Review: Small Dojo Big Profits, Michael Massie, c2003-2007

In the book Small Dojo Big Profits, Michael Massie makes the case that it is not only possible to make a significant amount of money running a small neighborhood dojo, but it is actually easier to do with a small school than with a larger one. He also seeks to provide a straightforward guide to allow potential and current instructors to mimic his financial success with a small martial arts club.

Massie contends that a small club (defined as 2000 square feet of space, with about 200 students), can be quite profitable for its owner, due to its small size and relative ease of managing. By contrast, Massie uses the law of diminishing returns (which basically states that at a certain point, additional investment in a venture will fail to produce significant improvement in the outcome) to show that a larger club can double your time investment and hassle quotient, without significantly improving your bottom line (due principally to increased costs associated with larger schools).

So, how “profitable” are we talking here? Well, Massie throws around some pretty impressive numbers: following his instructions, a club owner would theoretically be able to take home in excess of $120,000 a year from a club of only 180 students, in a rented space of less than 2000 square feet.

I’ll say this for Massie: he’s no liar. He does in fact lay out a rather simple plan and some easy to understand cost and revenue analysis that supports his contention. He’s done a good job of convincing me that bigger is not necessarily better, but it is a whole lot more work. For example, in the area of staffing: if you are only offering one class at a time (as you would in a small space), you only need one other person besides the chief instructor on staff – someone to answer the phone, take attendance and do all the admin stuff while the chief instructor is on the floor. In a larger club, you would need more instructors, plus probably more admin staff to handle the needs of several hundred more students, plus people to clean and maintain a larger space. And with the increased costs for rent, utilities, payroll and all that eating in to your profits, a larger club starts looking pretty unattractive.

Having read a pile of business books over the last few years, I did find Massie’s approach refreshing, because his advice and guidance are very specifically aimed at the care and feeding of a martial arts dojo. Most small business books work on a model either of a retail business or a professional service type enterprise (such as accounting or web design). Although it is quite possible to make some use of the information in those books, it’s great to finally read some advice on issues specific to our industry. From finding a suitable location, to sales techniques, insurance and potential legal issues, Massie lays out relevant and useful advice well worth reading by any club owner.

Another thing Massie does right: honesty. He doesn’t have much patience for bait-and-switch sales tactics, and is a strong advocate for truth in advertising. I nearly cheered when I read his instructions to always take a new member through the details of a contract, specifically the payment amount, length of term, and an explanation of any additional fees, all in person and in plain English, just before they sign it. If more schools took two minutes to do this with each new member, I think we’d all be better off.

I also agree with Massie’s argument that martial arts are undervalued as a recreational and fitness activity. Especially when looking at activities for children, most martial arts school rates are shockingly reasonable when compared to other types of training, such as gymnastics, golf lessons or dance.

All that being said, I did find some of Massie’s ideas to be unrealistic, or at the very least extremely difficult to accomplish. For example, Massie tells instructors to get their start by teaching at recreation centres and rented spaces to build up a clientele. Only after gathering enough students to cover the expenses of renting dedicated space should the instructor make the jump to opening their own school. In this way, you can achieve Massie’s ideal of opening a school with no initial capital investment. Yes, this is an excellent plan and one worth following, but the likelihood of having zero expenses in opening a new space is unrealistic, in my opinion.

Almost any type of commercial space is going to require some type of renovation, remodeling or at the very least, decorating, to make it suitable for martial arts, so there are always going to be startup expenses. You may have some large capital outlay for equipment, if you have to purchase your own mats instead of using the recreation centers’ mats, for example. If you are going to have a pro-shop, you are going to have to stock it. In any case, a zero-cost startup is not impossible, but should not be counted on by any means. But, as this is the method Massie advocates, he does not factor for any loan repayments in his monthly expense analysis. Debt retirement can be a hefty chunk of change that eats directly into a schools profit margin, and especially in those first difficult months and years building up a club, it can be financial suicide not to prepare for it. Many a good club has gone under because they were undercapitalized and couldn’t keep up with the bills until they got big enough to be profitable.

