We’ve covered a lot of material for NAPMA Maximum Impact Members in recent months about buying your own property for your school and about building wealth from your martial arts school business – not just income.

One fantastic contributor was Terry Bryant. His presentation was was very robust and comprehensive. This topic is useful for everyone. It’s especially critical If you as a school operator perceives your long-term career path is running a single location then It’s very important to be looking at ways of developing wealth within your school; not just developing income. The two are very different.

What is a truism with a karate school is the only way really to develop wealth from a single school is if you’re now affiliated with a larger and stronger organization. As a member of a Franchise organization you may find a resale market for your school when you are ready to retire or have need to move along for any other reason.

If you are, for instance, in a different industry let’s say you run a burger shop and you run Jim’s Burgers. Well, Jim’s Burgers is only as good as Jim running the place and only as good as the revenue it can develop on a day-by-day basis. But, to actually think that you’re going to run it for 20 or 30 years and sell it for a significant amount of money, short of whatever the real estate might be, is pretty unrealistic.

It really doesn’t matter what the business is. If it’s a dental practice, if it’s a law office, if it’s a karate school, if it’s a dance school, if it’s a gymnastic school, or if it’s the Jim’s Burgers, the wealth from small, unaffiliated business comes purely from cash flows being directed into other investments or cash flows being directed into the properties that the business is in, because the building will have use for other businesses other than, in this case, the martial arts school.
So, one way of developing wealth long-term in a single location is to own a building that ends up being worth $1-million or $2-million and to be paying for that building from the cash flows of the school.

But, as a single, independent operator, it’s extremely unrealistic to think that there’s a pot of gold at the end of the rainbow where you can sell the school and have it be worth much. Now, the way that that does happen is instead of being Jim’s Burgers, you’re an independent McDonald’s franchisee. An independent McDonald’s franchisee or an affiliated business in just about any format that’s part of a large organization, now there’s an established market for people who are looking for that brand and that business.

There’s a training infrastructure. There’s a support infrastructure. And there’s an awful lot of things that collide, that create a value to the business itself with or without real estate that goes with it.

So, one way that as a martial arts school operator that you can create long-term wealth would be, for instance, a Mile High Karate franchisee has a much greater likelihood of being able to sell their business and having equity at the end of 10 or 20 years than someone who was running their own independent school, because it becomes much less personality-dependent and more systems-driven, has marketing in place, and a prospect base of people who are looking to get one.

That having been said, short of doing that, the only way really to build wealth in a martial arts school is either ownership of the property that you’re in, or create as much income as possible and put it into other investment vehicles. And those investment vehicles would be stocks or bonds or any type of mutual funds. It could be gold or it could be the property you live in or a variety of rental properties.

So you have to look at your school, thinking of it as either an opportunity to become affiliated with a large organization and have equity when you decide to retire or move on, or as an income-generator that can be funneled into other investments. One of those could be the building that you’re in.

More about NAPMA & Maximum Impact:
http://www.NAPMAFreeOffer.com

To visit Tom Callos’s Blog please click link below:

http://tomcallos.blogspot.com/

A great quote – from last month:
“Winners Remember Results – Losers Remember Reasons”

Anchor this with your staff and your students. Teach “Internal Locus of Control” and have a “no excuses” environment, that starts with you.

Anyway since we’re in the Holiday Season I’ll share another quote for you and for your students, it’s actually from the first edition of the Mile High Maverick and is my 1960’s music trivia question as well:“Face piles of Trials with smiles, it riles them to perceive
the web they weave”

Music trivia nerds, recognize that one?

Anyway moving on to more serious things.

On our end we’ve had an incredibly busy and productive fall so far. Our Black Belt retreat morphed into the “World Champion Reunion” with my instructor and our Mile High Karate director of instruction Jeff Smith who invited Joe Lewis to join us for the weekend in Breckenridge with about 350 Mile High Karate Black Belts.

Then I was at the NAPMA office with Bill Wallace called and after a few minutes of ritual harassment (mutual harassment about bow legs and walking like chimps (him and I)) it dawned on me that if we talked him into rescheduling a seminar we’d have all three of the original champions together.

