Tag Archives: Finance

Business-Building-Blog-Martial-Arts-Business

Monitoring Statistics for Martial Arts Business Success

By Brett Lechtenberg

Over the years, I have talked with many Martial Arts school owners and shared many achievements, struggles and failures. There are a few things that consistently seem to enhance martial arts business success, separating the top owners in our industry from the schools that are struggling.

martial arts business successOne of the key areas top owners watch closely is their daily, weekly and monthly statistics.

There are many areas to focus on, but if you are currently not following your numbers very closely, I suggest starting with the basics and get more detailed as you become more comfortable.

Here is where I suggest starting:

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What I’ve Learned That Leads to Business Success – Part 1, Quick Accounting Tips – Steve Giroux

By Steve Giroux

A good friend of mine recently told me that he was going back to school to get a degree in accounting so that he could open his own small business. I’m not sure if it was because he knew I had a degree in accounting and attributed my success in business to my college degree.

My two cents: unless you’re planning on owning a CPA firm, you don’t need to invest over $100,000 and countless hours in a college education to succeed in becoming an entrepreneur.

What you DO need — in my opinion — is a BASIC understanding of accounting. It’s important because it will help you gauge your progress. So let’s dive into two basic accounting tips that have helped keep my business fiscally fit.
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How to Beat a Cash Flow Drought Like a Pro — Master Kenny Kuek

By Kenny Kuek

As the saying goes in business: “Cash is King!” It really is.

You can’t tell your landlord that you’re the Master of Martial Arts that teaches life skills and self-defense. Your landlord doesn’t care.Bottom line: if you don’t pay your bills, you’ll end up on the streets.

I have visited a number of Martial Arts and Fitness businesses — many that have no problem enrolling members — but because of their lack of financial management, they end up having cash flow problems. There are times you may need to improve your cash flow. Here are some strategies to bring more money into your business:

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Can You Continue to Fund Your Business Growth? A Look at Your Balance Sheet – Michael Connor

By Michael Connor

iStock_ChartCan your membership business continue to fund its growth? The balance sheet can answer this for you right away.

By knowing how to read a balance sheet, you’ll also be able to have a relevant discussion about it – or a discussion about the balance sheet of a business you’re interested in acquiring.

Two other uses: 1) Vendors and lenders can use the balance sheet in considering the creditworthiness of the business. 2) owners and potential investors can use it to help determine the value of the business.

Let’s look at the balance sheet to get a better understanding and get a picture of your financial health.
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6 Tips to Monitor the Cash Flow of Your Martial Arts Business – Master Kenny Kuek

By Kenny Kuek

Martial Arts business is like any other business — to survive or to grow, “cash flow” is paramount. Any small business must measure and monitor their cash flow. Doing so will help you to determine if you need to implement cost control or search for alternative funding. Here is a basic and simple guideline to help you measure and monitor your cash flow.

1. Know Your Student Value

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Know your student value. Student value can be calculated by dividing your annual gross revenue by the number of active students. For example, if you have 100 active students, and gross revenue is $180,000 per year, your student value per annum is $1,800, or $150 per month.

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Business Owner Cheat Sheet – Financial Terms Defined – Michael Connor

By Michael Connor

ABCEvery business owner, manager, and director needs to understand the basics of finance in order to be successful. At some point you will find yourself in a discussion in which certain financial slang will be used and it’s important for you to comprehend the language. This article will simplify those sometimes puzzling, but need-to-know, financial terms. This will be a good first step in learning the common jargon used and what each term means.

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Profit & Loss Statements: What Every Business Owner Should Know – Michael Connor

By Michael Connor

profit_lossAs an owner or manager of a business I”m sure you have heard of Profit and Loss (also known as P & L). But do you know what it is and understand its components?

It”s important to understand in order for you to talk knowledgeably with your managers, bankers, tax advisors, and investors. In this article, I”ll show an example of a P & L Statement and explain what the terms mean.

