backwards into it. After I wrote the book, I did a lot of guerrilla marketing for that book, because I knew it would be controversial because of the nature of the book and how I wrote it.

Mike Massie:

It was kind of an angry book. I was a little bit angry at the industry and the state of the industry at the time. But I did a lot of guerilla marketing to market it and self-published it and developed sort of an underground following. And what I found was people started coming back to me who had purchased the book can read the book, some of them who hadn’t purchased the book. Actually had a lot of piracy issues going on. But they were asking me for advice. So I find myself spending about 10 to 15 hours a week answering questions for free.

Mike Massie:

And I soon realized between running a publishing business and running schools, and doing the fatherhood stuff and all these other things that I had to do at the time, of course, I didn’t have my kid back then, but he came years later, but being a family man, I realized that was unsustainable that I couldn’t keep spending 10 to 15 hours a week giving people free advice. So I started charging for it. Started off with… this was back in the day, too, this will tell you, with a forum, a paid forum the people joined and then that eventually became Martial Arts Business Year or MABSU, which is how I do most of my coaching and consulting now through that group.

Josh Peacock:

Awesome. So you’ve been in business, you’re a veteran now in the business consulting industry for martial arts, so to speak. And I’ve personally benefited from your products for many years now, probably five or six years. I definitely wanted to have you on the podcast because I think that the advice you give is not generic, first of all. And you understand the perspective of a small business owner, especially somebody who’s doing something on his own dime, and not somebody who’s trying to franchise, or come in with his life-saving… something like that.

Josh Peacock:

A lot of gym and even martial arts stuff is kind of oriented towards people that have these really big operations in mind. And that’s definitely why I wanted to have you on, because that is relevant to what we’re talking about today, and that is recession-proofing your business from economic downturns. So I think the first question I have to you is what are the biggest issues that martial arts instructors are dealing with in this economy?

Mike Massie:

Okay. Well, first, thanks for the kind words. I appreciate that. And it’s always nice to have somebody plug my materials for me. I am independent, I don’t take any sponsorships or any advertisement, or anything from any other businesses and industry, corporations, whatever. So I kind of pride myself on that. And then that kind of allows me to give people the straight dope on what they need to do to run a small successful school. So in answer to your question, we’re talking about challenges, right? The main challenges instructors are facing?

Josh Peacock:

Yeah. So economic challenges. I guess that’s kind of broad, so business challenges, losing money on things they don’t need, just all that kind of stuff.

Mike Massie:

Well, I would like to talk specifically to the pandemic, because that I think is creating the main challenges that school owners are facing right now. And I think every instructor’s aware of that. Every school, or an instructor… when the pandemic started, and at first I was a bit of a skeptic, because I had actually announced on my page. I was like, “Hey guys, everybody’s freaking about the pandemic, don’t worry about it, blah, blah, blah.” And then I saw some transmissibility numbers. I saw the transmission rates and what epidemiologists were reporting. And then I changed my tone really quick because my background is in healthcare. I have a degree in health sciences and I kind of know my way around PubMed, and I knew when I was looking at those numbers, I was like, “Okay, this is going to be a bit more serious,” especially because it seemed to have started to spread so quickly in the United States.

Mike Massie:

And when that happened, when I saw that happening, I knew that this was going to be an issue. So immediately, I kind of changed my tone and told people, I said, “Hey, look you’re going to have to start paying attention to this. This is going to be a big part of what’s… challenges that are going to face your dojo over the next year.” But none of us really knew. Nobody really knew at that time back in… gosh early 2020, because we first started hearing about the virus in 2019, but we really didn’t… nothing happened until spring of 2020. Nobody really knew how serious it was going to be. So when the lockdowns happened, I told everybody, I’m like, “Look, they’re saying 15 days to flatten the curve. I don’t think it’s going to be 15 days.”

Mike Massie:

I’m like, “You guys need to prepare for the long term.” And so that’s what I started preparing my clients for, and started telling people to do. I would say that challenges that school owners are facing right now due to the pandemic and the subsequent economic challenges we’re facing, supply chain issues and so forth, that are causing kind of a ripple effect in the economy, the main issues, first are government overreach. And this is personal opinion, obviously. I understand that government entities need to do things to maintain the public welfare. Maintain public health and welfare. I understand that. But I’ve seen clients in certain states, which I will not name specifically, but certain areas of the country where the local and state governments have cracked down with these draconian measures that have made it impossible for these school owners to survive.

Mike Massie:

And so in areas like that, I’ve seen school owners lose everything. And right now, finally these states and local governments are starting to kind of ease up a little bit. So these people are going to start over from scratch. And even in states where… in local jurisdictions where the government has not been so draconian in the measures that they have implemented. Now, I’m going to say something. I’m not anti-vax. I’m not even really necessarily anti-lockdown in a sense. I just feel like there was a bit of an overreaction as far as how businesses were treated, because the way small businesses were treated was unfair. You could still go to McDonald’s and Home Depot, but you couldn’t go to your local martial arts school in some areas, which is ridiculous.

Mike Massie:

So that government overreach that has hurt a lot of school owners, even in states like my own, like Texas, where the governor, thankfully he lifted the lockdowns very, very quickly and we don’t have mask mandates and things like that. Even in states like my own, you’re seeing school owners suffer. And that’s simply because they lost so much business and so much income and had to revamp and respond to the lockdown so rapidly. And it was Zoom classes and distance learning and what not, that a lot of those school owners are still only just recovering, and they’re still reeling from money that they lost and income they lost over that time. So that’s the first challenge.