Anyway, Bill was nice enough to accommodate us and we ended up with the original Middle Weight, Light Heavy-Weight, and Heavy Weight World Kick-Boxing champions at our Black Belt retreat to training privately all of our Mile High Karate instructors then to work with our Black Belts from around the country including Colorado, NY, Florida, Maryland along with new MHK school owners like Wes Hall, Christine Hardy, Alan Condon, and Calvin Thomas.

The planets really aligned and it turned out that WCL ended up booking their event on our same weekend and we ended up taking all of our Staff and Black Belts (and, Chuck Norris’ invitation) to the WCL event along with about 1,000 Mile High Karate schools.

Joe Lewis, Jeff Smith, Bill Wallace, and myself (along with Jodi & Jaeda) got a chance to meet with Chuck at a private reception before the event along with his friend Randy Travis and others. The event was exciting and we got a chance to touch base with NAPMA NSSN member and Oklahoma Team Captain Dale Cook – among many others.

I want to continue a theme by devoting this column to a mentor of mine, and one of the original innovators in professionalizing the martial arts industry, Nick Cokinos.
In this column, in a recent interview for sounds of success, and constantly in NAPMA Squared I’ve warned of a disturbing trend in our industry. I’ve stopped counting the number of bankrupt and near-bankrupt schools I’ve come across in the last year caused by a combination of several factors.

Those factors:

First, becoming a “high pressure – sales” organization.

Second, focusing on cash-outs.

Third, poor cash management without a “contingent liability fund.

Fourth, an extension of point three – spending money received, but not earned on extravagances not investments or savings.

In the past I’ve attributed many of my ideas to Martial Arts Business Master Nick Cokinos so today I’ll just include his recent article in it’s entirety:

For whom the bell tolls
by Nicholas Cokinos,
EFC Chairman
After considerable deliberation and research, I have decided to express my views on this fairly new “cash-out” selling procedure being advocated by certain individuals. The allure is almost too much to ignore. It is similar to the ancient Greek legend of the siren song, according to which, while sailing along the isthmus, sailors were tied to the mast to prevent them from giving in to temptation.

You can easily envision certain school owners salivating down the chin at the prospect of getting their hands on a lot of easy cash. I guess by now you’ve figured out that I am not a great advocate of the cash-out scheme. But you are entitled to know all the serious and important facts involved.

Let’s start with the legal term “contingent liability.” To translate, this simply means that I have received a substantial amount of money for which I have rendered no service and accordingly I have not earned it. When a student registers for a one-year program (100 lessons), I must agree to provide the student with a competent instructor and appropriate facilities in exchange for the tuition of $1,500, payable at the rate of $125/month. In such an arrangement, I am being paid as I earn the money. At this point, after hearing tales of a spectacular way to get my hands on a lot of money, I am encouraged to romance this student to pay the entire sum up front, which is affectionately known as “cash-out.”

Let’s jump ahead for a moment and proceed to persuade 50 students to cash-out. I now have a ton of money and I am basking in the light of my newfound riches. But wait! I have also accumulated a contingent liability of 5,000 untaught lessons. I have put the money to good use, i.e. my wife got her nose fixed, my child is going to an expensive pre-school, the living room desperately needs new furniture, and lord knows I want to purchase that new Porsche.

Question: now what am I going to do about fulfilling my end of the contract of providing facilities and a competent instructor for the next twelve months? These 50 students are no longer sending in a total of $6,250/month. That’s gone, but the obligation/liability is now staring me in the face. Panic time! So I start to scramble, needing cash to meet my bills and maybe, just maybe, I start to high-pressure my students to raise some money, even offering as much as a 20–30% discount. (There goes my profit.)

Have I become a selling organization? Am I combing the ranks to see who will be my next victim? Perhaps I should cut down on the payroll and let a teacher or a receptionist go. What about my life-long pledge of dedicating myself to student service? I have always found great joy in helping my students grow in mind, body and spirit. But I can’t be bothered with that right now because I have some serious problems. I have a cash flow problem, and to top it, I am not getting new referrals these days.

My vast wealth was short-lived. Down the road, my problems are compounded because it is getting harder and harder to get cash up front, and my profits are down. To add to my woes, my head instructor, who I can tell you loves teaching martial arts, walked in to inform me that he was leaving, giving no reason for his departure. I think I have made a serious business mistake.

