Black Belt Banter: Martial Arts Business Podcast
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Black Belt Banter: Martial Arts Business Podcast
#22 | Monthly Tuition vs. Paid in Full: Which One Actually Grows Your Martial Arts School
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In this episode of Black Belt Banter, Master Jimmy Hong joins Master Lee and Master Jeung to break down the debate of monthly tuition versus paid-in-full programs. They discuss cash flow, stability, lessons from COVID, and how to balance both models for sustainable growth. A must-listen for school owners looking to align their billing strategy with long-term success.
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In this week's episode, Stability or Cash Injection, the most controversial billing debate in martial arts business. Welcome to Black Belt Banter, the best podcast to help your martial arts school increase profits and generate substantial revenue. I'm Jimmy Hong. Joining me is our resident expert, Master Jay Lee, the president and CEO of the U.S. Taekwondo Center, home of the legendary 1988 U.S. Olympic head coach, Grandmaster Sing Lee. A six-stand cookie one black belt, Master Lee continues his family's proud tradition of excellence in martial arts. We are also joined by Master Philip Young, a second generation martial artist, six-stand cookie one black belt, an MBA graduate from Fordham Gabelli School of Business. Master Philip is an expert with a sharp business perspective. Welcome, gentlemen. Welcome to the show. Master Lee, let's start with you. What do you think about this paid in full versus monthly?
When Paid In Full Makes Sense
SPEAKER_00Thank you, sir, for having us. I think that it always depends on what the school's objectives and goals are, because obviously, if you if you're doing too much paid in full and you're not managing those funds correctly, it can lead down a really negative path. So uh uh some examples of what your school owner is trying to accomplish is let's just say, for example, the school needs to get a bunch of brand new mats and they need to generate$10,000 of cash injection so they can pay for those mats. I think you can easily manage doing some paid-in-ful discounted programs so you can invest it back in the doja. I think that's one of the key things that school owners should keep in mind is how you're planning to manage those funds. Um, so you can always set up some kind of goal that you're trying to invest back in the doja, and then you can accomplish that by paid in full because there's no faster way to generate um big revenue and it beats trying to go get a loan, right? If you're paying a loan, it could be a tough environment for interest rates to inject some cash into your business. So paid in fulls are a great way to do that. And I also think that it anything, it's a balance, right? You should always in our schools, we don't do 100% paid in full. We we have a blend of that. And so we have some monthly residual revenue. Uh, the way we look at it for our schools is we want to try to have our regular expenses paid by the monthly receivables. So regular expenses would be your rent, your main payroll. So you're you're never stressed out about trying to generate too much money. And if you don't get those cash out paid in fulls, then you won't you don't want to put yourself in a bind. So it's just like anything, having a balance and how you plan out your budget, having a vision and and goals of what you're trying to accomplish, and also limiting the number of paid in full that you do in your school so you're not too cash heavy.
SPEAKER_02Master Jung. Yes, sir. What is your stance? What is your stance, sir, on why do you first of all, your school, do you do most mostly monthly or do you do paid and fulls as well?
Building A Balanced Revenue Mix
SPEAKER_01First of all, thank you for having me on the show again, sir. It's a great honor to be here. And to answer your question, uh we do have a very good balance of paid and fulls and monthlies. But going back, I think we hit that reset button when COVID happened. Previously, COVID, we were very heavily into paid and fulls, and then Copinary School shut down, and we realized how important it is to have the monthly recurring revenues as we approached post-COVID. From that point on, I learned a healthy balance of paid and fulls and monthlies are the right ways to approach the business perspective of Doja. Like Master J Lee said, you're going to have variable costs and you're going to have fixed costs. And especially if you are renting versus if you own your own property. If you own your own property, you're going to have very heavy variable costs. One day you're fixing a border, another day you're fixing a roof. So you're gonna need those paid and folds to match up those costs. Versus if you're renting, what your costs are going to be. You know how much you're paying in rent, your payroll. So you can play around with those two, I guess, different situations and what best fits your model and your intention to move forward with your approach.
SPEAKER_02Let's go into a model then. Let's go into a hypothetical, not a hypothetical, a typical model. Let's say a single school owner, 180 to 200 students, they charge about$200 a month in tuition. Where Master Jung, where what should they stay at monthly or should they convert into some paid and fulls from there if that's a model? Because that's a typical school owner. That's not they're not struggling, they're successful, they're profiting each month. What do you think about that, Master Jung?
Lessons From Covid And Recurring Revenue
SPEAKER_01I think of it like this when I look at the model that I wanted to create, I wanted to create a model that was very scalable. And to be to be efficient in how we enroll students, there's also a downside to this because just because it's easier to enroll students, you also have to watch the back door because it's easier to get out of your program. So when I approached it, I personally didn't want to deal with all the sign-ups and other intricacies that are involved in the onboarding processes. So I made it very easy for my staff to be able to sign up any student that walks into our door.
SPEAKER_02That's why And that's through monthly, is what you're saying.
SPEAKER_01Yes, sir. All of our students they join in through our very basic monthly program option. To keep a healthy revenue and healthy balance, I would say at least to 70% should be on your recurring monthly basis of your tuition, and the rest can be on your paid and full service.
SPEAKER_02I absolutely agree, especially for your staff development. If staff is doing enrollment, it's much easier for staff to enroll with a monthly tuition than the complexities of a paid and full tuition. Master Jay, going back to you, you said the high the loan going back to the loan is the high interest is a great point. Why pay a percentage of the money that you're gonna borrow when you could do a paid and full, and that's not gonna be a percent, you don't have to pay a percentage at all. Why not why not gravitate towards that even further instead of trying to get line of credit or a loan?