Mike Massie:

The second challenge that’s facing school owners right now is inflation. I think we’re seeing rates for inflation that are like, man, I want to say the last report was 6.6% increase year over year, which is crazy. The last time we saw inflation like this was probably during the Carter administration, when I was just a kid. That was before your time. But I remember those days and things were rough, because inflation was out of control. Fuel prices were going sky high and everybody was tightening up their belts in order to deal with those economic conditions. And we haven’t really seen anything like this, even in the great recession, which I survived through running a martial arts studio. I almost lost my shirt to tell you honestly, but we came through it and ended up with a six-figure school. But it was rough.

Mike Massie:

But even then, we weren’t seeing conditions like we’re seeing now. So that’s the second thing because that’s impacting school owners on the backend of their business, because when inflation increases, when supply chain issues cause inflation, what you got to understand is everybody is going to pass those costs on. So landlords are going to pass those costs onto renters in the form of higher rent when people renew their lease and whatnot, or they’re just going to increase the triple nets, because in a lot of commercial leases, the way these commercial leases are written, these landlords can increase the triple nets with very little justification.

Mike Massie:

So you’re going to see school owners facing that. Als, energy costs are increasing, so that’s also another overhead cost. And then vendors that supply martial arts school owners with equipment and so forth, I mean, when their costs increase and their profit margins diminish, obviously they have to raise their rates and they have to raise their prices and pass that on to school owners. So that’s the second thing. And then the third challenge that’s facing school owners right now is the shrinking discretionary income that consumers are seeing.

Mike Massie:

A lot of people during the pandemic, those who remained employed were able to save up money, because they just weren’t spending money. There wasn’t anything to spend money on. People were stuck at home, they weren’t able to go out to eat, they weren’t able to go to the movies and so forth, so people just tucked away money, which is fine. When the economy opened up again, you saw people start to spend a lot of money very quickly. And that was good. That helped a lot of small businesses like martial arts schools, for example. The problem is that money is not going to last forever. And what I’m hearing from a lot of families now locally, and I live in a pretty affluent area, but I’m still seeing people complain about grocery prices, fuel prices, energy prices, everything is going up. And here in the Austin area, the cost of living is extremely high anyway, for the area.

Mike Massie:

Rent prices are extremely high. You can’t find a home. Gosh, we were lucky to find a home in the area that we live in. We moved to this area for the better schools and so forth for our kid. We were really fortunate to find a house in this area. Now, what we’re seeing is that the home that we moved into four years ago, what we paid for our home, homes that are half the size of the home, like half the footprint, half the size, much smaller lot and everything, people are paying the same price that we paid four years ago for homes that are 50% of what we got in a home when we purchased.

Mike Massie:

So when you see families are facing diminishing discretionary income, their family budgets are getting tighter and tighter, it’s going to be harder to get those people to spend money on something that is not necessarily a necessity. A household necessity. To spend money on recreational activities. So that’s the third challenge that school owners are facing right now.

Josh Peacock:

Excellent. And I know that, and you were talking about diminishing profit margins. Profit margins are razor thin enough when you’re running a martial arts school for most people.

Mike Massie:

They can be.

Josh Peacock:

Yeah.

Mike Massie:

Yeah. I will say though, I’m going to be completely honest with you here. When you say that, I have to point out that that’s kind of… people say that because there’s kind of a poverty mentality in the martial arts industry. And this is coming from the guy that branded himself as the Small Dojo Big Profits guy, right? But I will say that in the martial arts industry, there’s actually financially a very low barrier to entry in opening up a martial arts studio. Because when you open up a martial arts studio, let’s face it, all you need is enough square footage to put down some mats. So you need four walls, you need a bathroom, you need an office and some mats. That’s it. That’s all that you need.

Mike Massie:

It doesn’t cost a lot to open up a martial arts studio. When you compare that to say opening up like a gym, if you were even going to open up a small gym, like a personal trainer’s gym, you’re going to have to invest $10,000 easily in fitness equipment, to open that place up. Easily. And that’s on the low end. I’m talking maybe like… you could spend $30,000 and not bat an eye. And I know this because I was actually partners in a gym. It was a women’s gym franchise that I opened up with a friend of mine. And I was partners in that for a short time. It’s expensive. If you’re looking to open up a restaurant, for example, I mean, just the build out cost and the equipment, 100, $200,000 without question easily, to open up a restaurant, even a small restaurant.

Mike Massie:

So your profit margins can actually be really high into martial arts studio, if you have enough students. The problem is though, because there’s a very low barrier to entry in the industry, you have a lot of people jumping into business, opening up martial arts studios that really haven’t done their due diligence and that don’t have the education, or experience to run a school successfully. And that’s why you end up with people crying in the industry about, “It’s so hard to run a martial arts school. My profit margins are so low,” this and that. And it’s really not because the business is that hard. It’s a very simple business, low barrier to entry. We don’t really have high overhead cost in comparison to other industries and other businesses. It’s just that people are not very good at running businesses that get into this industry. It’s as simple as that.

Josh Peacock:

Yeah, I got you. I remember from… well, I ran my own club for a little while, but I didn’t charge enough first of all. But I know from working as an instructor at several schools for quite a few years, that they’re just not charging enough. They were choosing locations that are way too expensive, or too big or both. And they’re just bleeding out all of that money that they could have been taking home as profit. That kind of leads me into my next question, and that is as the economy sees another downturn, how can martial arts schools insulate their businesses against this and even future market depressions?

Mike Massie:

Yeah. Well, what’s interesting is that what we’re actually seeing is we’re actually seeing a kind of a split economic downturn. So what we’re seeing is this kind of bifurcated economic period where people at the top, the very, very wealthy people are acquiring even more and more wealth, whereas the middle class is seeing their wealth, not only their income and their buying power with their dollars because of inflation, but also their over overall hold wealth shrinking. So I’d just like to point that out, because it’s not that the economy is completely taking a downturn. It isn’t. It’s just that the middle class is not necessarily faring well under the current conditions. Which directly affects us because if you think about it, most of our clients are going to be middle class people.