I hear ringing in my ears: “For Whom the Bell Tolls….” My friend, it tolls for thee. Nick Cokinos is founder and Chairman of Educational Funding Company. EFC may be contacted at 301-654-8677

Stephen Oliver, MBA 8th Degree Black Belt. Is the Author of several books on marketing for martial arts schools, is the developer of the NAPMA Squared “Maximum Impact Program” and founder and CEO of Mile High Karate. He was formerly an EFC Board Member from inception to 2001. He can be contacted at www.MileHighKarate.com NAPMA: http://www.NAPMA.com

It’s otherwise a beautiful day in Denver, Colorado. Bright and sunny with a gorgeous mountain view. I site to wake up waiting for my six year old daughter who’s a little grumpy this morning because daddy (me) let her stay up a little too late. She insisted upon doing homework a little late into the night trying as usual to finish her week’s homework a day early.

Given a few extra minutes I made the mistake of tuning on the news. This morning tuned to CNN rather than Fox which would be more normal. A friend of mine today is in the news, and unfortunately not in a flattering or positive way.

The first news story up is about my friend, newsflash from New York. What a way to ruin an otherwise beautiful day.I awoke to:

“Former Giuliani protege surrenders to feds”

Excerpts from the Story from CNN:
(CNN) — Former New York Police Commissioner Bernard Kerik turned himself in Friday morning to face arraignment on federal corruption charges, the FBI said. Bernard Kerik’s indictment comes a year after he admitted to misdemeanor charges of financial impropriety.

Kerik, 52, is a longtime friend and former protege of former New York City Mayor Rudy Giuliani, the Republican presidential front-runner in national polls.

Kerik was frequently by Giuliani’s side in the days after the September 11, 2001, attack on the World Trade Center, and his role as the city’s police commissioner propelled him into the national spotlight. Watch what Giuliani says about Kerik’s legal troubles »

President Bush nominated Kerik to be secretary of homeland security after the president’s 2004 re-election. But Kerik withdrew his name from consideration after allegations that he employed a nanny whose immigration status was questionable.

Just to be clear and on the Record. Bernie’s a friend of mine. He has been one for about 5 years. Jeff Smith and I met Bernie at the Battle of Atlanta. Joe Corley had picked up his book and had the temerity to pick up the phone and invite Bernie to the Battle of Atlanta. We met post 9/11 and when he had already become a partner with Guiliani-Partners having left his post as Police Commissioner. I last communicated with him last night:

Bernie,

Been catching the news RE the legal issues.

Just want to make sure you know that MANY of your friends (myself included obviously) are standing with you and standing behind you. Keep your chin up and anything I can do just ask.

Martial Arts Professional Magazine maybe getting permission to reprint the Kerik won’t fold piece or perhaps we could do an interview that we can send to members and print in the magazine to get your side of the story told might be valuable from at least a the standpoint of the Martial Arts Industry. If you’re up for that let me know or if
there’s any other way I can be of service in these troubling times.

Stephen Oliver.

His response:

Thanks Steve… to fight this and fight it right, I’m going to need all the help I can get. If there’s anyone looking to support us, please refer them to: www.keriklegaltrust.com

Keep in touch.

BK
___________________________
BERNARD B. KERIK
Police Commissioner
City of New York (Retired)

The Kerik Group LLC
275 Madison Avenue
35th Floor
New York, New York 10016
www.kerikinternational.com
www.myspace.com/bernardkerik

And, just to set the record straight. Bernie Kerik is a martial artist – 5th Degree Black Belt from myself and Jeff Smith with Mile High Karate. He began training in Martial Arts in 1969 – same year I started – and has been a martial artist ever since.

He was on our Board of Directors until we agreed in 2006 not to move forward with a relationship with Mile High Karate and mutually agreed to remove him from our Board of Directors. That was right after the initial Bronx legal issues.

We remain friends.