The 70% Monthly Benchmark
SPEAKER_00Yeah, I think it makes sense if you're investing the money appropriately. I think that I think sometimes what I've heard in the past from people is that they're doing a tremendous amount of cash out and then they're just going and buying extravagant things and vacations, things like that. So that's not definitely not something that I would recommend. I think that there's obviously, like you said, Master Hong, there's you have to have a better salesperson who's able to get those paid in full. And so Master Jung's model is very simple. Any staff member can sign people up. So so anything is a everything is a plus and a minus. But I think the other part of why I believe that paid in full is important is that you know, we look at the psychology of people in our today's society, and people are very fickle, they're changing their minds all the time, and people are so used to a month-to-month model, whether that's Netflix or anything, that people can just cancel within 30 days. And that's obviously good in a lot of ways for a consumer. But when it comes to taekwondo, that also gives that mentality of their commitment to taekwondo training. And so that's why I think that's another really important benefit of paid in fulls is that it gets people's long-term commitment. And what we tell all of our families is that, you know, they always say, Oh, you know, Master Lee, I don't, I don't know, my kid is only seven years old and I don't know what they're gonna do in three years. That's a big commitment to make. And what we tell them is that that you're 100% right as a parent, your kids are gonna change your mind. Kids are always gonna have ups and downs. And if you ask your kids what they want to have for dinner tonight, it's probably not what you're planning to have them eat for dinner. So understanding that there are gonna be ups and downs and that our program is designed to push kids physically and mentally, that it's gonna get harder. We want to know that when the going gets tough, that mom and dad are not ready to just wash their hands and say, hey, we're gonna quit, that we know that the parents are committed to this training. And so that's a really important psychological benefit for the parents to be committed to the program. And it is 100% true. And anything that you spend money on is the more you spend on something it on something, the more you value it. Like if you go to a high-end steakhouse and you buy a$70 steak, you're you're like licking the plate. You're gonna eat every every bit of that. But if you go to a buffet, I mean, if you watch a buffet, look at how much waste is done on a meal when people go to a buffet.
SPEAKER_02Or or sizzlers.
SPEAKER_00Or sizzlers. I know that's where I saw you last week, Master Hong. So so I think that the commitment is really a critical piece of the paid in full. Now we we do a lot of monthly as well, but I think that is one of the really important values is that you have people's commitment. And when parents pay for their kids' program, it's very less likely that they're gonna quit because the parents say, Hey, hey, John, I paid for this program. You're gonna finish your black belt. And so that's another really big benefit of the paid and full from my perspective.
SPEAKER_02Wait, Master Lee. So are you saying when parents pay full, they're in a contract or membership agreement, but when they're paying monthly, they're not? Are they in a contract for 12 months or 18 months or 36 months if they're paying monthly, or do they get to cancel any time and monthly as well? Because you can still charge monthly and still be binding them into a membership agreement.
Commitment, Psychology, And Retention
SPEAKER_00That's true. So for our programs, we do sign them to a long-term commitment, but there are clauses that people can get out of their training. And so, like, you know, we're a very high military community. And so obviously, if they move, there's no obligation to discontinue their payments. If they have some kind of permanent medical condition that prohibits them from training, they'll have no commitment to continue their training. We also offer holds if they're experiencing some financial hardship, whatever that may be. And then we do have a cancellation clause that they do they pay a$500 cancellation fee per student to cancel the program. And and we, you know, we still have a lot of parents who are not a big fan of that, but we just go back to the commitment that we we let parents know that a commitment is a two-way street. Like when we bow to our students, the students bow right back to us. And so when we tell our parents, we say, hey, look, we're we're vested in our community. We we own the building that we're in, we have a mortgage here, we have a full-time staff, we're all committed to doing this. I guarantee you, if I said to you, hey, Mrs. Jones, I'm on a month-to-month lease here. Do you want to sign your child up here? They're probably gonna say no. So that's what we tell the parents is that we we ask for commitment. It's not we're gonna lock your hands in together, you can get out of the agreement, but we also want to know that when things get hard and when we push your children, that you're not just gonna quit, because inevitably that's what parents and kids do is when things get hard, they want to quit. And that's one of the things that I think is really a challenge in our society now is that kids are quick, quick to quit things. They're quick to really give up when things are hard. And I think that's one of the really important life skills that we teach in Taekwondo is that you're making a commitment to something and it's gonna get difficult, it's gonna get harder, and you're gonna keep pushing through. And we need the parents' commitment on that side as well.
SPEAKER_02Absolutely 100%. I don't know when our industry has changed from because we used to do a lot of paid and falls and a lot of membership agreements. We call them membership agreements instead of contracts because contracts has a negative connotation to it, but it both means the same thing. But nowadays, just like what we said, Master J, we are a subscription-based society where we don't buy computer programs, we subscribe to them in month to month, right? If we're Adobe, Microsoft, we used to just buy it for what a couple hundred dollars and we would own it for the life of it. But now we have to pay monthly and we don't own it anymore. I don't know when we switch to that. But the mentality for school owners is like, hey, we can't be charging a year commitment. Everybody we want to offer our parents month to month. They could quit anytime. I don't know when that mind shift has shifted, but majority of the school owners are doing that when I have spoken to them. Master Philip, what is your monthly? Are they month to month or are they in a membership agreement? What is your setup there?
SPEAKER_00It says they're in a contract.