I also find his plan to be more commercial than many school or club owners would be comfortable with. I don’t think that commercialism is a bad thing in itself, but it can get out of hand. As I said before, Massie does show how one might make a pile of money with about 180 students training twice a week. According to the examples given in the book, this can be accomplished by running 6 or 7 classes every weekday evening, with no class being longer than one hour. In Massie’s model, the students are about 85% children and teens, so there are plenty of half-hour and 45 minute classes on the grid, with the longest class being one hour (Note: I checked Massie’s home dojo website and he follows this model himself: his longest class is 50 minutes). For this, he advocates charging no less than $100 per month. As a parent, I find this pricing outrageous – there is no way I would sign up my four year old for two half-hour classes a week and pay $100 a month for the favour. As an adult who trains as well, this pricing is out of line with the rates charged by some of the best and most respected clubs in my area: I think it would be difficult to justify this pricing in the average market.

In addition to the pricing issue, Massie is a big fan of contracts, strongly suggesting a minimum term of one year even for children. This is a full-stop issue for me personally; I would not sign myself up for a year of anything, let alone my kid. I can understand offering a discount or perk for people to encourage them to sign up for a year, but only doing business on that basis cuts out a lot of potential clients.

My eyebrows went up at one particular line in Massie’s revenue model: proceeds from belt gradings. I have no objection to charging a fee for a belt grading (we do so at our club), but in Massie’s financial example he shows an monthly income from grading fees applied to about one third of his students. So, each student is grading about once every three months in order to make that work. Either Massie is suggesting charging for belt stripes, or he’s actually grading people four times a year. In a typical six or eight belt system, this promotion rate would take a student from white belt to black belt in under two years. Hmmmm.

So, if you sum it all up, a club following Massie’s plan would have about 200 students, with 85% children and teens, so there would be around 30 adult students. Students would pay $100 a month for a minimum of 12 months, for training between 30 minutes and one hour, twice a week. Each student could expect to grade once every three months. See what I mean about the commercial aspect? I’m not sitting on a high horse here; most of us are in this business to make money after all and Massie certainly can show you how to do that, but in order to follow this plan, a club owner would have to be very, very comfortable with the money-making character of the club.

Some of Massie’s advice is spot-on for a specific segment of the martial arts industry, but doesn’t fly so well with other segments. For example, I found that Massie’s marketing recommendations were best suited to a school or club teaching traditional martial arts. Massie suggests advertising in local newspapers and from my own personal experience, you have to really consider who is reading the newspaper and whether your style of martial art will appeal to those readers. You might do well with tae kwon do, karate or aikido, but your average MMA-heads probably aren’t cruising the community paper looking for the next event at the library or church bake sale. He also suggests joining the local Chamber of Commerce to find new members; a move also well-suited to a TMA club. If you can claim your art will provide stress relief and low-impact fitness you will find many clients among the middle-aged businessmen that frequent Chamber events. Again, if you are offering something a little more hardcore, you won’t find many takers. Although, I also advocate joining your local Chamber but for very different reasons: you can probably get a good discount on your merchant account fees, insurance, and some other services by being a member. Plus it’s a great place to shop for the business professionals you will need such as an accountant or a lawyer, and they frequently offer seminar series featuring local business gurus, so you can pick the brains of some high-priced help for the price of a business lunch.

At the end of the day I’d say Massie’s program is a good read, and it provides some straightforward and useful advice for nearly every martial arts club. It’s especially useful for someone who plans to open in a club in the next few years and wants a clear roadmap on how to do that in a methodical and logical fashion, while keeping an eye to the eventual revenue potential of the club from the start. You will get the most benefit out of it if you happen to teach a traditional martial art style and plan to teach a lot of children, and somewhat less if your art is not popular among children and their parents.


PS - Thanks to Samuel Browning for edits and Ming Loyalist for wording suggestion.

This is Omega's Review of this book


Small Dojo BIG Profits:

You have got to appreciate a book in which the author openly takes shots at himself. If it were not for the first few pages in the introduction I might have kept my blinders up the entire time reading this manual on how to run a small yet profitable martial art school. All I can say is that I wish I had a manual like this when I first opened up a martial art studio. Michael Massie never mentions anything I have not discovered, but what I discovered about running a gym came from over a decade of hit and miss efforts. Ironically that is how long it took him to put together the ideas contained in his manual.

