Smart Business Practices

Implementing smart business practices is critical to the long-term success of any small business, like a martial arts dojo or mixed martial arts gym.

It starts with keeping good records.

You should have monthly financials that you review on a regular basis. These financials show you the health of your business and serve as a measurement throughout the year as to where your expenses and revenue (hopefully resulting in profit) truly are.

Along with keeping accurate records, you need to know, at all times, what your break-even point is. This is the level of business at which you are neither making a profit nor a loss. For your type of business, the break-even point is the number of students required to generate the revenue that covers both your fixed (rent) and variable (pro shop inventory) costs. Any time you consider adding a new class or training program, you should calculate your break-even point.

The legalities of running a business.

Beyond the dollars and cents, it’s also important to protect yourself and your business. First, you should consider forming either a limited liability company (LLC) or a corporation, so that any debts or legal judgments against your company can’t be carried over to your personal finances. Also, make sure you have adequate business liability insurance. Talk to an attorney and insurance agent to find out what makes the most sense for your company.
Also, protect yourself by putting everything in writing, especially your contracts. Oral agreements are difficult to prove. Make sure your relationships with your students, instructors, vendors, etc. are all put in writing.

It comes down to smart choices.

Finally, be smart with your money. Every successful business person knows that long-term success depends on having enough capital to operate, grow, save and possibly expand. Make sure you have a good relationship with a local banker. Capital is difficult to obtain, but if you have a banker who understands your business and trusts you, he/she will be more likely to work with you when you need additional funds for equipment like trolley bags, mats or weights.

Also, even though you may feel like you are running your business payroll to payroll, try to “save for that rainy day.” Reserves, no matter how small, are critical. Every business will go through slow periods. You need to make it a priority to save some money to help you get through those slow periods.