SPEAKER_01Yes, sir. They are in an agreement. We do call it a membership agreement. The reason we have them sign a membership agreement, even though it's for a month or for three months, for six months, for the 12 months here, because there is also a liability clause that goes in there as well. So I think it's very important that you have something on paper for any type of business that you're running. It can be a Taekwondo school or you can be running an ice cream shop. You need to have things on paper to track and order things. That being said, you asked why we have shifted into this model of monthlies in our time. And I really think about this, and I think the model that we are looking for is truly just convenience. Everyone is looking for convenience. Convenience is like the new thing that everyone wants to go into easy in, easy out, right? And from that model subscriptions like Netflix, what you see are other things, and it seems like our industry has adopted some of the trends that are occurring in our economy. And I do believe also in healthy balance as well, what Mr. Jay Lee said. So I think it is important to still continue to have the paid and folds and the structural, over the overarching structure of having a program and a membership, right, within your school so that you have these healthy balance of flourishing in your dojong. And it's a great culture difference too. If you're predominantly just on the membership model, your culture is very different in the on the mat than if you have a predominantly program-based model, right? And just going back, it's like you can we can name memberships, programs, and all these things. What's the most important thing is what happens on the mat, right? That's where the magic happens. If your program sucks, no one's gonna stay. Whether you you psychologically tell them this is a black belt program or this program. Your what you provide on the mat first, it has to be superior, it has to be your bread and butter. And then you can put in all your structural developments that goes into it.
SPEAKER_02Yeah, I'm sorry, go ahead, Master Lee.
SPEAKER_00Go ahead, Master. Sorry, Master Hong. I was just gonna say that I I I think it just depends on the school learner. I don't think there's anything wrong with a month-to-month model. I I think there's a lot of people who are very successful with that, and it makes a lot of sense. It's Master Jung alluded to is that it's an easy way for your staff to be able to do that. And so it's a model that is easy to duplicate. But I I it's just in my philosophy, I do think having a commitment from a parent is important. Because if I don't know that you are committed to this program, then it's not going to be the right fit for either of us because the commitment is a two-way street. And so that's why I personally believe in that in my schools. But that's not to say a lot of other people are not successful doing it in a month-to-month agreement. And that model makes sense too.
SPEAKER_02But you're saying that your month-to-month, Master Lee, your month to month, they're in agreement anyway. So if they're in a membership agreement for 12 months or 36 months or whatever, what difference is it when they're paying paid in full or monthly tuition when they're in a length of term contract agreement?
SPEAKER_00That's right. So for me, we are assigning people to a commitment, whether that's six months, 36 months, or whatever that commitment is, we don't offer month-to-month agreements because our space is valuable, our staff's time is valuable. So we want to focus on the parents and students who are actually committed to the program. If we don't know you're going to be here next week, it makes us hard to know how to teach your children because not everything in life is going to be easy.
Contracts, Clauses, And Flexibility
SPEAKER_02Right. I 100% agree. 100% agree. Okay, like I've said this many times. I'm a soccer dad. We pay a total cost is astronomical, but just on club fees alone, just on tuition alone, we pay over$4,000 a year. And we're in a one-year agreement. One year agreement. Whether you pay full or you pay into in in four months or six months, there's no monthly option. But for one year, everybody knows you come in and you whether you love it or you hate it, you are in that contract for one year with that school. If you wanted to leave, you could leave, but you're not gonna get a refund. And if you want to join another team, another club, you have to pay again to join another club. Just if you quit one take on a school and you go to another school, you're gonna pay to go to a new school, but you're not gonna get a refund. So what we're doing in our industry is not some alone thing. This is done through all sports, majority of the sports, team-based sports individual as well. Yes.
SPEAKER_00But I think, Master Hoan, that's a great analogy, right? Your son is a club level soccer player and he's very committed. He trains almost 12 months out of the year. And that's what we want for our students who want to become black belts, is we want people who are committed to the program. It may not be the right fit. Some people don't want to be a black belt, and some people don't want to do club sports. If they don't want to do club soccer, then they should just go play at an eight-week program at the YMCA. And so it just really depends on what your parent and kid wants. If you want your kid to be a club level player, they've got to make a commitment. If you want them just to be a recreational level player and they just loving around, running around and they're not as serious, then it's not the right fit for them. So that's the way we equate it for our program is that we start everybody in a six-month program. That six-month trial period is a time for the student, the parent, the school to determine if it's the right fit both ways. And if we all feel like we're committed to one another, then we have people come enroll to our black book pro program. And we know that it's gonna take time, we know it's gonna be difficult, and we know there's gonna be ups and downs. So if the parents believe it's gonna be good for them, they will finish their black belt. If they allow the kids to quit, they will quit. And I tell the kid, I tell a lot of the parents this myself is that I wanted to quit so many times when I was a kid, and my parents wouldn't let me quit. And I look back, and even though it was hard at that time, I'm thankful that they did not allow me to quit because Tekweno made me in the person that I am today. And I think that it's even harder in today's society. Parents are very quit, quick to let their kids quit something, but you can't let them quit because quitting is a habit, and you don't want your kids to become habitual quitters at things.
SPEAKER_02So you're saying initially your natural tendency is a quitter. You were born a quitter, and then you took it. No, you no, you are the quitter, not me. You you took Taekwondo and Taekwondo raised you beyond being a quitter into a goal focused. Oh, I understand. Master Jong, going back to you.
SPEAKER_01Yes, sir. Oh, wow.
Culture On The Mat Drives Everything
SPEAKER_02You are absolutely he's the quitter. He's the quitter. You're absolutely correct about what you said before. Hey, what does what's just the it doesn't make a difference whether you do monthly or you do paid in full, because if you don't have your classroom strength and structure in place, there's gonna be too much leaks, too much attrition going out. Doesn't matter how they come in, right? If your classroom is not motivating, it's not goal focused, you're not providing the students what you promised, then yes, whether they sign up for monthly or paid in full, it doesn't matter. Under the assumption that and that's why this podcast covers everything. We don't just cover one thing. We don't just cover marketing. We don't just cover signups. We don't we cover everything because we have to be strong in all aspects and phases of our business. And we're just assuming under the assumption that, hey, your classroom is solid, you're motivating, the students are excited to go in. Going to the monthly tuition, do you do all the signups or do you have staff do the signups? And scaling that monthly, how how do how does that work? What do you recommend a single school owner to do?
