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Small Business
Getting started: Karate
March 19, 2001: 7:33 a.m. ET

Jumping into the martial arts business is easy; staying there is hard
By Allen R. Wastler
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NEW YORK (CNNfn) - Sometimes you peek in through a glass storefront and watch uniformed students kick and punch.  Perhaps you are even one of the students. Or you are already a black belt, shattering boards and blocks like glass.

The question remains: What's it like to run a martial arts school? Perhaps more important, can you make money at it?

"I used to hate getting up in the morning, but now I love it," says Walter Fricke. He quit his job three years ago and took over Universal Martial Arts in Bloomfield, N.J. "Each day is a different challenge. And it's hard work. But it's also full of personal gratification."

Does he make money? Yeah, he does. But he, like many other successful school owners, has to work at it. Not everyone makes it. Within half a mile of his do-jong are two others that had to close down.

"It's tougher than some think," says Rob Colasanti, vice president of the National Association of Professional Martial Artists. "Someone can be a very good black belt, but still be a white belt in business."

graphicIndeed, roughly one out of five martial arts schools is likely to go out of business in a year, according to industry estimates.

It's a crowded field. There are more than 14,000 schools in the United States, NAPMA estimates, not counting the roughly 5,000 additional programs held at community centers, health clubs, churches and the like.  The barriers to entry are low, the ego lift is high, and many of the 4.5 million people involved in martial arts throughout the United States probably give it a thought now and then.

Pajama work

After all, it's a pretty interesting occupation, full of action and sex appeal. As Colasanti points out, you get to go to work in pajamas and have people bow to you and call you master. And, more seriously, you do have a chance to make a positive difference to people and the community.

Fricke had about $10,000 in seed money for his school, the lower end of what NAPMA advises prospective school owners to have on hand. Also, his school came equipped with a water fountain, changing rooms, mirrors and other equipment peculiar to the martial arts business. Those costs, plus allowances for marketing and insurance, should also be added into the mix.

"It's not just being a good businessman," says Fricke. "It's dealing with the parents of the six-year-old that you're not going to promote. You don't prepare for that in black belt training."

His hard work has paid off. His school grew from 20 students to 200. He added programs, an equipment supply side business, and a Web site. His school has positive cash flow and he nets over the industry average, currently at about 20 percent.

How much a school makes varies. The main source of revenue is students -- the more students, the more revenue. A 200 student school, for example, could bring in about $150,000 in revenue. To attract students, schools have to offer a variety of classes, both of different types and at different times. That means either a lot of time on the part of the owner or adding to costs by hiring more instructors. Some choose to go the franchise route, giving up some independence in exchange for marketing and business support from an established chain. And there are a few that are turning their own single-school operations into chains themselves.

This is leading to a bifurcation in the industry with smaller, one-instructor shops on one end and larger, diverse "karate centers" on the other.

"People are making more money in the business than ever before, but the industry is consolidating," said Colasanti.

Not only is competition tough, and likely to get tougher, some barriers to entry may begin to form, beyond the obvious knowledge and skill set required to be a martial arts instructor. Concerns about children and possible abuse are prompting some state legislatures to think about regulating for martial arts instruction. graphic





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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.