How many students does it take to...? (Financial question)

[dvcochran]

The place I trained at the longest had some classes that were just "fillers" for those who needed them, but didn't get the kind of attendance the prime-time classes got. For a while, there was even a 10AM M/W class for a small number of folks who couldn't reliably make it to evening classes.

We have a 10:30 morning class M-W-S at one location and M-S at the other where a lot of people do shift work.

 

[JowGaWolf]

Good point, I can’t argue against that. If you are running a school and your livlihood depends on it, take students whenever they are available. Hopefully there would be a big enough group with interest in these times lots to make it worth the time, or real potential for it to grow if it is small to begin with.

If I ran a school where I'm counting on that money. I would be open for more than 8 hours and have classes throughout the day. There's no way I would run it like the last school.

 

[dvcochran]

Yeah, that is what I suspect may happen a lot. It I think it could be a possibility, just need to adjust if it isn’t being used.

It also occurs to me that during summer vacations and holiday breaks, having morning and afternoon classes could give more options for the kids and the older students, including college age, who are suddenly finding free time.

We have 3 summer camps each 5 weeks long. Retention is good.

 

[Gerry Seymour]

We have a 10:30 morning class M-W-S at one location and M-S at the other where a lot of people do shift work.

Yeah, I think you need shift workers for those classes to be a revenue source.

 

[JowGaWolf]

If I ran a school where I'm counting on that money. I would be open for more than 8 hours and have classes throughout the day. There's no way I would run it like the last school.

Even if there are no classes, there is something that can be worked on to help promote the school or provide content for students.

 

[dvcochran]

Yeah, I think you need shift workers for those classes to be a revenue source.

It is really important to know the makeup of the local economy. Some of my oldest students worked 2nd/3rd shifts. Many of them older than me.

 

[Monkey Turned Wolf]

My school used to have morning classes. They were barely utilized, to the point it wasn't worth my Master making the commute to open the school in the mornings. There was a 1 month period where I was furloughed, in which I was usually one of 2-3 students in the morning class.

Now, he does do some private lessons during that time (it helps that he's moved closer), but he doesn't keep it on the schedule.

I was referring more to afternoon then morning classes-morning classes still have the issue of people either working or sleeping during them if they have a shifted work schedule.

And with it, an important part would be advertising. If you can get those people to know about your class, it would be a lot different than just offering it and expecting them to discover it.

This is of course presuming you're not working during the day yourself, it seems at the very least an avenue to explore. And that you're moving somewhere with a lot of shift workers.

 

[Gerry Seymour]

I was referring more to afternoon then morning classes-morning classes still have the issue of people either working or sleeping during them if they have a shifted work schedule.

And with it, an important part would be advertising. If you can get those people to know about your class, it would be a lot different than just offering it and expecting them to discover it.

This is of course presuming you're not working during the day yourself, it seems at the very least an avenue to explore. And that you're moving somewhere with a lot of shift workers.

In early days of a school, an extra 10 students makes a big difference. Definitely worth exploring.

 

[Rich Parsons]

I am going to be that guy and give you an indirect answer.
But first some Big questions:
Of the 5k monthly expense estimate how much is going toward rent?
What is the national cost of living scale where you will rent?
If 2/3’s of that is for rent you are better off purchasing. I will explain.
Why be the slave when you can be the master?

My first school was/is in a strip mall. Don’t make that bigger than it is. It is a 4-unit complex that I was able to purchase after the school had been there about six months. But the wheels of purchase were set in motion about a year before opening the school.
By starting out with a 30 year variable mortgage , the payment was less than any spot I could rent of equal size in a comparable area. I converted to a fixed 15 year 3 years later and paid it off in less than 10.
Using a rough pen, 2 rented units pay the bills. Especially with the consistent change in the “martial arts as a business” landscape, it allows for maintainability of a commercial size Dojang that I could not see having any other way.
And here is a salient point; I do not believe it would matter what service industry it is. As long as the product is not costing you money it can stay viable.
I don’t ever remember doing the “per student” financial evaluation since it hasn’t been needed but your number will only be relevant to your input/output situation. It is pretty hard for me to picture a commercial school of big enough to support the student numbers you talked about without some way to offset the initial deficits. Yes, that can be working another full time job but that surely changes the dynamic.

Now, for some realities you will need to embrace:
You need to either take a really good business MANAGEMENT class (not sports management), get experience from your work, or have a good, trustworthy mentor. No shame in the latter and it has paid huge dividends to me for years. He has helped me make all my big financial decisions.

Expect to spend more on marketing than rent in the beginning.

Expect to take a loss or make little to no money for 3-years. This is how you have to plan you finances (most people anyway). IF you do it right you will far out pace the 3 year timeframe.

Don’t be afraid to sublet in the beginning.


One of the biggest changes I have seen through the years is what people perceive to be a “nice” gym. Gone are the days of the old sweat boxes. When people pay for a service they want the whole enchilada. And I think that is within reason. This means you must plan and design your Dojang for what works now and that can expand/modify in the future. And teaching classes will be less than 50% of the job.
This is another area visiting as many schools as possible has great value.

If you can show us an actual budget it would give us all great points to talk around. Would also need to see some comps on rentals in the area and then see what is for sale in your area.

I saw this model work for some local Martial Artists in the Late 70's & Early Mid 80's.
Also good info

 

[WaterGal]

Here I'll give you my answers straight up the way you asked them: Currently teaching out of a community center

1. 30 students to breakeven (includes rent, marketing, and software).
2. 70 students to decent living. I'm on average charging around 115 per student, you can do the math.
3. N/A -> I'll hit capacity around 60-70 in the community center (800 sq ft studio)

My phase 2:
1. 70 students to breakeven
2. 120 to decent living
3. 180 to good living
Max capacity of my own place (2500 - 3000 sq ft) will be around 200-250. Poissbly 300 if I really push it.

I think this is the best answer on this thread.

If you can build up a big enough student base to break even on a commercial space before you open one, that eliminates most of the risk. And you can buy equipment over time, develop processes, get better at teaching, etc.