SPEAKER_01So at the time of current, right currently, right now, we do have a staff member that takes care of the majority of the signups. Once in a while, okay, so you don't do the signups then. Once in a while, I will do it. If at the time is seek where I need to step in, yes, I will do it. But most of the time, my staff, front desk manager, will handle that. But going back to the monthly, so it's like what I realized with having a monthly structure where it recurs in the many payments is that you're also your average member value goes up drastically higher than if you were at a discounted program structure. That's one of the things that I realized is that if you can maintain these students throughout the year, having a membership model where they're reoccurring, you realize that you're giving out less, I guess it's so uncalled discounts. So your average member value tends to increase a little higher. Okay. But that's if they stay, right? One of the biggest draws back that we do face is during summertime. In summertime, a lot of our students, they may take a little break, may never come back. We always have to end up calling them and checking up on them, finding our ways to offset our revenues in the summertime. That's always been a struggle. Whereas the program model, you're fixed into a program where you have a destination of a goal very long term. So psychologically, you're very in tuningly committed to the program. And that's why I really enjoy the model of the program structure as well, because you will always have those students that would want to stay committed to your program. For them, this is perfect. And then you will always have those students that are on the fence here and there. And obviously, it is your job as your martial art teacher to provide the best commitment you can with them. But it's meeting the needs of your members. That's what I see, sir.
SPEAKER_00So Master Jung, when you sorry, Master Hong. Um Master Jung, so your programs they are signing up for a one-year, three year, and it's a month-to-month or cancellation fee. Can you explain how you're structuring that? Sure, sir.
SPEAKER_01So we have our month-to-month option.
SPEAKER_02We also you do offer a month-to-month option.
SPEAKER_01Yes, we do offer a month-to-month option. Okay.
SPEAKER_00Because he's a quitter, that's why. Okay, so your month to month is a higher monthly tuition, correct? If they choose that option.
SPEAKER_01No, sir, because you know what? Our students, I want to give them the flexibility. Okay. And if they would love a savings, then we do have a six-month model where you're committed for a six-month, but that's paid in full. And you also have a 12-month model where it's paid in full. And within that, we also have a program model where it's separate from the memberships. And this program is like a black belt club program, like you would call it in some of the industries, or leveling up into other names. So that's our model, sir.
SPEAKER_00So, Master Jones, just to clarify, I come into your school, I take a free trial class, one class, two weeks, whatever that is. Then your staff is coming in and they're saying, Hey, would you like to continue on? They say yes. You give them an option, you can say, Hey, I could pay month to month, and it's X dollar amount. If you want to save a little money on that tuition, you can make a six-month agreement, and but you have to pay it in alum sum. Correct, sir. Yes, sir.
SPEAKER_01Correct.
SPEAKER_00And then if they say, hey, after that trial, they want to just go straight into the Black Belt program, they can do that?
SPEAKER_01They can do that if we offer it to them, if they meet the right criteria of our school. But most of our students end up taking the either the six-month again, or some of them switch to a month-to-month model, or they upgrade to a year. Yes, sir.
SPEAKER_00But if they do the three-year membership for the Black Belt program, is that a commitment? It's a contract, right? They're playing for the 36 months.
Onboarding Flows And Trial Design
SPEAKER_01Yes, sir. No quitters there. There are contracts. But can they cancel it if they have something coming up? Do they have the ability to opt out? No. It is the fixed paid in full for that program until Black Belt.
unknownYeah.
SPEAKER_00So they can pay it in a lump sum or they can pay monthly over the course of three years.
SPEAKER_01No, they don't have the option to pay monthly.
SPEAKER_00It's just Oh, so they the only way to pay monthly is if you're paying a month-to-month agreement. Yes, sir. Got it. Yes, sir. Got it.
SPEAKER_01I learned all these programs. You know who I learned it from, sir? I learned it from Master Jay Lee. Oh, yeah. He's the mastermind. That's why you're a quitter. That's why you're a quitter.
SPEAKER_02He learned.
SPEAKER_00No, that's not true because we allow we allow many of our members who are in a black belt program to pay monthly towards their tuition. They do not have to pay it on a lump sum.
SPEAKER_01Got it. I understand. So how he just took a bear. How do you proceed on with your onboarding procedures when a student comes in for their first time, sir? What are their options?
SPEAKER_00So for our model, we do one free private lesson. It's a one-on-one free trial lesson. It's an evaluation. And one of the things that we tell the students is that yes, we're going to let them try Taekwondo, but also we are evaluating the child. We're evaluating the student to see if they're qualified to participate in our group lessons. So once they, if they successfully complete the trial lesson, we explain to them that our ultimate goal is that we want all of our students to become black belts. We have a standard of excellence in everything that we do, from our facilities to our staff, but that includes our expectation from our students. So ultimately, we want our students to become black belts. However, our black belt program, and this is an older model that I learned from Master Hong over 20 years ago, is that our Black Belt program is by qualification only, meaning they have to earn it. And when we say earn it, we look at regular class attendance, attitude, and effort in class. And we want to make sure the kids maintain their respect at home. So being respectful is not just being respectful at the dojai. They have to listen to their parents, get along with their siblings, do everything they're supposed to at home. And so we explain to them that being the Black Blook program, they have to demonstrate these qualities. We start everybody in a six-month program. So you don't have the option to join our BlackBook program right away. We want to start them in a six-month trial basic program. So we can evaluate them as well. And then from there, they have the option. They can pay monthly towards that six-month commitment, or they can pay it in a lump sum and receive a discount.
SPEAKER_01And then when you first start, so you only have the option of six months, sir. Is that correct, sir? Yes, sir. Okay.