Massie immediately discusses the myth a lot of school owners are brainwashed into by billing companies which is that "bigger is better". The funny thing is that many modern martial art schools are quite successful without having the hundreds of students and thousands of square feet that you would think would be the normal model of a successful school. By his definition a big school would be defined as having over 3000 square feet with 300 students.

What I really like about this manual is it’s ability to discribe the already existing problems in the martial arts:

“First, Who This Book Is NOT Written For

First, let me tell you who this book IS NOT written for. This book is not for the close-minded, the brainwashed, the gullible, nor is it for those without a sense of humor or who take themselves too seriously. This book is not written for the industry puppets that are compensated handsomely to endorse less-than-ethical companies and substandard products. Nor is it for those who promote their students to Black Belt in a pre-determined period of time regardless of their knowledge, skill level, or performance.

It is not written for the 25 year old who promoted himself or herself to 10th dan, or who touts themselves as a self-appointed soke, shihan, hanshi, djunim, grandmaster, or any of the myriad ridiculous titles being used these days…”

In his manual he goes over the propagators of such myths; the martial art industry leaders. These industry leaders are known most commonly as NAPMA and MAIA. Who do these industry giants really represent? If you have not guessed already it is the martial art suppliers like Century, the billing companies, the many different companies that make money off the schools.

Originally this report was several pages long. Like many things I have found out however it is best just to keep it short and sweet and get to the points at hand:

1. Would I recommend this manual? Yes, if you’re planning on starting out a gym or school I would read this and commit its lessons to memory, this can do nothing but help you.

2. Does this manual promote Mcdojoism? Promote it? No, I wouldn’t say promote it. It simply goes over the methods in order for a potential instructor to make a living doing what he believes he actually wants to do.

The only thing I could not concur with is the selling of memberships. I am not sure if I simply convinced myself this is simply the way things could or should be. I’ve seen many gyms that do this and may be a moral hurdle I cannot seem to get around. This is going to be an issue that each separate gym owner will have to address.

Samuel Browning's review

A review of Michael D. Massie's book "Small Dojo: Big Profits!"

I was interested to see Massie's model for how to run a successful commercial operation. I should state up front that I have no problem with a professional martial arts instructor making a good living by teaching professionally. I just have a problem with the methods some use to achieve this goal. Generally my review of Massie's methods are positive, with a disagreement regarding some of his techniques. His methods do lay out a very specific roadmap for building a small to medium size martial arts school without charging extreme fees. (For that see Steven Oliver). His central point is it takes far more managerial skill to run multiple site locations and a school of say, 400, when most martial arts instructors are far more likely to be successful running a small to medium school of say 200 students at a single location.

Massie's book has 13 chapters and three Apendixes for a total of 215 pages. Chapter 1 - 2 discuss the justification for this book and do not contain much information but the remaining eleven chapters are quite valuable for the aspiring school owner because they provide a guideline for how to start a school from scratch and then run the business systems that will continue to keep it profitable.

Massie's central point is that it is far easier to run a small school well, and profitably if it has around 200 students then if you attempt to run a mega school of 300 and up. He convincingly demonstrates with financial figures how a school with say, 1,800 square feet, rather than 6,000 square feet and more students has a much lower overhead, and is much easier to break even with, not only with rent, but also in terms of how many students you need to recruit each month and retain each month. Then he explains how this approach prevents you from having to hire more staff which will dramatically increase your overhead.

This is a very well ordered presentation. Massie starts by explaining how you select a area with the demographics for the type of students you would like to teach. How you arrange to teach multiple classes part time in this location, and then how you transition this group of students into the core of your new school when you actually rent space of your own. This is time consuming but on the bright side it means you don't just open your doors and have to live on loans for the first year while you assemble your student body.