A Profit and Loss Statement or Income Statement is one of the documents that show the financial condition of a company. Other documents include a Balance Sheet, Cash Flow Statement, and the Statement of Retained Earnings.

Here is an example of a P & L and an explanation of each item:

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9 Tips to Keep the Cash Flow Flowing – Michael Connor

By Michael Connor

describe the imageNo matter how impressive your business plan or Income Statement may appear, you will be out of business rather quickly if you don’t have the cash to pay your landlord for next month’s rent.

Every business has peaks and valleys in their business cycles ― particularly membership-based organizations like Martial Arts schools, MMA gyms and fitness businesses. These peaks and valleys could be a matter of days, weeks, months or even longer. Whatever the case, smart business owners have a plan for what to do with cash surpluses during the peaks, and what to borrow during the valleys, in order to stay strong and in business.

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10 Tips to Protect Personal Financial Information

By Member Solutions

As many as 10 million American a year are victims of identity theft. More than half become victims when their credit card information is stolen. It takes anywhere from 3 to 5,840 hours over a 4-to-6-month period to repair damage done by identity theft based on the severity of the crime. The average number of hours is 330.

As a result of identity theft:

  • 47% of victims have trouble getting credit or a loan.
  • 70% of victims have trouble getting rid of negative information on their records.
  • 66% of victims’ personal information was used to open a new credit account in their name.
  • 12% of victims end up having warrants issued in their name for financial crimes committed by the perpetrator.

As a business owner, it is your obligation to protect the personal financial information of your customers.

Here are 10 simple things you can do to protect your customers’ financial information:

1) Take Stock: Know what personal information you have in your files and on your computers. Never leave sensitive papers in a common area unattended.

2) Scale Down: Keep only what you need for your business. If you don’t have a legitimate business need for information, don’t collect it.

3) Lock It:  Protect the information that you keep. Limit access to employees with a legitimate business need. Control who has a key, the number of keys and know when information is being accessed.

4) Pitch It: Properly dispose of what you no longer need. If you collect applications with personal financial information, make sure the paperwork is unreadable before you dispose of it. Cross-cut shredding is an effective way to prevent identify thieves from stealing it from your trash.

5) E-mail Restrictions: E-mail is not a secure method to transmit sensitive data. Never send personal financial information by e-mail.

6) Protect It: Use anti-virus and anti-spyware software, as well as a firewall, and update them both regularly. Also, use a password-activated screen saver to lock your computer whenever you are not in front of it.

7) Use Strong Passwords: The longer the password, the better. Use passwords with a combination of letters, numbers and characters, and change it frequently. Do not use the same password for all of the various accounts you access.

8) Limit Team Roles: Only allow certain employees to access sensitive personal financial information. Manage the user permission of your employees carefully on places like banking websites.

9) Only Use Vendors Who Are PCI Compliant: Make sure your vendors are Payment Card Industry (PCI) Compliant. Whenever possible, choose a vender that is Level One compliant, which is the highest standard awarded. Any financial institution, software provider, merchant processor, or other company that you do business with should be taking steps to be PCI compliant. Any company or software application you use that contains cardholder data should comply with PCI.

10) Treat It Like It Was Your Own:  Safeguard all personal financial information of your customers, employees or anyone else like it was your own personal information.

Our Commitment to You

Security is of the highest priority at Member Solutions. It’s the sum of every action we take to protect our clients that entrust their business to us, the customers that entrust their information to us, and our team that places trust in each other.

We are proud to be a Level One Service Provider Under the Payment Card Industry Data Security Standards (PCI DSS).

One Final Thought

If you accept credit and/or debit cards at your business, you must become PCI compliant. Member Solutions can help get you started. With Member Solutions’ PCI compliance program, you can become PCI compliant in less than 20 minutes. And for a low monthly fee, you can bundle our PCI compliance program with Data Breach Protection insurance to protect your business and members in the event of security breaches and identity theft.