SPEAKER_02I like that model because you're not giving someone who's coming in, they don't know and trying, let's say you're a young parent and you have a five-year-old, and they don't know what is the world of Taekwondo or martial arts. So you're not giving them a bunch of options. They're just like, hey, come here, try this, let's try it out for the next six months and see how your student does. They're if they love it, they're like, sign me up. They don't have a bunch of options to be like, oh, let me think about it, discuss with my wife, and come back. They're just yes or no, right there on the spot. And why wouldn't you? Because assuming your intro private class was really awesome, the kids are excited. I remember my child doing soccer on the first day. We were so excited. If the soccer club was like, you gotta join us for 10 years, I would assign on the spot because I was it didn't matter. I was just so excited. Having kids, when I was running my taekwondo schools, I did it before kids. Now having kids, it made my perspective so different about running a taekwondo operating a taekwondo job.
SPEAKER_01That's interesting.
Parenting, Choices, And Long-Term Goals
SPEAKER_02Because now I'm thinking it not as a business sense, I'm thinking as a parent perspective. If I come in, we forget how excited the kids are. We forget how excited the kids are joining the Taekwondo school because we're in it day-to-day. I I used to not want the parents watching the class. Now I know different. You want the parents to join the class, you want the parents on the sideline, focusing on their kids, watching the kids play soccer, because then you're more invested. You're more into it. You'll follow the club anywhere. So if they told me, Master Home, Mr. Hong, join our club for 10 years. We're gonna bring your son into this high-level soccer player. Where do I sign up? I would join right then and there. If they gave me all these different options, and I'd be like, okay, let me think about my wife. I would have joined no matter what, but that's just my enthusiasm. And when these kids come in to your Taekwondo school, your martial arts studio, it doesn't matter what program you put in front of them, they're gonna be so excited to join. It's just how you want your program to set up, how you want your student to go through that pathway to become a black bell. And that's what I learned from having kids versus opening, operating a martial arts school before kids. What do you think about that?
SPEAKER_00Well, let's be clear, Master Hong, in your example, it's not your choice, it's your wife's choice. So you there's no discussion, right? Whatever she tells.
SPEAKER_02We all know who wears the belt in this relationship.
SPEAKER_01So that's and it's obviously the true grandmaster at your house, huh?
SPEAKER_02She's the Quang Chong of the place.
SPEAKER_00But I think Master Hong, you bring up a really great point. That's a great point, sir. Yes, sir. Ultimately, it's what do the parents want? And I think that's also my experience as well. I've operated a school for a long time without kids, and now that I have a child, my perspective is completely different. I sign my kids up for things that I know are gonna be good for him. And there are times where he doesn't want to go, but it's not his choice. As a parent, we guide our kids in the path we want them to achieve, and they develop the qualities that we teach them to. If we just leave it up to them, they're gonna, they're gonna be lost and they're gonna make a lot of bad decisions. So I think that as a school, you know, we know what's gonna be valuable for the kids, and and obviously there's the kicking and punching, there's the physical component, they're learning the self-defense, but the greater value to Tekwondo is the life skills. We're teaching kids respect, we're teaching them discipline, we're teaching them confidence, and we're teaching them perseverance. And that those are qualities that parents find value in. And I think it just goes on to the philosophy of the school owner. What does a school owner believe in? And there's no, again, I think there's no right or wrong way to do it. There's only a right way for you on what you believe your philosophy is. Because I've seen so many models that are successful from what month to month to paid in full, et cetera, et cetera. You name it, it just depends on what what the philosophy of the school owner is.
SPEAKER_02If you ask a seven-year-old, a five-year-old, a 10-year-old what they want today, what they want tonight, what they want tomorrow, every answer is different. That's right. Because they don't have the maturity and the brain development, be like, what's best for them. So you have to explain that to especially a first-time parent who's young in their late 20s, 30s, because a lot of times they don't know. They're like, oh, it's you know what, I'm gonna let my kid decide because whatever their reasons are. But then it's up to you to educate them. Look, if your child, what did your child want to eat today? What did he want to eat yesterday? What was his choice? Was it a healthy, good option for them? They're gonna be like, no, I they he wanted candy and he wanted ice cream. Yes. So why would you want an important life decision that's gonna help his life skills from this point on? A very important aspect, why would you leave that up to him? You have to make that decision for him as the parent, making the best goal and decision for him. And that's not up to a seven-year-old, that's for you, the mom and dad. And the best decision for him is to join this tech wonder school right now so we could develop him into an awesome student in the future. Not because I guarantee you, yeah, today the seven-year-old is very excited. But if you keep asking him every day, oh, do you want to go to Takwano today? Do you want to go to Takwano tomorrow? He's gonna say yes today, tomorrow, the day after. But eventually, month one, month three, he's gonna say no. Why? Because that's what kids do.
SPEAKER_00But if yes, sorry, sorry, I 100% agree with you, but I think I also agree with Master John. That's why the classroom is so critical. Like we can spin different ways to sell programs, payment, etc. But if you don't have a strong classroom, none of it matters, right? Like we're you like you said, Master Hong, we're teaching them respecting discipline. But if you don't have discipline inside your classroom, you can't inspire the kids, you can't teach the kids, none of that stuff matters. So it's all about the classroom. And then for school owners who are trying to decide how what model they do, they got to figure out what best meets their goals, their mission, their philosophy. But it always starts with the classroom.
Numbers, Metrics, And Predictability
SPEAKER_01Master Jay Lee, I have a question on, and this is something I actually I've been having trouble with. Maybe some other people are having trouble with too. Is how do you find the time to carve out, to meet with the parents, to schedule for to introduce black belt programs or leadership programs? And who's doing that? Are you the person that's doing that, or is it your staff? Or so the logistics behind that, can you talk a little bit about that, sir? Because I'm very interested.