There are chapters about billing companies, and avoiding using one which also is hired to provide consulting advice. Massie even advises that you hire a billing company that normally services the health club market and not the martial arts school market since its more likely that you will receive better customer service. Its Massie's belief that martial arts billing companies encourage all kinds of contract shenanigans which are unethical, and he very well may be right.

His breakdown of how to market your school, through your students and paid ads is very detailed and useful. He talks about how to negotiate a commercial rental, and this chapter explains how to obtain the most reasonable price for such space. He discusses multiple profit centers and he talks about everything from running pro-shops to vending machines. As a lawyer I thought his discussion of legal issues was adequate, and especially strong regarding what licensing one had to obtain from your local government in order to run your business. His chapter on retaining students (11) is probably the best in his book. He has a whole system for tracking students and spotting when they are first showing signs of dropping out.

I especially liked that his system is flexable enough that if you want to drop something from its approach (other then not getting a big school with 300+ students) it will probably work well. It also uses soft sell, and the questioning approach "do you want fitness, or self defense the most" rather then the hard sell, "you must want to be a black belt, we are a black belt school!" (See John Graden)

Things I disliked about Massie's system.

1) He argues that the minimum length of membership should be 1 year, and won't agree to shorter contract times. (p. 103) Personally I would not sign a first time agreement for this length of time, though I would pay substantially more for the privelage of paying month to month. Typically he would offer a one month trial, no obligation if people wanted to try it out. This is not included in his student application which he appears to use a a partial contract (waiver of liability) Since he does not include a copy of his regular contract in his appendix I am not sure if he includes such language in his actual contract at which point such a promise would be worthless in court if the instructor decided not to allow the student out of the contract before the month was out.

2) A discussion of what to do with students who quit taking classes because of reasons beyond their control such as a job transfer. (Massie puts this at 3-7% a month) I wonder if Massie lets them out of their contracts or sends collection after them? how would I know? Its not in his guide. But since its a reality he should discuss how to handle such situations. His manual is silent on this issue.

3) Like many instructors he uses a number of the standard techniques for raising money that I'm not a fan of. 1) A suggested $100 yearly management fee. 2) A suggestion that the students be required to buy equipment through his schools pro-shop. (p. 174, the private label approach) 3) Use of belt testing fees. He suggests $25 is very reasonable (p. 175) though he has a formula elsewhere in his book. I find that testing for money tends to drive the McDojo system.

4) Page 171, Massie recommends using a automatic renewal option in his contracts. I hate this because typically people have to provide timely notice in writing to opt out which they will often forget to do.

Conclusion:

My review is mostly positive because Massie advocates a flexable system, and if the instructor doesn't want to use a particular technique, he advocates (other then not establishing multiple locations, and recruiting more then 200 students at a given time), he can simply decide not use this method. Secondly, I believe that having the instructor focus his attention one one location, which he directly supervises, will increase the quality of martial arts instruction, rather then having him attempt to run several locations, of which the average instructor will probably do poorly. I also do not think that a minimum monthly fee of $100 a month for adults is excessive, though I think that a different price structure for multiple (well behaved) children from the same family would be appropriate. I agree that if you are running a full time school for children, you can charge according to what others are charging students for say dance and gymnastics lessons. It is certainly a better benchmark then say Mr. Oliver's favorite comparison to college costs.

Another strong feature of this text, which in my opinion makes it worth its several hundred dollar price to a school owner, is that it provides what feels like, immediate, first hand coaching as verses some manuals which one can read cover to cover, without knowing "where do I start". Massie's instructions are very specific, and therefore adoptable by the average reader who wants a small, yet well organized commercial school.

This is Michael Massie's reply

Thanks Samuel!

The reviews were very fair and balanced, which I really appreciate. They also reminded me that I need to update my manual again. Below are answers to some of the questions you and your reviewers had:

I don't charge belt testing fees anymore. After thinking back to when I was a new student, and how much I hated paying them, I stopped charging my students to promote them - all I charge is retail on the belt now (about $7 - $8).

