One of the things that holds back many clubs is the issue of finances. There’s never enough money to do everything you want to do, to buy all the equipment you would like to have, to pay staff as much as they might want or need.
So how can you improve your club’s finances? There is no single magic bullet that will improve things, but you can certainly change how you think about finances and perhaps think differently about how you pitch and run your club.
It is incredibly important to keep good accounts for your club. You don’t need to buy full-blown accounting software, and you can just use a spreadsheet, but you do need some way of tracking your finances.
How much money comes in on a regular basis? (Bonus question: from which activities in particular?)
How much money goes out on a regular basis? (Bonus questions: which regular costs are most expensive? Which costs are necessary and which are just random?)
What kind of buffer or “rainy day fund” do you want to maintain, so that you can handle a few weeks when income from attendance fees might be lower than usual?
Accounting doesn’t need to be difficult or time consuming. A couple of minutes a week and you might have at your fingertips all the answers to each of these questions. However, if you don’t do your accounting, you might not know any of these answers, and that’s just madness.
Thinking about breaking even
If your club is not in a great financial situation, and you are bleeding money on a regular basis, then your first goal is to reach the stage where you break even. If your accounts tell you that your money in is about equal to your money out, then at least you will no longer bleed money every month. It will give you some time to catch your breath and to stop worrying before you try to improve things further. It is an important goal.
If you are not yet breaking even then it means your expenses are greater than your income. Look at your accounts: why is this the case?
It might be that your expenses are quite reasonable, but you just don’t have enough income from attendance fees. Alright. Either increase your attendance fees or recruit more people.
It might be that you have a good number of people, but your expenses are simply through the roof. Alright. Either you increase your income further, or reduce your expenses to something more reasonable.
It may be that in some months you turn a profit because enough people attend, but in more months, you lose money because attendance is spotty and people just don’t turn up predictably. Alright. Either you increase your income, reduce your expenses, or work out some kind of solution to improve how regularly people attend so that your income is more predictable and with less fluctuation.
Of course, maybe these solutions sound anything but simple to achieve. “Just increase your income” is easy enough to say, but potentially quite hard to do! But that’s a separate problem. First, you need to identify why you are bleeding money, and therefore what you need to do to solve that problem. Then, once you know what various things you might need to work to improve, you can tackle each of them as separate problems and work out how best to solve them.
Profit is not a bad word
Profit is not a bad word, although many people might think it is.
Martial arts clubs are not in the same situation as big, multinational corporations that hire CEOs for seven-figure sums and that take the whole executive committee for a week-long strategic retreat to somewhere exotic. Martial arts clubs are not lining the pockets of millionaires or helping someone buy their third yacht.
For martial arts clubs, turning a profit means having more money than you started with, that can now be invested back into the club to buy new equipment, to improve your facilities, to do your marketing and advertising more effectively, to arrange first aid training for people so that the club is even safer.
Every single club that you might look up to as a shining example of “a good club” will be making a profit. That’s why they can afford to do the things they do that make them such a good club.
There is nothing intelligent or helpful about running a club on such a shoestring budget that it has to close down because there’s simply not enough money to stay open.
This may not be rocket science – but then again, it might be a totally different perspective to how you have been raised. I struggled with these ideas myself for a number of years, and the clubs that I ran during those times would have been much better clubs if I hadn’t tried to keep everything as cheap as possible.
Thinking about making more profit
If it is so helpful to make more profit for your club, how do you do that? Especially if your club has already existed for a while and you are scared of losing members if you increase your fees.
Well, people tend to be willing to pay whatever amount of money if (1) they have it and can afford it, and (2) they feel like they are getting their money’s worth from paying that much.
A good way of thinking about this is to consider eating at restaurants. If it costs £15 to eat dinner somewhere, and you have that much money spare and available to spend, and you feel like you are getting £15 worth of food on your plate, then this probably seems quite reasonable. However, if it costs £50 to eat at a more expensive restaurant, and you only have £20 in your wallet, then you simply can’t eat there; or, alternatively, if you pay £50 at a restaurant but they only give you what you consider to be £20 worth of food, then you won’t be happy.
It’s the same with martial arts clubs. If you charge £N, and people think that is reasonable for the experience they receive, then they will generally be happy to pay it. If you double your price without improving your service, or slash the quality of your service without reducing the price, then people are going to feel unhappy about it.
But here’s the thing: you can increase your prices if your service is good enough that people still think that is reasonable. Here are some simple examples:
- You are already teaching phenomenally well, but you are severally undercharging. Therefore, increase your prices. People will still be happy to pay the higher amount, because your service is still good enough to warrant it.
- You move to a bigger, nicer hall. Take the opportunity to increase your price, not only to pay for the more expensive rent, but to make a bit more profit for the club as well. You can make everything nicer if you have a bit more money to spend, and people will be happy to spend more if everything is nicer.
- Everyone is currently training with plastic swords and just mask and t-shirt, while paying very little into the club. Double the price of attendance, or even levy a one-off club improvement fee, buy two steel swords, some better protective gear, and therefore the club provides people with loaner gear to be able to experience fencing with better equipment. With a direct and obvious benefit, people might be happy to contribute a little more than before.
Here’s a thought exercise for instructors and students alike: if your club wanted to double its attendance fees, what the club need to improve for this new fee to be reasonable? Maybe have a discussion with your club mates about this, and see if there is something that you can do to improve your club’s situation.
What could you do if you had more money?
This is a different way of approaching the question. Rather than considering “what do we need to improve if we want to charge more?”, perhaps consider “if we had more money, what cool stuff could we do with that?”
- Maybe you could provide better equipment.
- Maybe you could move to a better hall.
- Maybe you could offer discounted rates for people on a lower budget.
- Maybe you could run community outreach events free of charge for the public.
- Maybe you could buy video equipment and software and start making instructional media for your members.
- Maybe you could bring in a professional instructor, whose teaching you admire, to give some kind of seminar.
- Maybe you fund a trip to the local museum for all your members.
- Maybe you sponsor your club instructor to attend an international event, to bring back lots of interesting new ideas.
- Maybe you buy a club library of reference books.
If your club has more money that can be reinvested in the club, you can do really cool things that will make your group stand out as a shining example of “a good club”. With such motivation, maybe you can find a way to rise the income you need to achieve these goals.
Thinking about finances can be terrifying if you are not used to it. Depending on how you were raised, you might have a better or worse relationship with money. But this doesn’t need to be difficult. And, if you find it hard to justify charging higher fees or making more profit, I hope this article offers plenty of suggestions to help you square it with yourself.
The main message in this article is that if your club has more money, you can do more things and make a better club. Therefore, you should strive to charge an appropriate fee at your club so that you can run the kind of club you want to run and that your members want to be part of.
Since many of our clubs are still closed due to the pandemic (although hopefully with reopening coming closer on the horizon), this might be an ideal time to think about your club finances and to consider how much better your club could be if you could make more of a profit.
If you would like to talk to me about this in a bit more detail, to discuss your club’s situation and any ideas or difficulties you might have, please reach out to me to arrange some online coaching. I would be more than happy to talk with you and to offer my experience of running martial arts clubs and businesses over the years.
Keith Farrell teaches HEMA professionally, often at international events (why not hire me to teach at your event?), and has an interest in coaching instructors to become better teachers. I teach regularly at Liverpool HEMA, and help behind the scenes with running HEMA in Glasgow at the Vanguard Centre.