SPEAKER_00You know, we're we're pretty old school in our philosophies, and we we still do do a sit-down with a parent when we're enrolling them to the black belt program. I I know a lot of people have gone away from that model that there's no sales, right? They do everything in the lobby. Any staff member can do it. And I think there's great value in that for sure. Um, in our schools, our philosophy is still the same where we we do sit down and have a conversation with the family because it is a commitment for both the school owner and the kids. And so we we do schedule appointments outside of the during class time. So whether that's me or a different staff member, we have dedicated staff who will sit down and go over the program with the parents. I know that doing it in the lobby, having transparency, there's a lot of value in doing that. But I also, in our philosophy, I think just being able to have a quiet conversation with the family when we're talking about a commitment. We we look at our taekwondo school not as a sport. We look at taekwondo as a school. And so it's it's kind of like an admissions process, right? We if you if you want to enroll your child to Harvard, there's an admissions department, right? And you go through an application and you go through that process and you sit down and you go through financial aid, figure out payment options, etc. So we we look at ourselves more in that regard as opposed to a sport or activity. And that's why just for us, it makes sense to still do it that way. So as we go through the process and try to find out models that are more duplicatable, then I definitely think there's great value in eliminating that that office conversation. So that's just the way we currently do it.
SPEAKER_01So when you are having this conversation, you're having this conversation together with the child and the parent. So the then the child is excused from the class and you're talking with them during what class is going on. Is that what's going on, sir?
SPEAKER_00Yeah, yes, sir. We'll do it before or after their class so that the kid can be a part of the conversation because we want to hear from the kid that they want to do this program as well. And like Master Hong said, ultimately it's the parents' decision. But at the same time, you want the kids to have their commitment as well, that they want to achieve their goals also.
SPEAKER_01And how often are you having these conversations?
SPEAKER_00It just one time in the beginning stages, and then and then is there another follow-up conversation that occurs after this, or is it just one initial So the way our models work in our school, we'll have we have what's called an enrollment director. And our enrollment director will do a private one-on-one trial lesson with the student to see if they're ready to participate in our group classes and be part of the program. So they'll they'll sign them up to a six-month beginner course. They don't have the option to go to a black book program right away. We have to accept them to that program. So then after that, and in a period of time, whether that's two months into their trial program, four months, six months into that trial program, we'll have another sit down. They'll sit down with the family after we've qualified them to be part of our Black Book program. They'll sit down and go over the options to continue in the Black Book Club. And then sometimes parents will say, Hey, you know, we'd love to do it. We just need to sit down and talk as a family. You know, some people will sign up right away. It really just depends. So, but for the most part, it's it's the one meeting about the program, and then they'll enroll to the program. Thank you, sir. Thank you. Yes, sir.
SPEAKER_02That's that's very solid, Master Lee. I'm to go from born as a quitter to achieve where you are now, it's very important.
SPEAKER_00It's all because of Techwind and all because of the Black Belt Panther podcast.
SPEAKER_02Okay. Okay, I have a question for both of you guys. I have a question for both of you guys. All right. Hypothetic on a typical school owner, let's say a hundred students charging two hundred dollars a month. So they're doing monthly, if they've been doing a monthly tuition 200 times$200 times$100 student, that's$20,000 is their monthly receivable. Assuming it's a small school, a single school owner, that's serviceable if they have five to like three to six thousand dollar rent, utility staff, so forth. But then if they just switch that and tweak that, and let's say from 10 new students a month, they get 40% of that is paid in full. Right? And let's say the paid in full is 12 months. Okay, I'm sorry for an audience listening and uh uh for so much math, but$200 times 12 months is$2,400 paid in full. Is that correct? Yes, correct. If you just do if you just do times four students that month, that's nine thousand six hundred dollars or let's say ten thousand dollars fee exactly, you're doubling you're having your total monthly tuition. You went from twenty thousand that month to thirty thousand because you get twenty thousand in res in monthly and then another ten thousand and paid in full. That's a significant amount that you have accrued in that month from a hundred member school. Why is Masli? Why wouldn't every school do this? They should be doing this. And absolutely right, if they don't have the discipline to uh correctly manage those finances, obviously, then they shouldn't do anything like that. But assuming that they do, uh I mean, shouldn't every school be doing this, Masali?
Marketing Spend And Cash Management
SPEAKER_00I believe in that. I I do think that there should be a blend. There should be your monthly receivable, and then you have that amount. I think the reason some school owners would choose not to do that is because number one, you don't have the sales process, right? Like you you don't want to have a high pressure sales process. You need a uh really qualified staff member who can do those kind of paid in full. So you just leave it in the the Netflix model. You just Sign up, anybody can do it. So that's one piece of it. I think the other piece of it is that there's pressure to that. If you're relying on that money, then you have to make sure every single month you're doing that. And so that provides a lot of profession pressure to the school owner. So the other model of just doing everything monthly is that you have a better clear vision of what you can expect that's more predictable. Whereas if you're relying on the paid in full, then you can have these ups and downs. And so it just depends again on the philosophy of the school owner. If they if they feel that their numbers can produce that, right? You you know, that there's that term that Master Chandley uses reverse engineer it, right? Like if you know the number of inquiries that you're getting and X percentage are converting to a membership and X percentage are going to paid in full, X possession. If you can predict and know what those numbers are, then you have a better idea of how consistent that can be. So I think having a good understanding of the performance of your location on all these metrics is really critical to make predictions on how you want to operate your school.
SPEAKER_02What percentage do you recommend? What percentage should be paid in full versus monthly each month?
SPEAKER_00I I think for us, we're probably about 30%.
SPEAKER_02Anywhere from that's not 30% is not that much.
SPEAKER_00But I also have a very high overhead, right? Like I I have mortgages, I have high payroll. It's important to us to be able to maintain that. If I had lower overhead, I would probably do less than that.
SPEAKER_02But I think less than 30%.