Visit membersolutions.com/credit-card-processing or call 888.277.4409 for more information.

Have a security tip you’d like to share? Post it below.

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Cash is King – Steve Pinado

By Steve Pinado

Cash is the lifeblood of any business. Strip away everything else, and your business is only worth the present value of its future cash flows or the money that you can keep. No matter how great your facility or programs, you’ll be out of business if you can’t pay your landlord on time. Not having enough cash to bridge business peaks and valleys is the number one cause of failure for small businesses. This article covers the essential components of the cash flow statement and provides key strategies to help.
A cash flow statement lists the beginning and ending cash balance for a specific timeframe by showing cash flows in three categories.

  1. Cash from Operations — This measures how much cash your core operations provide to your business and results from the delivery of services ― revenue from customers minus operating expenses like rent, payroll, and inventory additions. Non-cash expenses, like depreciation, are added back to this section.
  2. Cash from Investing — This measures how much cash you invested in your business to enable it to operate and includes purchases or sale of assets to be used in the business. Purchases are referred to as capital expenditures. Examples include real estate, equipment, or anything deployed over time, listed on your balance sheet, and depreciated.
  3. Cash from Financing — This measures the inflows and outflows of business capital and is the result of increases in debt (a source of cash), loan repayments (a use of cash), distributions to business owners (a use of cash), or investment dollars flowing in to the business (a source of cash).

In the example above, the business generated $25,000 [≈ Per capita income – United Kingdom, 2005] in cash from operations, invested $30,000 [≈ Per capita income – Switzerland, 2005] back into the business, and raised $10,000 [≈ Average used car]through financing activities. Subtract the investing cash of $30,000 [≈ Per capita income – Switzerland, 2005] from the positiveoperating cash of $25,000 [≈ Per capita income – United Kingdom, 2005], add the positive financing cash of $10,000 [≈ Average used car] and end up with $5,000 total cash generated. When we add that $5,000 to the $8,000 [≈ Per capita income – Russia, 2006] beginning cash, the ending cash position is $13,000. It was critical for the business to have access to cash flow from financing to operate this period because investing cash outflows exceeded operating cash inflows.

To protect and grow your business you must understand cash flow and accurately predict future monthly cash flows. Nearly all membership businesses experience seasonality with cash from operations decreasing in summer and peaking in fall. Businesses need to proactively build cash prior to seasonal decreases or have easy access to financing cash to carry them through these times. Planning for capital expenditures to replace key items like mats, signage, computer equipment, or inventory in advance of a selling season, also requires clear understanding of expected future cash flows to protect your business and make the most of opportunities.

In Martial Arts businesses, there are several strategies you can employ to positively impact cash flow each month and over time. Here are three ideas:

First of the Month — Have your members pay at the beginning of the month. Rent and other expenses are often due early in the month. Time your operating cash inflow to these outflows. When you sign a new member, collect payment for the current month upfront then set their first recurring payment for the first of the next month.

Consider Bi-Weekly Billing — Monthly tuition rates are routinely over $100per member. Factor in families with multiple participating members and you’ve got one hefty monthly bill. Offering your members the ability to pay a smaller amount every two weeks may be appealing to them. You will also end up with two extra payments each year given the 26 week calendar year.

Manage Delinquencies — Tuition payments not collected increase your accounts receivable and reduce the cash generated from operating activities. Businesses can have successful sales, deliver services well, and still have significant cash flow challenges because their customers don’t pay on time. When a customer does not pay you must act immediately. Prompt, professional and persistent action, combined with offering flexible payment options, help ensure you do not experience cash flow problems due to customer delinquencies.

Remember … cash is king! Take the time to employ these specific strategies and pay close attention to the timing and source of your cash flow. In the end, you’ll be better prepared to handle seasonal decreases, forecast monthly ending cash, and budget for expenses.