In this post I will continue my series on how to start, grow, and maintain a karate studio. In my last post I explained the importance of having a business plan and started going through the ins and outs of the business plan as it pertains to a martial arts studio (or similar type business). That post turned out to be quite large, so I broke it into two separate posts. In this post I will conclude my explanation of the martial arts business plan.
In the previous post, I focused on the Overview of Business Concept. This section consisted of the following subsections: Market Opportunity, Growth and Financial Objectives, Legal Form of Organization, Market Served and Business Location, Initial Financing and Timetable for Establishment, and Exit Strategies.
In this post, I will focus on Marketing of the Business which consists of the following subsections: Industry Description, Competitor Analysis, Target Market, and Competitive Advantages. I will also include the additional information typically included in Appendices.
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Marketing of the Business
In the Overview of Business Concept section, your objective is to give a very high-level overview of how your business will operate. This includes the location, what you will offer, the structure, your projections, how you will get started, and even how you will end if you choose to.
The Marketing of the Business section will explain at a high level how and why you will be successful. The previous section explained what your business is, this section will explain why you have a viable plan for success.
In this subsection you will describe the entire industry, not just how you stand out (that comes later). This will also be information that is not exclusive to your location. It is a very broad, general description of the industry nationwide and possibly internationally. Be sure to include the following information:
- Styles of martial arts taught
- Types of programs (preschool, after school, adults, youth, family, tournament, etc.)
- Who takes martial arts (ages, genders, abilities, etc.)
- Percentage of population that is interested in martial arts
- Organizations/governing bodies involved
- How many studios are full-time, commercial, part-time, large, small, etc.
- Average size of studios
- Average experience of instructors/owners/staff
These are the main topics I included but you could certainly add more if you feel they are important.
In the Overview of Business Concept section, there was a subsection entitled Location Analysis where you analyzed all the possible locations for your studio to determine which is the best. This subsection will do something similar but will analyze the other businesses like yours in the proximity of your studio. In other words, your competition.
This subsection is important for several reasons. It is important to know the number of competitors in your target market as it will determine how you go about marketing your business. You also need to know which of the competing businesses in your area are the best and where they are located. You probably don’t want to be located directly next to the largest, most popular martial arts studio in town. It is also important to know about your competitors since potential customers will be shopping around and you should be able to intelligently talk about how you differ.
When doing this analysis, be sure to include all competitors, not just martial arts studios. Martial arts studios have many more competitors than just other martial arts studios. Gymnastics, swimming, yoga, dance, and fitness studios are all competing for the same type of customer.
Just like with the location analysis, you will need to come up with a matrix of topics that you feel are most important for your industry in your area. I used the following:
- Program/class price
- Are they overpriced or cheapest in town?
- Quality of instruction
- Are classes taught by a teenager or by an experienced instructor?
- Is the studio in a great part of town with lots of visibility and foot traffic?
- Where they quick to respond to you and answered your questions promptly?
- Is it clean and spacious or small and dirty?
- Variety of class
- Do they offer several class options at different times of the day/evening/weekend?
- Do they seem to know what they are doing or are they flying by the seat of their pants?
You could have more of course, but these are the ones I chose. Once you determine the topics that are important, you then need to give each topic a weighting factor, 1-5, with 1 being least important and 5 being most important.
The next step is to contact and visit each competitor. When doing this, be honest with them. Tell them you are thinking of opening a martial arts studio and wanted to research similar programs in the area to get an idea of the market. They may be receptive and may not be. You are also identifying businesses you may want to partner with for community events, fundraisers, etc.
After meeting each competitor, give them a score, 1-5, in each of the topics you identified as important. Take that score and multiply it by your weighting factor.
Add up all the scores and you get the overall strength of the competitor. Do this for all the competitors in your area and you get a numerical representation of the best competing businesses.
Target Market and Demographic Research
In the Overview of Business Concept, there was a similar section titled Market Served and Location Analysis. In that section, you showed through demographic research that the location where you were planning on starting your studio was in fact a good choice. In this section, you will again point to the same demographic research to show that your methods for attracting clients and the services you will offer are in line with the target market.
You should be pointing to specific numbers in this section such as number of families, median income, location and quality of schools, and population. This section will show that what you have to offer is a perfect fit for the area you are choosing to be located in.
In this final section of your business plan, you will give one last sales pitch for your business. This section is all about what sets you apart from the rest of the crowd. Why would someone choose your studio over another in your area? Some things to consider:
- Your experience
- Endorsements from companies
- Current customer base
- Filling a need in your community
- Large, high class facility
You can’t just be like every other studio out there if you want to not only survive but thrive.
All the information I went over throughout the last two posts consist of no more than 10 pages in the business plan. Those sections summarize all the work you did in your research and analyses. All the nuts and bolts, the actual work, gets put in appendices. Appendices will account for 50+ pages of the business plan. Things like your budgeting tools and analyses, demographics research, location analysis, competitor analysis, etc., will comprise your appendices.
The last thing I would like to add is that the business plan is a working, living document. What I mean by that is that you don’t spend all this time working on it just to put it on a shelf and let it collect dust. You should periodically review it and update it. Check to see that you are meeting your projections. Update your budgeting tools. Modify your goals. Add new goal. Perhaps you want to expand or start a new venture within your studio. Your business plan is a great place to start.
I hope you have found these last few posts on the business plan for a martial arts studio helpful. Feel free to reach out to me if you have any specific questions or would like to see some examples from my business plan.
Just remember, you can’t get to where you are going if you don’t know how to get there.