The average student in my school takes 4.5 years to earn a black belt. In 20 years of teaching, I've promoted maybe a dozen people to first dan. It's true that no one gets a black belt from me without paying for it, but the pay is blood, sweat, and tears.
In both cases when I found a commercial space for a new school, I was able to find spaces that needed very little in the way of remodeling. Ironically, in both cases I moved into failed women's fitness centers; the first place was painted salmon pink, the second, lilac purple. We went through a lot of paint getting them ready to open... but I was able to negotiate assistance with minor build out issues in both cases. Finding motivated landlords is something that readers should consider when looking for a space - in both cases, the landlords were motivated to lease the space, so I was able to secure a better deal.

I offer 6-month memberships now, with the first 30-days at no-obligation, in case the student (or their parents) decide our school is not right for them. I agree, 12 months is often too long a commitment for a new student to make. However, almost anyone can figure out in 30 days whether a school is right for them, so I think asking for a 5-month commitment is not too much to ask. Besides, I hate having wishy-washy students bounce in and out of class. Making them commit, even for a few months, takes care of that issue.
I quit using billing companies for good, and don't believe in using collection agencies. By the way, you can use payment gateway services like Authorize.net, PayPal, and PaySimple to collect via check and credit card automatically at very low rates. Billing companies are a dying breed now, thanks to new technology, which kind of gives me a warm feeling inside when I think about it... Anyway, if someone doesn't want to train, they aren't going to pay - that's my philosophy. Ruining their credit isn't going to make them more honest, nor will it help my reputation in the community, either.

The "x tuition is too high issue" is really a matter of what you think your services are worth. I reverse engineer what I have to charge, based on the following: 1) My expenses; 2) what I need to take home to make a decent living ($60K - $100K a year is what I think to be a very reasonable amount of money for a small school owner to make - considering that you can make that with a two-year degree in some fields, and considering all the risk involved in opening a small business, I think you should be able to make a decent living doing it); 3) the local population, which will indicate how many students you can reasonably expect to attract into your school; and 4) what my competition charges - I certainly do not want to be the cheapest school in town. Why? Well, it makes you look like the worst school, because perception and price are (sadly) in direct correlation in the buyer's eyes. Now, I'm not saying you have to be the most expensive school in your area, but you shouldn't be the cheapest either because it makes you look like you aren't as good as your competition...
Feel free to post any or all of the above in the forums, and please let your forum members know that I won't be responding to their comments, good or bad (since I can't access the forums, and also because I learned long ago not to get involved in conversations about myself online).

Thanks again, Samuel, and please tell the reviewers that I appreciate ALL their comments regarding the SDBP manual.

Sincerely,

Mike Massie

I find Massie's mail to you quite interesting. It sounds like his system is similar to what the studio I'm at uses. One thing all the changes he mentions shows is that he's still evolving his business model and is keeping an open mind to how he does business, which our chief instructor always emphasizes as really vital to improving the way the school is run... our chief instructor is pretty much constantly looking for new and better ways to do any aspect of the business.

Thanks everyone, this looks golden. I'd love to make my living through martial arts, and since I'm pretty sure I'm not the olympic-quality athlete you need to be nowadays, I can (no sarcasm) look forward to working technique like crazy and teach.

This is the best review of any MA-related book I've ever read. I get a 3-for-1 deal on the review, PLUS the added bonus Author's Reply. This review is a fantastic value.

It just went on my must-buy list.

EDIT: JESUS FLIPPING CHRIST couldn't you have told me that it's $150!? http://www.small-dojo-big-profits.com/#order

Where can I get it cheaper?

it is a professional manual, like an industry-specific text for Construction, Law, Medicine etc. So $150 is on par with those pricing schedules.

Everything I've read here has been far more informative than other media so I appreciate everybody's efforts. I will be purchasing this manual for sure.

Also, I really like the update from Mr Massie including the PayPal idea, which I think I'll start using for my class.

Professional publications often go for that price. Now granted its not bound in leather, but it is a comprehensive guide to starting your own school and will save you its price in mistakes.

it is a comprehensive guide to starting your own school and will save you its price in mistakes.

I have to agree. It would not be worth the price tag for me to buy it at this stage, already in business for two and a half years and on a lean budget, but three or four years ago when we were just starting out, this would have been a worthwhile investment.