I did not know Bernie while in public service but have spent time with him at Guiliani-Kerik’s offices, at his new offices, have shared dinners at his home and was honored to host him at our Black Belt retreat. One memorable day in New York Bernie took Jeff, Joe, and I to a Yankee’s game. To say we got the VIP treatment would be an understatement. Personally greeted by the manager’s wife and escorted by the chief of security to seats that were front row behind home plate (I was afraid I might accidentally unplug the radar gun with my foot.)

I have no personal knowledge of the situation alleged other than conversations with Bernie’s attorney Paul D’Emilia and with Bernie and will draw no conclusions regarding what will happen at a trial if there is one. I do know from personal experience that his contributions to New York’s Prison Systems, Police Department, and to IRAQ and the cause of our national security has been incredible. Additionally, he has fought for the cause of martial arts instruction and sought out every avenue to help me in developing a truly international organization without financial gain purely from his love of martial arts and a desire to strengthen the youth of our country.

To Share Rudy Guiliani’s words about this situation:

NEW YORK, NY November 07, 2007 —In defense of Bernard Kerik, presidential candidate Rudy Giuliani says the successes of the former police commissioner outweigh any of his mistakes. Giuliani says Kerik’s successes at reducing crime and decreasing violence in the city’s prisons should outweigh his indiscretions. At Giuliani’s urging, President Bush nominated Kerik as Homeland Security Chief in 2004.

At his request I share with you information about the Kerik Defense Trust:

THE BERNARD KERIK LEGAL DEFENSE TRUST
The Bernard Kerik Legal Defense Trust has been established to allow Mr. Kerik’s friends and supporters to assist him in defending himself against possible charges that may be brought against him by the United States Attorney’s Office in the Southern District of New York.
In June 2006, Mr. Kerik settled an investigation by the Bronx District Attorney’s Office. He accepted responsibility by pleading guilty to two New York City ethics violations (unclassified misdemeanors) and paid a substantial financial penalty. Shortly after he settled the Bronx case, the U.S. Attorney’s Office began a new investigation. The Assistant U.S. Attorneys assigned to the investigation are now considering charges against Mr. Kerik, based in large part on conduct that was already addressed and resolved in the Bronx case. As a result of these two investigations and news and media reports, Mr. Kerik has been the focus of more than two years of intense publicity that has negatively impacted his business and personal life.

Throughout his career, he has earned more 100 awards for meritorious, heroic and distinguished service, including commendations from Her Majesty Queen Elizabeth II, President Ronald Reagan for heroism, and many others. He earned international recognition for turning the New York City Jail System into an international role model and as the New York City Police Commissioner; his tenure was marked with historic reductions in crime and innovative management. The world witnessed his stoic leadership during and after the attacks on the World Trade Center on 9/11 and today, he is an outspoken voice against global terror and enemies against the United States. Now, his 33-year career of putting his life on the line for New York City and this country is overshadowed by this investigation and allegations that must be put to rest.

Having incurred legal fees in the course of the Bronx and federal investigation and paid a substantial financial penalty when he settled the Bronx case, and having had his business impacted by the intense publicity, he is not in a position to fund a proper defense to this federal case. Therefore, we have established the Trust, so that his friends and supporters may contribute funds to assist in his legal defense to prove his innocence and allow him and his family to move on with their lives.

To support the fund by contributing on line, please click here: http://www.keriklegaltrust.com/howtodonate.html

The Trust may accept unlimited personal contributions. If you would like to contribute by check, please make checks payable to The Bernard Kerik Legal Defense Trust and mail them to:

Mr. Paul D’Emilia
The Bernard Kerik Legal Defense Trust
119 West 72nd Street
Suite 204
New York, New York 10023

Thank you on behalf of Mr. Kerik and his family for your help and support

Paul D’Emilia, Esq.
Trustee Email: pdemilia@keriklegaltrust.com
To learn more about Bernard B. Kerik and see just some of his honors, accomplishments and tributes, please click here: http://www.keriklegaltrust.com/heroism.html

Now. I’m sure we’ll get letters. Many will forget Bernie’s hero status. Others will accuse me of being a “knee jerk” conservative supporting the cause. Share them or not, I don’t care. I’m certainly not endorsing any inappropriate behavior by public figures, public servants, or private citizens. If Bernie behaved inappropriate many years ago, then I’m sure he’s going to pay a reasonable (perhaps even unreasonable) price for that behavior. I do know it’s easy for the media to hype real or imagined bad behavior. I do know that we all suffer many friends who swarm us in good times and abandon us in bad times.

