Want To Make More? Spend Less!

During periods of economic slow-downs and recessions, the school owners who are able to spend less while still maintaining business as usual are the ones who prosper.

Notice I didn’t say “survive” – just being in the game to survive runs contrary to the entrepreneurial mindset. If your only goal is to survive, then I suggest you quit now… because when you have self-limiting goals and no self-belief, it’s a sure formula for failure.

True entrepreneurs use setbacks as opportunities for innovation, which is why you have to focus on prospering – it puts you in the correct frame of mind to find the opportunities overlooked by everyone else.

Don’t Dwell – Just Implement

Now, I don’t want to spend a whole lot of time on cutting back, because it puts you in a scarcity mindset if you dwell on it too long.

However, here’s a short list of things you can do to save money this month… and in the coming months and years as you grow your school:

1. Save on your utilities -

• Go buy a digital programmable thermostat for your school, and program it so your AC goes to 80 degrees Fahrenheit right after you leave at night, and then turns back down to 72 degrees about two hours before you start your first class or appointment of the day (allowing time to cool your walls and floor, which helps offset the BTUs all those bodies are going to put out).
• If you have appointments or classes in the early morning, open the doors and use fans until the thermostat hits 78 degrees in your school. Then, keep it around 75-77 until class time – you don’t need it that cool until you get all those bodies on your floor.
• Replace all halogen and standard light bulbs with fluorescent lights.
• Shut off all lights and computers and unplug all your appliances and electronics at night (except your drink cooler – it’ll cost you more to re-cool your stock every day – buy Energy Star and it won’t matter much).
• If you pay your own water bill, put a house brick in the bottom of your toilet tank to save water.
• If you pay for your trash pick-up, start recycling to cust down on the amount of solid waste pick-up. It’s also good for your image (not to mention the environment) as people are more and more conscious of environmental issues these days.

The average-sized school will save a few hundred bucks a month following these simple tips during the summer months.

2. Save on your supplies and inventory -

• Start buying cleaning supplies, paper products, and vending items in bulk at warehouse stores, and only buy supplies once a month – multiple shopping trips multiply spending.
• Sign-up for wholesale accounts with multiple equipment vendors, and check with each vendor before you order equipment each month – then, order items only when they are on special or with vendors that offer the lowest possible price.
• Order all your equipment and inventory for the month in one order, instead of making several weekly orders during the month – plan ahead and you’ll save on shipping, and potentially get a volume discount on your order as well.
• Resist purchasing items for sale that aren’t proven sellers.

Supplies and inventory are a variable cost that can sneak up on you. Keep an eye on these expenses to keep them under control and to increase you paycheck each month.

3. Save on payroll -

• Create set hourly schedules for any personnel that are paid on an hourly basis. Make sure each employee has a time card that they have to fill out each day.
• Do not let employees fill out their time cards at the end of the week.
• Double-check your employee time cards before you disburse payroll.
• Finally, get rid of any non-essential staff – if they’re not pulling their weight, they’re dead weight. Cut ‘em loose or move them into a position suited to their skills and goals that generates income.

Bottom line – if your employees aren’t generating income for your school, fix it through training or cut them loose.

4. Save on your lease -

• If you find you have more space than you need, cut your floor space back – approach your landlord or property manager about cutting your square footage back, especially if your lease is coming up for renewal.
• If you’re opening a new school, resist the urge to get more square footage than you need – anything over 2,000 square feet of space is wasted in a new school, and will only serve to make your floor look really empty and lonely when you’re trying to enroll new students.

Huge over-size schools are a thing of the past. Being lean and mean is not just a preference – it’s a necessity of doing business in the new economy.

5. Save on marketing -

• Set aside one day this week to do a marketing audit. Make a list of all your marketing activities and expenditures, including:

- Activity
- Cost per month
- Number of leads generated per month
- Cost per lead

• You’ll soon start to see where your low-cost/high-impact activities are – divert all your marketing funds to these activities and cancel any marketing that is sucking up your marketing budget without generating many leads.
• If you find a marketing activity that is (according to my classification) “low-cost/time-intensive” and that is a good source of leads, devote more time to that activity, or devote more resources to it by paying an employee to devote more time toward generating leads from that activity.
• Set a goal that for every hour an employee spends on a marketing activity, they have to generate 2 solid leads and set one appointment, which should put your cost-per-lead under $10… which is way better than how display ads usually perform.

Marketing expenses should actually be investments that provide a return on what you spend… become an expert marketer so your marketing dollars pay you back in dividends.

6. Save on your billing -

• Almost any credit card processing company in the United States can set you up with an in-house credit card/debit card/ACH/EFT recurring billing system that has fixed costs under $50 a month, per transaction fees of .25 cents per, and processing rates as low as 1.25% on debit cards and 2.5% for ACH/EFT/credit card transactions.
• For the average school billing $10,000 a month in tuition, that’s about a 2% net cost on billing – cheaper by far than any other solution I’ve previously recommended.
• Pull out your billing statements and add up your processing fees, gateway fees, and per transaction fees, then divide that number by your gross billing amount.
• If you’re paying more than 2.5% of your gross billing total in fees, switch to in-house billing for all your transactions.

Billing can easily become your biggest expense as your school grows. Plan ahead now and you’ll save tens of thousands of dollars (and perhaps, even hundreds of thousands) on your billing costs over the life of your school.

7. Improve Your Cash Flow

• Start switching all your students who are “pay-at-school” and “pay-by-invoice” to automated recurring billing – preferably by EFT/ACH monthly payments directly from their checking account.
• If you’re not accepting electronic payments already… my on-time collections went from 70% to 97%+ when we started doing EFT/ACH payments on all our accounts. This is pretty typical in most schools.
• Just tell everyone you’re switching to this system to save time and money, and that it’s the ONLY method of paying tuition you’re accepting now (except for paid-in-fulls – never turn down up-front money).

By improving your cash flow, it’s like getting “found money” every month. Cash flow problems will eat your lunch, because you can’t budget, you end up paying bills late and potentially incurring late fees, which are an added expense. Trust me, you’ll be amazed what improving your cash flow does for your business.

Have any more cost-saving ideas? Post them in the forums:

Join the forum discussion on this post

One Response to “How To Slash Your Overhead And Boost Your Martial Art School Profits”