200 students is a *small* school?!

For a professional, full-time school... I wouldn't call it *small*, but it's definitely not a big school. I was just reading a profile of a guy in Maryland with two locations with about 900 students between the two schools, probably 600-700 in one of them. (Keith Thompson, Tri-Star Martial Arts. Article's in the November issue of MA Success, MAIA's magazine.)

Man, that would be a lot of the "business" side of things to run.

200 students, with kids classes, is fairly small/medium-sized. Classes most days a week, only one modest-sized workout area, and a convival, everyone-knows-each-other adult student base is what I saw in my teacher's school at that size.

It reminds me of Tipping Points' Rule of 150.

This is the best review of any MA-related book I've ever read. I get a 3-for-1 deal on the review, PLUS the added bonus Author's Reply. This review is a fantastic value.

It just went on my must-buy list.

EDIT: JESUS FLIPPING CHRIST couldn't you have told me that it's $150!? http://www.small-dojo-big-profits.com/#order

Where can I get it cheaper?

When I first bought my school I looked into getting this book. I ended up not getting the book for two reasons, $150 price tag and the McDojo way the book seemed to marketed. I did not want to market my school in any way shape or form like Massie was marketing his book.

After struggling to run a failing business two year and LOSING $50,000 dollars, my house, my girl, and my dog along the way, I wish I had spent the $150 two years ago to get a little guidance.

I have to agree. It would not be worth the price tag for me to buy it at this stage, already in business for two and a half years and on a lean budget, but three or four years ago when we were just starting out, this would have been a worthwhile investment.

I cannot disagree with you more. You need this book just as much as anyone. Is your school is successful and you don't need Massie's advice, $150 is a small price to pay for confirmation that you are doing things right.

If Massie's book helps you bring in just one more student, or keep an existing student for a couple more months, it pays for its self.

Two years ago I took over a failing school that was losing $2,000 per month right from the start. I struggled and fought and fought, and finally got the business to a point where it is breaking even. It took me two years to do it and it cost me nearly everything but I did it all by myself and I am proud of what I did.

Last month I hired a business and marketing coach. I'm paying her $1,500 per month, ten times what Massie's book costs. Sounds expensive, but if her first month on the job, my marketing coach was able to show be how to go from breaking even, to clearing $4,000 per month by shutting down one of my under performing locations.

What would have happened to me and my school if I hadn't spent that $1,500 I really didn't think I had?

How much more money would I have now if I spent $150 two years ago?

This is Michael Massie's reply

Thanks Samuel!

The average student in my school takes 4.5 years to earn a black belt. In 20 years of teaching, I've promoted maybe a dozen people to first dan. It's true that no one gets a black belt from me without paying for it, but the pay is blood, sweat, and tears.


This excerpt from Massie's reply gave me pause a little bit. It makes me wonder about Massie's ability to retain students.

My school has been open for 20 years (I've just run it for the past two), just like Massie's. It takes about 5 years to get a Black Belt at my school, just like Massie's. Everyone at my schools earns their belt with blood, sweat, and tears, just like Massie's. Massie has promoted "maybe a dozen to first dan", our school has promoted 148. We have almost as many 3rd Dans as he has 1st Dans.

When last checked, there was less than a 1% chance that a student that signed up for an intro class at my school would achieve the ranking of Black Belt. At Massie's school is seems like it 1% of 1%. That just makes me wonder.

I've always seen Shodan to be like a bachelor's degree in martial arts. The fact that Massie has so few Shodans, is like a college that has really poor graduation rate. Are the standards that tough, or do people just quit and go somewhere better? The fact he doesn't know the EXACT number of Shodan's he's promoted, especially when he can count them on his fingers and toes, makes me worry too.

I currently have 15 people training for a Shodan test in January and they all kick ass. If they don't won't let them test.

One last thing I'd like to point out that Shodan is the beginning, not then end. I didn't get my engineering degree, and then say "Alright that's it, I never have to do engineering again." That is not what I believe and that is not what my school is about. About 20% of our active students hold the ranking of Shodan or higher.