SPEAKER_00Yeah, but like you said, Master Hong, if you want to, if you want to grow your monthly income, it just takes a long time if you're just purely focusing on 100% receivables. Because no matter how great of a school, you're always going to have attrition. People will move away, people will pay out their programs, right? That it's just you have to really, it takes a long time to really build that up. I think it really just depends on what the goals are for the school, what the budget is.
SPEAKER_02Master John, what about using the same analogy of 100 students,$200 a month, 10 out of 10, 10 new students, four of them paid in full, so you get extra$10,000. Why not use that$10,000 to do a marketing blitz to make sure that next month you get 20 students in?
SPEAKER_01You actually you read my mind because that's where I was gonna go with this, sir, is because you asked why won't schools get due paid in fulls like you just mentioned four four students paid in fulls and get that at 96 9600. Is because it's not what's happening this month, it's what's going to happen next month and the month after that. I was I myself still struggling with marketing. Right? So if you get paid and fulls for four people, you better enroll at least seven new students monthly recurring basis to offset the paid and fulls for the four and plus a little extra wiggle room for the three. But schools that are hovering around 100 students, maybe 120 students, their biggest thing they need to work on is the market in X Mark. They're not pulling in 12, 15 new students on the next month. So it's hard for them to commit to make that you know paid in full, I guess, model more than four, because it's what's going to happen next month. And it's a very important, I guess, what Master Jay Lee was saying is to pre-plan and set and try to predict what is going to happen so that you can plan better. So to answer your question.
SPEAKER_02I'm sorry, go ahead, Mask Lee.
SPEAKER_00Uh sir, sorry. I was just gonna say that I think it all goes back to investing the paid in full, right? Like you just said, Master Hong, if you generate that ten thousand dollars and you have an idea of your metrics of what your conversion rate is, 100% you should be investing that back into advertising, and then you can double the number of new enrollments. So I I think it's all about managing the number, the revenue correctly so you can invest it back into dojo. And that's not all not to say that you don't want to keep some of it, right? There there has to be sometimes a reward. You know, you have to have the carrot on the end of the stick for the school owner as well. Like, I don't think there's anything wrong with saying, okay, well, I've had a really great year and and I do want to cash out a couple of folks and and I do want to take my family on vacation. I don't I don't think there's anything wrong with that. It's wrong if you're doing that every month, but I think that human beings, we all need to have goals too, right? And that's right. And part of success in a business too is you you know you don't want to take care of all your regular expenses, but you have to have some fun too, right? You don't wanna you don't want to blow it all, but you you should reward yourself too.
SPEAKER_02Master Jong. Yes, sir. What you said is absolutely correct. If you have a hundred students, then most likely their marketing isn't strong, right? But isn't and they don't have the marketing expense and budget to to overcome that. Wouldn't that ten thousand dollar help that marketing expense? Wouldn't that ten thousand dollars be like, okay, I'm gonna obviously not all ten thousand, but let's spend two thousand, three thousand next month to do this marketing blitz and get additional five new students, additional ten year students.
SPEAKER_01That's that's wouldn't that be though? That's assuming that this person knows how to use that ten thousand for marketing, sir. Because you can give someone ten thousand dollars to go for do marketing, but you have no idea how to use these ten thousand dollars. So that's what ended up happening with me in my beginning stages of my tojong is okay, I have this extra income. I would like to invest, reinvest it into my tojong. I just don't know how. What's the best way to approach it? Is it Google Ads? Is it give it to me?
SPEAKER_00I'll invest it for you, Master Jong.
SPEAKER_02I'll invest it for you. So, Master Zhou, that's a great point. School owners need to invest in our ASA AI marketing suite, but that's a topic for another time. I'm sorry, go ahead, Master Chang.
Demographics, Attrition, And Risk
SPEAKER_01Absolutely. So, like AI model, that's a great model. If because personally, I'm not I'm still working on this marketing part. It's so hard, it's challenging, right? So if you have an AI model where it does the marketing for you or it brings it in, and then they do the enrolled code, the trial period onboarding process and all that stuff, great, right? But when I was struggling, we didn't have that. So I had to, I actually I spent a lot of money for trials and errors. Then that's what ended up happening is you learn throughout the process, but to answer your questions, sir, that was what I'm saying is that you have this one paid and full model, but then at the next month it trickles, you need these new students to overlap these paid and full models, and then that just cycles on.
SPEAKER_02I think we're all in agreement. You shouldn't do everything monthly, you shouldn't do everything paid and fulls. I I've done schools that are like house of cards because so much percentage is paid and fulls, they had barely any monthly recurring revenues. And but they just the their sales is so strong on on the paid and fulls, and they invested so much money into marketing the next month that they always supplied with new students coming in. But it was like it can be very dicey. I don't know if you have the nerves to handle that month after month, nor would you want to.
SPEAKER_01And it's also where your like demographic is. I don't know the demographic of where you are at, Master J. Lee. But I live our tojong is located in a town where I think I did the five mile, five mile, what do you call it? The radius census. There was only like 38,000 people here. People are not gonna travel more than like 10 miles to go to your tojong, I don't think. Unless you're specialized program. So no matter how much you market, sometimes there is like this fixed demographic you're working with.
SPEAKER_02And but going back to the okay, it's a house of cards when you're doing everybody paid in full. But on the flip side, if you only do monthly and you have a hundred students and you're not doing any monthly, and the attrition is high, that's a slow death as well, because you're not replenishing the attrition of kids that are leaving the school. And it might not be any reason to you, they might be moving, they might have gone to other sports, they might be doing this or that, but you don't market and you're doing you're only bringing a couple of new students a month, and they're only joining monthly because you're not doing paid and fulls, eventually in in a year or two, your 100 goes down to 80, goes down to 50. It's a slow death. So either way, all paid and fulls or only marketing, you're gonna your business is gonna die out. Just one is gonna take longer than the other. So why not why not take a chance and get a couple of those two, three paid in fulls, get six, seven, eight thousand dollars, and do a marketing blitz to figure out what marketing works and to next month bring in 10, 20, 30 new students from that marketing blitz instead of dying slowly because you're afraid to do a paid in full and not sure what marketing works or not. What do you think, sir, Master Chuck?