Josh Peacock:

Absolutely.

Mike Massie:

So how can a martial arts studio owner insulate their business against an economic downturn? In other words, recess-proof their business, which is something that I talk about quite a lot. So the first step is you want to set your school up for success. And setting your school up for success from the beginning involves planning. You have to plan ahead and you have to look at things realistically. I will say that one of the worst curses that can possibly affect a new school owner is to have too much money on their hands. They have too much financing. And one of the worst consulting clients that I ever dealt with was a guy who had tons of money. He had a family member or somebody that had given him, like, I don’t know, it seemed to me like a lot of money.

Mike Massie:

He never gave me the exact amount, but I knew that he dumped probably a few hundred thousand dollars easily into a studio. Yeah, it was crazy.

Josh Peacock:

It makes me sick.

Mike Massie:

And the guy kept bleeding… He just kept bleeding money, and I kept trying to tell the guy, I’m like, “Look, man, quit spending money here, quit spending money there. Focus on this.” And the guy just wouldn’t listen and eventually they went out of business, which is unfortunate. But on the other hand, when you have somebody who has very limited resources, who’s bootstrapping their school, they have to be a bit wiser about the decisions they make in their business. And the first decisions that you’re going to make that are going to impact your business are going to be in the planning phase.

Mike Massie:

I mean, the planning phase is where you decide; what’s my school footprint going to be? What’s my square footage going to be? Where am I going to locate in the community? How am I going to find a location that’s going to allow me to work within a budget that’s still going to be a successful location that’s going to help me succeed as a school owner? What type of hours am I going to run? What type of programs am I going to teach? Which market am I going to go after? Which is something we were talking about before the podcast with your current venture as well.

Mike Massie:

These are all decisions that are going to impact you over the long term. You also need to think about your marketing budget, how you’re going to market, what you’re going to do to market your studio, how much money you’re going to spend on marketing every month, which should be one of your biggest expenditures when you’re first starting a studio. Should also be one of the largest, I guess you can say portions of your time should be spent. Division of your time should be spent on marketing when you’re first opening the studio and so forth.

Mike Massie:

So planning ahead and planning out what you’re going to do, having a good, solid business plan, and I’m not talking about one of those business plans that you’ve got to take, that you need that’s like 60, 100 pages thick to take to a bank to get a business loan. That’s not what I’m talking about. I’m talking about just having a general plan and strategy for your business that makes sense, and that’s going to set your business up for success. So really that’s the first step is pre-planning. Now I know that doesn’t help school owners that are already in business. Somebody who’s already in business, who is already struggling is like, “Well, that’s great if I was starting over again five or 10 years ago, but that doesn’t help me now.”

Mike Massie:

So other things that you can do to recession-proof your business, you actually mentioned this a minute ago about not charging enough, school owners not charging enough. And that is a huge problem in our industry. What I’ll see is I’ll see school owners who are still charging rates they were charging back in the 1980s and 1990s. Guys that have been around for a long time. And it’s ridiculous, because look at the inflation right now. I mean, we’re facing what, like 5% inflation on average, something like that? I mean, the inflation rates are extremely high right now. And yet school owners, most of them out there are probably afraid to raise their rates, but that’s something that you have to do, because just like any other business, I guarantee you, it’s funny, my wife took my kids to McDonald’s the other day, because he wanted McDonald’s. We don’t eat there very often, but it’s kind of a treat for the kids.

Mike Massie:

So every once in a while I’ll be like, “Okay, you can eat some junk food.” And she came back home and she’s like, “I can’t believe I spent 20 bucks for two people at McDonald’s.” And I’m like, “What? The dollar menu is no more, huh?” And that’s just the way it is. These big corporations, they know that when their cost increases, they’ve going to pass on to consumers. Other businesses are doing the same thing. Why martial arts studios don’t see it as a necessity to do this is beyond me. And I think it has to do partially with martial arts school owners are people generally speaking that care about their customers. They care about their students because the relationship that an instructor has with a student is so very different from the relationship that any other service provider has with their clients.

Mike Massie:

You can look at any other industry, and I’m going to tell you that martial arts school owners have a much different relationship, and in some ways, a much more intimate relationship with their clients. And in many ways that hurts us, because we start to look at our students as number one, people that we are protecting, that are kind of under our care in a sense. Many times I look at my students almost like my children. And so, when you get too close to those people and allow your relationship to go from a professional only relationship to a personal relationship, it makes it very, very difficult for you to do things like raise rates on your students. And so as an instructor, you start to feel guilty about that stuff.

Mike Massie:

You’re like, “Gosh, I know so and so right now is struggling, because they only have one income. They went from two incomes to one income, and I know such and such over here, he just got a new job because he was laid off during the lockdowns and so forth.” And all these things are going through your mind. You’re thinking about your students and your clients, and you’re putting them first before the welfare of your business. And I hate to say this, but a little bit of kindness is a good thing, but too much kindness can kill you when you’re in business for yourself as a small business owner. So I think that’s what happens with a lot of martial arts studio owners, is that we’re just too kind. And that kindness, that desire to help other people, which is the reason why most martial arts instructors get into this business in the first place, it causes us to shoot ourselves in the foot.