In my own life I’ve suffered through going from “martial arts hero-entrepreneur” status – early 1980’s to bankrupt and divorced (1989) and then back again. That process taught me MANY valuable lessons. One of which has certainly stuck with me and has informed my personal behavior with many people. That lesson? Be wary of those who seek you out when everything is going your way. True friends will be with you throughout your successes and failures. Never mistake those looking for something from you – including your employees and students – for your true friends. Many of those who abandoned me when I looked like a sinking ship foolishly returned when I climbed back to the top. Fortunately I was wise enough to recognize the naked self-interest.

To learn more about Kerik go to: www.NAPMA.com/kerik

I’d like to share a couple of stories – maybe silly stories that illustrate a point. Let me point out first a great Book Title from an author that I’m otherwise somewhat ambivalent about: Wayne Dwyer (You should read his first book “Your Erroneous Zones”.

The Title:
“You’ll see it when you believe it”

It’s a great title because it encapsulates a great concept for achieving high levels of success in anything you do.

First, think about Wealth. If you see abundance around you and are surrounded with people who have lots of wealth – it’s easy to see opportunities for yourself. On the other hand if you are surrounded by poverty – it’s difficult to see opportunities.

Anyway, back to a story I wanted to share.

A couple of years ago I was meeting Mile High Karate’s CFO (Bill Schlapman) and our then director of franchise development (Dave MacDonald) to discuss strategy. I live in the mountains outside of the Denver area at about 8,000 foot elevation – but, enjoy the activity of Downtown Denver. Often we would meet in Downtown – just for the stimulation and the activity going on (from my perspective.) Bill and Dave both HATE downtown Denver. They don’t like the traffic, the stuff going on, and given their choice they’d meet in the suburbs (I’ve dragged them to Vail, Keystone, Downtown Denver and lots of other interesting places since my mind works better that way and, a change of scenery helps my creativity.) Anyway even though they hate it – I’m the boss so we do what I want to do – “it’s good to be the king” (if you’re old enough you may remember Mel Brooks uttering this line in “History of the World.)

Anyway one of the things that Dave and Bill bitch about is finding parking – since where I usually meet them requires street parking on a meter.

One time when we met I recall I pulled up to the Starbucks where we were meeting – just as someone was leaving and parked within about 10 feet from the front door. I arrived at 9:55 for our 10;00 meeting – parked right in front, and went in. Several minutes later both Dave & Bill walked in separately – both muttering about how horrible parking was downtown, why the hell do we have to meet there, and complaining about how far away they parked.

Now as an aside let me share that Dave was a Psychologist (MA) and an ordained minister and, by the way a great guy. Anyway I said to them: Turn around and look where I’m parked – pointing at my Black Jaguar immediately in front of the door.

Bill then muttered “yeah, that sucker always seems to be within 5 feet – he must call ahead and have them reserve a spot.” Dave said – ok how is it you’re always parked close and neither of us can find a space? My response was “Dave you’ve just got to visualize a spot in the front of the building and when you get here it will appear.”

Dave the Minister sputtered and spewed and said – “you don’t really believe that new age crap do you?” My answer was “No, I really don’t think I make it materialize.. what I do believe is that if you expect to see it then you are more likely to see it. If you expect to not be able to find one, that’s what you see.”

There’s a moral to this silly story:

You’ll See it When You Believe It!

Want to be wealthy?

Subscribe to the Robb Report, Worth, Millionaire. Visit Ferrari & Bentley Dealerships. Vacation where you are surrounded by Wealthy people with expensive toys – not where it’s cheap Go to Bermuda and stay next to Ross Perot’s house, Go to ASPEN (and, hang out at the Private Jet Terminal for awhile,) Go to Ft. Lauderdale and hang out around the 100-300 foot, Multi-Million Dollar Yachts, and shop at the “Toy Store”. Watching TV? You can watch the local news about someone who can’t pay their electric Bill because of high energy prices – or, you can watch “High Net Worth,” Trump, Gene Simmons, or some other example about why there’s lots of money in the world.