SPEAKER_01No, I agree, sir. I and like I said, it takes a lot of trial and error with the marketing thing. But if that model fits your if you're comfortable with that model and if that fits your owner's perspective and how you want to run your dojong, 100% go with it. Yes. I in my thought, what while I'm just thinking, yes, it does work.
SPEAKER_00It can work, you can make it work, yes. But I think you know, it's all a balance, right? And everything you are adjusting, whether that's a week to week or a month-to-month basis, you should be looking at as a school owner, there are metrics and stats that you should always be tracking. How many phone calls are you getting, how many walk-ins you're getting, how many are converting to the programs, what is your conversion to an upgrade to a regular program? So based off of that, based off your budget, you can adjust the model, right? Maybe this month that we had a really great month and we will reduce the number of paid and fulls that we take. Or maybe this month we need to up it. So I think it's always about being on top of your numbers, being on top of your budget, your mission, your goal philosophy, and then making adjustments as you go along the way.
Adjusting Mix Month By Month
SPEAKER_01That's correct. Master Hong, I met many Taekwondo masters in our industry. And I traveled quite a few places. I even saw schools in Korea too. But I have never met someone more profoundly great at logistics than Master J. Lee. I swear he is like we're recording this.
SPEAKER_00Wow, so we have a compliment from Master Jung. You gotta post this all over Assad, Master Hong.
SPEAKER_01I'm telling you, Master Li is amazing at logistics and numbers. So when he's talking about numbers, I think he's hitting the right nerve in many people because I myself included, I'm a slacker in numbers. But numbers tell the truth, right? And when you have numbers to back up, your staff meeting becomes much more, I think, in it in well, go ahead, sorry.
SPEAKER_00Sorry, Master John. I think first of all, thank you for the kind words. You're too kind. I think that I still have a lot of ways to grow in. So I appreciate the kind words. But I think that there are two things that I always tell our staff. Like you just said, the numbers don't lie. So that's number one. Numbers, numbers don't lie. If you don't know what your numbers are, then you don't know how to value your school. But ultimately, if you look at your numbers, it'll tell you what's going on in your school. Correct. And then number two thing that I tell our staff is that don't confuse efforts with results. Because we know that all of our staff always works hard. We know that they have their hearts in Tekwondo. They believe in Tekwondo, they're always doing their best, but you can't confuse with working hard with how are the numbers producing. And I think that's a really critical thing is that people have to understand that when you look at martial art business, you have to look at it as a business. You can't just look at it as just what do I love to do? You have to treat it as a business.
SPEAKER_01When I was in my like, I really loved Taekwondo, like competing, like right after that, I took it over my father's dojong to help him a little bit more full-time. And passion was one of the things that I needed to do a successful in Taekwondo Dojong. But it's also there's a flip side. Passion is not the only thing that's like you need because passion, if you have passion, you only do the things you like. And when you do the things you like, your business doesn't grow. As you brought up a really good point, sir, because passion is the first step. But if you only have that first step, your your growth only seeks up to here. Because you only do the things you like, right? You run your program the way you like it, but it's a business.
Outsourcing And Playing To Strengths
SPEAKER_00Yes, sir. But I think that's where our generation of school owners today are so better equipped than we were 20 years ago because the way that you have it set up now is that you can't pursue your passion. So let's say your passion is just teaching, but you don't want to deal with the accounting, you don't want to deal with the students' complaints, and you never before in our industry have you had the ability to pay third parties to handle some of the things that you don't want to deal with. Like you said, Master Jung, how do you use your marketing money? Do you think you can find the right ad agency to handle that for you? You can find the right student management system that can take a lot of that place for you. The great thing about our industry now is that you can outsource this stuff, you can pursue your passion, and you just have to really have the right vision of what you want to accomplish. For me, Master Jung, you said some really kind words about me, but it I'm just lucky that I surround myself with people who are a lot more smarter or more talented in certain areas and let them work on the things that they're really good at so I can work on the things that I'm really good at.
SPEAKER_02There are so many people that are so much smarter than Master J. He's there's a plethora of people. It's Master J is so fortunate to find so many people because there's so many available. 100%. And then they're not quitters either. What a great topic. What an interesting topic. We need to conclude here because I feel like we could go for another hour. This is great. But I do want everybody back because we there is a way to do these paid and fulls that are highly successful. We just because you asked for it doesn't mean that you're all these parents are are gonna automatically do paid and fulls versus monthly. We want to, I want everybody to come back for that because that's a big part of today's discussion as well. And audience, viewers, let us know. Do you agree, disagree? What is your system like? Do you do all monthly or all paid and fulls? Please be interactive. Join our Facebook group. It's called the ASAP, what is it called? ASA Private Group. Asta private group. ASA means American School Owners Association. And thanks for tuning tuning in to another episode of Black Love Panther. Whether you're a die hard monthly tuition school or you love the big boost of the paid in full, the goal is the same: create a system that supports your students, stabilizes your business, and helps your school grow in a healthy, sustainable way. Remember, there's no one size fits all. What matters is choosing the model that matches your culture, your sales process, and the season your school is in. In today's episode, if today's episode gave you the clarity or sparked new ideas, make sure to subscribe, leave a review, and share this with another school owner who might be wrestling with the same decision. And if you want deeper support, tools, or coaching to grow your martial arts business, visit us at asamartialarts.com or follow us on social. Thanks again for hanging out with us. We'll see you in the next episode of Black Belt Panther. A big shout out to Master Jalee, Master Philip Jung. Until then, keep training hard, keep leading strong, keep making an impact. Bye, everybody.