Mike Massie:

So the second thing I will say again, I’ll reiterate this, that school owners need do to recession-proof their dojos is to intelligently raise their rates. And that’s something that I don’t have the time to get into on a podcast like this, but it is a subject that I talk about extensively with my own coaching clients and in some of my materials. So we can talk about that later at the end of the podcast. So that’s the second thing. So the third thing is reducing overhead. And if you’re just starting off, or if you’re planning your school, it’s easy to reduce your overhead because you could set up your school for success from the beginning, which is something that I talk about in Small Dojo Big Profits, which is setting up your studio to where you’re not spending a huge amount of money on your overhead when you first start off.

Mike Massie:

It’s simply too much risk to take on the beginning. But if you already have a studio that’s open, there are still ways that you can reduce your overhead. And there are numerous ways to do that. Number one is, if your studio is overly large, and I will say a studio that’s overtly large, pretty much anything over 3000 square feet is probably more space than most school owners need. And people will argue that with me till kingdom come. But I can tell you, after having been in this industry, I’ve been in the martial arts, involved in martial arts, I’m closing in on the end of my fourth decade in a few years in martial arts.

Mike Massie:

So I’ve been in the industry as a professional for 30 years, and I can tell you when you’re in the industry as long as I have, and you spend time behind the scenes with people, speaking with people and having candid conversations, not public conversations, but candid conversations, you start to hear things. And you start to hear things about school owners that you thought were extremely successful and wealthy, that you thought their schools were these huge schools that were just profit machines, that weren’t. And you start to find out that these school owners that have these huge schools with these big, huge square footage, and like 800, 1,000, 1,200 students, you start to find out that those schools actually had very narrow profit margins, and that the school owners weren’t earning that much more in profit every year than somebody with maybe like a 2,500 square-foot school with 250 students.

Mike Massie:

And it’s eye-opening when you hear these stories. Man, I’ve heard them over the years over and over and over again, and I’m not going to name names because I don’t do that. It’s unprofessional. But I will say that those stories are out there. They exist. I’ve heard them, I’ve heard them secondhand and firsthand. And so, if you have a school that you feel like you’ve got more square footage than you need, and if it’s more than 3000 square feet, you probably do, I would consider downsizing. I would consider renegotiating with my landlord or moving to a new location. So that’s the first thing.

Mike Massie:

The second area in which you can reduce your overhead is usually payroll. And honestly, most small school owners, they probably don’t have enough help, but for those who are spending way too much on payroll, if you’re paying your employees more than you’re taking home, and you have a school that is 300 students or less, and you’re paying your employees more than you’re taking home, your payroll is probably too steep. So that might be an area where you can cut back on. Now I will say this; in today’s workplace environment, I guess you could say the workers marketplace, workers are expecting higher pay, they’re expecting better conditions. And so it may be difficult for you to cut back on payroll just now, but there are ways that you can do that. That is the second area that I would look at.

Mike Massie:

The third area I would look at are other fixed costs. You have fixed cost in rent, and of course, in your own salary and so forth. And those are areas that you can’t cut back on, but there are other fixed costs that you have in your business as well. And you would look through your fixed cost and then also your variable cost in your business. Cost and overhead expenses that change from month to month. Say, for example, let’s say a school owner typically runs specials or special offers where they’re giving away like a free uniform with every new student, right? I’ve heard from instructors now that they’re having a hard time finding uniforms, which really kind of sucks, because of the supply chain issues.

Mike Massie:

But in normal times, in regular times, you might be able to find a different supplier that would be able to get you uniforms at a reduced rate or maybe buying bulk or something like that. You could also look at doing things like changing your vendors or service providers for different things like communications, internet and so forth. You could also look at installing energy-efficient technology in your studio that will help you save money on heating and air conditioning and so forth. There are a million different ways where you can cut expenses in a martial arts studio. And the way that you’re going to do that is you’re going to sit down over the Thanksgiving holidays, or over the Christmas holidays is a great time to do this, especially over the Christmas holidays at the end of the year when things slow down for more school owners, to sit down and go through your expenses, to look at your profit and loss report.

Mike Massie:

And if you can’t print a profit and loss report, because you’re not doing proper bookkeeping on your school, that is an indication that you need to start doing proper bookkeeping with your school and keeping books on a regular basis. You need to set up QuickBooks for your school or something like that, or get an accountant or a bookkeeper to help you with it. But you need to look at your P&L and go through it, and look where your expenditures are out of control. And then you need to go through in those areas where you see your expenditures out of control, you need to go through that at a granular level and look at every single expense in your P&L report for that particular area of your business to find out where that money’s going and if there’s places where you can plug those holes. That is the third way. Reducing overhead.

Mike Massie:

The fourth way that a school owner can recession-proof their dojo after setting it up for success, raising their rates, reducing overhead, is by learning to be a better marketer and salesperson. And that is so, so, so important. In the martial arts industry, I think with a lot of school owners, a lot of instructors who are kind of like they’re my kind of instructors that are really hardcore and that are really serious about their art and serious about what they’re teaching, and they don’t want to run… I hate to use this term, but I’m going to use it. They don’t want to run a [MacDojo 00:30:14], or they don’t want their school to be just a childcare or whatever. In other words, in their minds, they’re telling themselves they don’t want to be a sellout.

Mike Massie:

For those types of instructors, the words marketing and sales are kind of dirty words. They have a negative connotation for a lot of these people. And what I’m going to tell people who are listening right now, instructors and school owners or potential school owners out there, is that you’ve got to get rid of that stink and thinking if you’re going to be successful in this industry, because there is no small business out there that is successful, that does not market themselves successfully on a daily, weekly and monthly basis, and that does not make a sale every day that they are in business. And it’s funny, one of my old high school buddies, Tom Whitaker, who’s been around the industry forever, he’s actually the first guy I ever advised on opening a martial arts studio, because he saw that I was running a studio back in the nineties and saw that I was fairly successful and came to me as a good friend and said, “Hey, Mike, give me some advice. How do I get started?”