Again – you’ll see it when you believe it. What do you believe about you potential for success and wealth?

Oh – the Email I received this Morning:

Master Oliver,

I wanted to say, “Thank You” for recommending “The Secret” to me. It has made a HUGE difference already. I got the video, watched it, and was blown away by the content. That weekend I had my wife sit down and watch it with me. She, too, was blown away. We IMMEDIATELY started using the secret and things began happening almost as immediately.

We paid off all of our credit cards within 2 weeks of watching the video and then, GET THIS, one of my student wrote me a check for $35,000.00 (35 Thousand) as a GIFT!!!

We’re using the money to pay off the remainder of the debt our business has and to put a down payment on purchasing our own building.

AND, I’m taking a trip to China next week for 2 weeks (a lifelong dream)- We didn’t have an instructor in place to cover me while I was gone. I just booked the trip A MONTH AGO and paid for the airfare and hotel, etc… and “believed” that everything would work itself out. On MONDAY of this week I got a call from one of my previous instructors (and probably the best one we ever had) and he wanted to know if he could come back to work for me over the summer. He started Monday.

You think that’s coincidence? I don’t

The environment in our school has changed. There is a very positive feeling in the air and our upgrades are now doubling from what they previously were. I’m still working to get a handle on our marketing and advertising at the moment but I believe that, too will be highly affected by knowing “The Secret.”

If any of the others in your Coaching Program haven’t seen the video I would HIGHLY recommend it. I had my entire leadership team watch it last Saturday because I feel like it is THAT important.

THIS is the stuff that creates belief and raises one thinking as to what one thinks is possible………………….

Sincerely,
James Theros

“Motion Beats Meditation”

Someone who I would consider a bit of a mentor recently passed away. In this case he wasn’t a friend but was someone who’s material I would study at any chance and who I spoke to briefly when he agreed to contribute material to NAPMA Squared and to our NAPMA Squared Members – and, additional material to Mile High Karate.

His name was Gary Halbert and he was a well-known and highly successful direct response copywriter. If you’ve paid attention to direct mail conversations such as “A” Pile, “B” Pile then you’ve heard indirectly of his work. As a NAPMA Squared Member I’ve made a lot of his material available to you. Other material is still available at:
http://www.thegaryhalbertletter.com/

Anyway… The headline: “Motion Beats Meditation” is borrowed from Gary and encapsulates a message that I want you to get solidly this week.

Why?

I’ve spoken with several school owners with problems and with issues to fix this week who are doing….. NOTHING to fix them.

They recognized the problems. Lament the issues. And, then do nothing.

If you’ve got an issue to fix – fix it quick. Massive action quickly always trumps thinking, stewing, and lamenting the problem.

Do something about it NOW.

Short on staff?
Get a sign up.
Mail to your students.
Get an ad in the Paper.
Post an ad at CraigsList, Monster.com, etc.
And, Proactively approach anyone who looks like a good fit!

Do SOMETHING – Anything – Now.

A real key to success is rapid and immediate movement. Move forward quickly and don’t wait for the perfect solution to happen to you – it never does.

“Operation ‘Money Suck’ ”

“Operation ‘Money Suck’” is also borrowed from Gary and encapsulates a message that I want you to get solidly this week.

What’s the point of “Operation Money Suck?” – well let me share with you another “Halbertism” that will help to explain”

“There’s no problem that was created due to a lack of money – that an abundance of money won’t solve.”

Operation Money Suck is the concept that if you hit a point where cash-out exceeds cash-in – most of us go to work trying to make the creditors happy, with dealing with the “juggling” act of who to pay, and with dealing with day to day interruptions. The solution is different: Go to work creating an ABUNDANCE of Money so that you can solve the problems created by a lack of money.

Shut the door, turn off the phone and create the plan to create an avalanche of money coming to your business that will create the problems that were created by your short-fall.

How do you do that in a martial arts school?
Marketing, Sales, Upgrades.

Get the Volume of New Students Way Up.
Get better at converting prospects to enrollments
Convert students to BBC, Master Club, Leadership – or something higher.
Accelerate payments
Get balances due – paid in full.