Mike Massie:

He was the first guy that I actually coached through the process of opening a martial arts studio in a sense. And he’s been very successful. As a matter of fact, his success in his schools has far surpassed what I’ve done in my own schools.

Josh Peacock:

Wow.

Mike Massie:

But he told me once. He said, “Mike,” he said, “Think about this. Do you know of any other bus where they can consider themselves successful if they don’t make a sale every day?” I said, “That’s a good point, Tom. Yeah, that is a really good point.” And I think a lot of martial arts school owners, we program ourselves to think that if we go a week without enrolling a new student, that somehow that’s okay. It’s no big deal. I’ll average it out over the month or whatever, or my enrollment is still good on the floor, even though I didn’t enroll anybody this week. It’s okay. Well guess what. If enough of those weeks pass where you’re not enrolling people when you’re not making a sale, pretty soon, you’re going to start to lose clientele on the backend, because you all know retention, attrition is a big issue for martial arts school owners because most martial arts schools are somewhat of a revolving door, as far as the students they enroll, and students that are leaving.

Mike Massie:

It’s kind of just the nature of the business. Part of that has to do with customer service though, to be honest. But if you’re not enrolling new students all the time, your enrollment is going to be shrinking pretty rapidly. And that’s something that we need to consider. And I will say this as well, is that in some 17, 18 years of coaching martial arts school owners over the last couple of decades, the majority of the people that I coach who are struggling in their martial arts studios, 80% of the issues, the challenges that they face in their business could be solved with better sales and marketing, because that would increase their cashflow immediately. So cashflow really is the answer to most of the issues and challenges that martial arts school owners face, and the way that you solve that is being better at marketing and better at selling memberships. That’s the fourth part of my answer.

Josh Peacock:

That’s a lot to digest.

Mike Massie:

I do. I talk for a long time. I kind of like to hear the sound of my own voice as my wife says, but yeah, hopefully I answered that in enough detail to help people out there.

Josh Peacock:

No, yeah, this is excellent. I think that you touched on a lot of things I wanted to revisit for just a second. To help people like me, who listen to tons of podcasts, read tons of articles about how to make it in the fitness business, in the martial arts business. And they hear lots of very great sounding advice, but aren’t sure how it works mechanically. And you mentioned how our kindness can really kill us. And this is a huge thing… really across even just regular marketing podcasts for any type of industry, all you hear is care about the client and help people out. And you do want to do that, but I think that that advice can be misleading because it leads you to think that it’s up to you to constrict your own business, to help your clients instead of using your service to help them and letting them manage how it is they’re going to support what it is that you offer.

Josh Peacock:

Especially a martial arts school, more so than a gym is a community. And people who are part of a community, who benefit from a community, who get reciprocal care from the community are always supporting the community in some way with a martial arts business, that the primary way you do that is monetarily. You give them money to be a part of that community. And I don’t think there’s anything dirty about that. If they care about the community, if they care about what it is they get from the community, they will do what they need to do to remain a member of that community.

Mike Massie:

Yeah. Well, I will say this… Not to cut you off, but I will say this; there’s a lot of soundbite coaching that goes on out there. What I call coaching by platitude, which is where consultants, coaches, they get into the consulting and coaching business without actually understanding any type of framework for how to deliver information to other people in a way that makes sense. You understand this because you have a master’s degree in… what is a master’s degree in? What’s your master’s in?

Josh Peacock:

Oh, teaching and learning.

Mike Massie:

Teaching and learning. There you go. So you understand that there are certain ways to impart information out of other people. You have to organize it in a certain way and so forth. And I think what you have is you have a lot of people out there that are like… they’re listening to Gary B and Grant Cardone, and they’re talking about crushing it and 10X-ing it and all this other BS. And I mean, that’s great for Gary B and Grant Cardone, but they jump into the consulting industry and they don’t have anything more to offer people than soundbites and platitudes. So, you get this kind of coaching approach out there where people are just kind of like, “Yeah, you need to 10X it. You need to grind, grind, grind.”

Mike Massie:

Honestly, that type of coaching doesn’t help anybody because it’s not giving anybody any actionable advice. And I think it’s a little bit of a epidemic in the industry. But getting back to your question about how studio owners can deal with their desire to be… I guess you could say their altruism. Their desire to be altruistic toward their clients and balance that with running a business, is that you have to remove your emotions from your business decisions. And this is something that’s difficult for a lot of us to do.

Mike Massie:

Whether martial artists want to admit this or not, many of us are pretty emotional people. We’re people that are kind of… I would say martial artists, because of the type of knowledge seekers that we are, the type of wisdom seekers that we are, we tend to be a little bit more in tune with our emotions than the average person out there, which sounds funny, but I think it kind goes back to that kind of warrior/scholar, warrior/monk type of personalities that many of us have where we tend to be a little bit more contemplative and a little bit more self-aware than the average person. So, for that type of personality, it can be difficult to divorce your emotions from your logic and decision making.

Mike Massie:

But one of the best things you can do for your business is approach your business like Spock, and just approach everything from a very logical viewpoint, and just kind of go, “Okay, if I didn’t have any emotion involved in this and I was just making the decision based on the numbers, what would I do?” And see, numbers don’t lie. There’s an old saying in the martial arts… not the martial arts industry, but in martial arts itself, specifically in combat sports; the mat doesn’t lie. The ring doesn’t lie. When you go in there, when you go on the mats, or you go in the ring and somebody is trying to twist your arm off or take your head off, your skill is laid bare for everyone to see. And that’s the great thing about combat sports, is that you know exactly where you stand as far as your skill level in combat sports, which is awesome.

Mike Massie:

And that’s why I respect combat martial artists. In the same sense, I respect good business owners who are willing and able to divorce their emotions from their business decisions and make decisions in their business based on logic and numbers alone. And when you start tracking numbers and metrics in your business and start looking at the metrics, start looking at KPIs in your business and go, “Oh gosh, I’m enrolling only six people a month, but I’m losing 10 people a month,” it has a certain pucker factor to it, when you look at the numbers and you look at them and nothing else. I mean, that’s when you see those numbers in your business and you realize that the numbers are telling you, if things don’t change in your business, you’re going to be out of business in a year.

Mike Massie:

It tends to have an impact on the way you make decisions in your business. So that’s my advice, is for martial arts school owners out there to… yes, we want to help people, but what you got to remember is if you shut your doors and you’re closed, you’re not helping anyone. Going out of business doesn’t help any of your students. Because basically what you’re doing is, you’re abandoning your students through your own failure. It’s a little blunt for me to say that, but it’s true. So you owe it to yourself and you owe it to your students to be better at business, to track your metrics, to track your numbers, to look at the numbers and look at them unemotionally, and make decisions based on your numbers and not on your emotions.

Josh Peacock:

Absolutely. Look at the numbers. You have to retrain yourself to think about martial arts in a different way than you do as a martial artist. And even speaking as somebody who’s mostly done that, I’ve worked professionally in marketing for a few years now, and sometimes those beliefs that you have as a martial artist trickle back in, when you’re trying to put together a business plan. When you’re trying to think like a business person. Looking at the numbers is an excellent way psychologically to open it up in a sandbox, so to speak. All the stuff about your students and all that stuff, put it aside and think about, “What do I want to make as a martial arts instructor? What do I need to survive? How do I keep this business open and just look at the numbers?”

Josh Peacock:

And then once you figure that out, then you can approach your students, instead of allowing… you talked about the way we think about our students as coming under our care. I mean, it’s a very paternalistic or maternalistic thing to be teaching about self defense. Anti-bullying. That sort of inclines you to think about your students in that way. And so you want to hear about them triumphing over the bullies, over these adverse life situations that they come through, and because you’re human, that’s going to bias the way you think about them, and you don’t want to hike up prices and make things harder for them, because you care about them. But you’ll find probably most of your students are willing to pay more.

Mike Massie:

Yeah, if you’re delivering on your promises, and promise-delivering is something I talk about a lot in my coaching programs and with my coaching clients, is we have to deliver on the promises that we make in our marketing. If we’re telling people that we’re going to teach their children to have more discipline, respect, to get better grades and so forth, you damn well better be delivering on those promises in your classroom. And the same thing goes with adult classes. If you’re telling people that they’re going to lose weight, they’re going to get in shape, they’re going to be more confident, they’re going to have less stress and so on, you got to be delivering on those promises. But if you are delivering on your promises, people are going to pay for that. Because you got to remember, people buy based on emotional and not rational reasons.

Mike Massie:

They justify after the purchase, with rational reasons. They rationalize it after the purchase, so they don’t have buyers remorse. But they buy based on emotional reasons, and what martial arts school owners need to understand is that people have to continue… every single month when that payment comes through and hits that person’s account, they have to re-rationalize the decision. And guess what’s going to be stronger than rationalization, because rationalization is going to tell the person, “If I cut out this $150 a month, or $200 a month martial arts tuition payment, I could get a nicer car or whatever.” But emotion is going to tell them, “You know what? I love the feeling that I get when I leave class every day, or I love the look in my child’s face when they’re out there in the floor at the end of class, and they’re beaming because of whatever they did during class that day. And my child’s so happy and so much more confident now than they were when they first started martial arts lessons.”

Mike Massie:

That’s when it’s going to keep him continuing to pay that tuition. And you know what? It’s also going to allow people to rationalize paying a little bit more for tuition as well. It’s something that we have to consider as martial arts school owners. Let’s look at this on the flip side too; if you’re delivering that type of service, the type of service that changes lives, why wouldn’t you want to charge what you’re worth? Moreover, I will say this. From the client’s perspective, everybody needs to think about what their ideal client is. And I know when I first started teaching martial arts, my goal was to help children. I had had a very difficult childhood, and it affected me and impacted me into my adulthood. And martial arts training had helped me deal with that, had helped me become a better person and a stronger person and kind of become the person that I wanted to be.

Mike Massie:

And I wanted to pass those lessons on to children. Also, to my adult students, but mostly to children. That was my mission when I first started teaching martial arts. And part of that mission was I wanted to make my services available to underprivileged kids. And I did. I did that through several ways, which I explained in my books. But what I found very was that a business runs on cash. Simple as that. And because of that, you have to make sure that you’re attracting the types of clients, the type of client that can actually pay you good money every month to keep your doors open. If you want to help those other people that maybe can’t afford your services. Right?

Mike Massie:

So guess what? People who are very successful that have money that can pay you what you’re worth, they don’t respect broke people. It’s as simple as that. No successful person is going to look on somebody who’s broke and go, “Wow, I really admire that person.” They’re not going to. They might admire someone because of their accomplishments, their professional accomplishments. But they’re not going to look at them when they’re struggling every month they pay their bills and they’re driving a crappy car and all this stuff. They’re not going to look at that person and respect them for that. If you’re saying that you’re going to teach people how to be more successful in life, if you’re marketing yourself not only as a martial arts instructor, but also as a sort of a success coach, you better be successful.

Josh Peacock:

Absolutely. And this has been one of the hardest limiting beliefs for me to shed, because if you’ve never experienced it before, it’s hard to believe. But if you don’t charge enough, people will psychologically devalue the product that you offer. You might lose really the best students that you could have. The students that you really want, you could lose them because you don’t charge enough.

Mike Massie:

Yeah. Yeah. And a perfect example of that, I was talking with the local martial arts instructor here that just opened up a studio near me. And you always like to talk to the other instructors in town for various reasons. I like to be on basically good terms with them. I don’t want them to see me as the enemy. And so I was talking with this guy and I was kind of giving some advice, and I said, “What you got to understand is…” And we were talking about teaching private lessons. I said, “In any community you move into,” I said, “I’ve seen this in affluent communities that I’ve owned schools in and in communities that were lower middle income. There is all was going to be a certain percentage of the local population who are willing to spend from four to 10 times what you’re charging in monthly tuition with you each and every month.”

Mike Massie:

It’s just a simple fact. Perry Marshall talks about this in his 80/20 book. 80/20 Sales and Marketing. It’s a good book. I recommend everybody should read it. But there’s always going to be a certain percent of your clientele that are willing to give you more money if you’ll only ask for it and give them a reason to give you that money. And it’s interesting because the way that I charge clients for private lessons is much different from the way other business owners charge. Most school owners, and this is what this school owner was doing, they will sell like a block of private lessons or something. They’ll give you a discount for selling a block of private lessons. And that doesn’t stabilize your income.

Mike Massie:

What I do with my private clients is I make them subscribe to taking private lessons from me. And I have had some very affluent people train with me, especially through the pandemic, because people were looking for things to do, that wouldn’t think anything of dropping 1,000, 1500 bucks a month on private lessons just at the drop of a hat, because not only do they have the money, but they saw the worth in what I was offering. And you’re not going to get people to see your worth if you’re a struggling business owner.

Josh Peacock:

Yeah. I’ve never heard of that before, of the subscription thing. All the conventional wisdom I’ve seen is to charge rotating block subscription, not subscription, but block sets of private lessons.

Mike Massie:

It’s a horrible way to sell private lessons, because [crosstalk 00:48:26] what you’re doing is, and I’m getting off on a tangent here, but what you’re doing is you’re programming your client basically to treat your business as an a la carte thing. I’ll just take what I want when I want it. No, that’s a horrible way to establish a relationship with the client. You need to set the standards for your clients and set… you set basically the ground rules from the beginning and kind of set expectations and so forth. And the way that you get them to pay you is one of the ways that you do that. But a lot of martial arts school owners out there have a hard time asking for money. I understand that. My wife went through that when she first started… after we got married, she came and worked in my school. She would help me out. And then she had a hard time asking for money.

Mike Massie:

So one day, I told her, I said, “Honey, you’re really not asking for their money. You’re asking for our money, because when those people are in here and they’re taking classes and they’re not paying us, then they’re stealing from us. They’re stealing our money. They’re taking money off the table.” And boy, that turned my wife around really quick. All of a sudden, her eyes lit up and she’s like, “Oh, you’re right.” And after that, she had no problem asking people for money. So you got to change your thinking around a little bit and understand that when somebody is in your studio and they’re taking classes from you, when you ask them for money, it’s not their money you’re asking for. It’s your money.

Josh Peacock:

Yeah. Trading has always been an honorable thing. Humans have always done it. And as long as you… I think that instructors don’t understand what their promises are and that entirely different podcast episode. But they don’t understand what their promises are, so they don’t understand when they’re delivering. Now, if they understand what it is and they can measure delivery, I think that a lot of the trouble of asking for what they’re worth will resolve itself. Maybe not all of it, but most of it will resolve itself. And certainly, the people that you serve will have no problem, because you have done exactly what you promised them to do.

Josh Peacock:

I want to be respectful of your time. I have one more question before we begin to close out.

Mike Massie:

Sure.

Josh Peacock:

And I wanted to get your thoughts on starting an online program to have to… I don’t know that lockdowns are going to happen again, but in the event it does, having an online program that’s maybe not as big as some of the other things out there, but just has a few people that are getting what they can get out of an online program. Maybe traditional programs are more conducive to this, but how do you feel about that? It’s been the rage over the last year. I don’t know that many of them have stayed around. Do you think that’s a sustainable way to help your business, or is it kind of a fad?

Mike Massie:

Yeah, I don’t think it’s for everyone. And the reason why is because not everyone has the charisma, or the ability to deliver curriculum. They don’t have the understanding of how to deliver curriculum effectively through a distance learning program. But one of my instructors, who I have been following his teachings for gosh, man, since I owned my second school in the early 2000s is Burton Richardson. And that’s a big part of his business model that he teaches people through distance learning. And that’s a huge part of his business model and he’s very successful at it. And because of the way that he delivers curriculum, and because of the expectations, the performance standards he has for his students, he’s turned out some really phenomenal students.

Mike Massie:

Now granted, all these people are going and they’re training with him in person, as well as using his courses and his online training resources and so forth, but man, he turns out some really phenomenal students using distance learning. But on the other hand, Burt’s been at for a long time, he’s a phenomenal martial artist. He’s an absolute encyclopedia of knowledge. And so, he’s very good at delivering information via video presentations and online courses and so forth.

Mike Massie:

For the martial arts instructor who is charismatic, who can present well on screen, who understands camera angles and videography and so forth, and who has the wherewithal to either learn or already has the marketing skills, and the technical skills to set up an online course, which is easier than ever now, why shouldn’t you do that? And why shouldn’t you set up online learning for your students, or even for distance students who are several states away or whatever across the country, if not in some way, compromising your integrity and doing so?

Mike Massie:

So there was a question that came up in my Small Dojo Big Profits group, the private group that I run, that’s the free group on Facebook. And I think you were involved in that conversation where somebody said, “How do you feel about giving people belts when they’re learning online?” And I said, “Man, you got to be careful about that. Maybe the first few belts, maybe like the beginner belts, the first two belts. But then after that, I think you kind of need to see people in person to be able to give them rank.” I said, “Certainly you don’t want to be giving people advanced under belts or a black belt through the mail.” And some people bristled at that, because they’re like, “Well I had the student and he trained during the pandemic completely online. And when he came back, he was better than ever. We were amazed at how much their skill had improved.”

Mike Massie:

I’m like, “Well, that’s fine. But what if that student is an outlier?” And I would say they probably are. Martial arts instruction and the transmission of knowledge in the martial arts is also in some ways the transmission of skill. Now you can’t transmit skill to somebody else directly, but you can help them learn skill directly. You can guide them to learn skill correctly in a direct manner. I don’t feel like that’s something that you can do completely online. It’s just not. And I don’t care what anybody says, I don’t think you can do it completely online. But through a combination of online learning and in-person learning, I think that somebody can become a heck of a martial artist. Heck of a martial artist.

Josh Peacock:

Yeah. I agree with you. I have a friend that does online training, and he’s done a really good job. There’s a few things, and it’s going to depend on the learner, I think that most of good instruction can be done online. But there’s a level of feedback that just can’t give over an asynchronous communication. And you can try to do the live coaching through Zoom or whatever, but sometimes you have to do more hands-on than that.

Mike Massie:

Yeah, you got to be there.

Josh Peacock:

Yeah. Sometimes you just have to be there. The video might not be great, or the lighting might… you never know. You can get multiple angles at a given time. You don’t have to instruct them to turn and all that kind of stuff. There’s just stuff that you take for granted when you’re teaching as an instructor that you have to totally… it’s a pain to do on a Zoom consulting call, or a private lesson, or something like that. But yeah, what it sounds like you’re saying is, it’s something… if you can do it, if you understand how to do it, it’s something you should definitely do, but be cognizant of some of the learning pitfalls. The teaching and learning pitfalls.

Mike Massie:

Yeah. And you also have to understand the scope of what you’re offering and who you’re offering it to. If you’re a brand new first degree black belt who is opening up your first school, you probably don’t want to create an online video course presenting it to the world at large, purporting to be an expert at TaeKwonDo and ranking people online. That’s probably a mistake. But recording your curriculum for your students and putting it online and charging them an additional fee for access to that, no matter how you decide to do it, or possibly even having your curriculum online and having students that train with you for a time and then move to a different state or a different area, they can’t train with you directly anymore, giving them a way to continue their training and maybe come in once or twice a year and check up with you and stuff and get progress checks and direct training from you and so forth, maybe that’s not a bad thing.

Mike Massie:

Now, if you’re a high-level black belt, somebody who’s an instructor who has a very specific… I’m going to say very specific skillset, referencing Liam Meson, but somebody who has a very specific skillset, that is unique and that you are considered to be an expert in your field, why wouldn’t you want to put your material online and create online courses for people? It doesn’t mean you’ve got to certify people online. It doesn’t mean you’ve got to give belt ranks online, but you can still deliver the material and sell that to people, and have it be an extra stream of income for yourself.

Mike Massie:

I don’t understand where the resistance is in delivering instruction online, or delivering courses to people. I think people automatically assume that it’s an either/or thing. People are doing both. They automatically assume that if you have an online course, you’re automatically giving people black belts online. Those two are not mutually exclusive. It’s not black or white, you can deliver online instruction and not be giving people belts through the mail.

Josh Peacock:

I mean, a self-defense course is the obvious good one that you could do that wouldn’t require you to doll out ranks and things like that. Absolutely.

Mike Massie:

Yeah.

Josh Peacock:

Awesome.

Mike Massie:

For sure.

Josh Peacock:

Great advice. So where can people find you?

Mike Massie:

I’m just going to give you one domain. One website to go to, and people can download some of my materials for free. So if listeners go to freedojobook.com, they can download a couple of my books for free and kind of check out my stuff without really having to spend any money and gamble on a person maybe that they’ve never heard of before or something. So yeah, go to freedojobook.com and you can download some of my materials for free and check it out.

Josh Peacock:

Awesome. I will say again, highly recommended the paid stuff as well. If you enjoy his free stuff, don’t be cheap. Everything is reasonably priced.

Mike Massie:

It’s okay. Yeah, I understand. It’s funny because one of my longtime clients, kind of former client now, but we’re still in touch. This guy, Seb Bates, he’s an amazing guy. He bought my book when he was 16. This was back when I was charging a lot for that book and for the course and everything that went with it. I mean, it was a significant amount of money for him. And he bought it long before he wanted to start teaching martial arts, and studied the materials and so forth, saved up for it. And he contacted me to thank me recently and said… it’s interesting looking back, because now this guy, he owns multiple schools. He has schools in two different countries. I think he told me his business is doing millions a year right now, his martial school.

Josh Peacock:

Wow.

Mike Massie:

Amazing. I’m so proud of him. But he told me, he said, “Looking back, Mike, honestly, you don’t realize it at the time, but when you look back and you see how one small decision can… your entire future can hinge on it or can influence your future and send you in a completely different trajectory.” And he was kind enough to say that reading my book was one of those events for him in his life, which I really appreciated. But I get not everybody can afford to spend $100, $200 on coaching. Which is why I have the books on Amazon. So people can go to Amazon, or they can go to my bookstore and buy them and they’re pretty inexpensive, so yeah.

Josh Peacock:

Awesome. I appreciate you sharing that story and thanks for coming on the podcast, man.

Mike Massie:

Absolutely, man. I appreciate you inviting me on and if you want to have me back some time to talk about other stuff, just feel free to invite.

Josh Peacock: Awesome. Thank you.