Martial Art Business Plan

8/3/2019 Martial Art Business Plan

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GURUKULAM

Martial Art Academy



Table of contents

Title No: Description Page No:1 Executive Summary

1.1 Objectives

1.2 Mission

1.3 Key to success

1.4



Executive Summary

It is estimated that over five Lakh Indians are currently involved in some type of Martial Arts.

India has a definite history of the origin of the martial arts. History says that

Bodhidharma a Buddhist monk from South India who lived during the 5th/6th century AD. He

is traditionally credited as the transmitter of Ch'an (Sanskrit: Dhyna Japanese: Zen) to China,

and regarded as the first Chinese patriarch. According to Chinese legend, he also began the

physical training of the Shaolin monks that led to the creation of Shaolinquan. The Indian

subcontinent is home to a variety of fighting styles. It¶s the land of origin of martial arts. Various

martial arts including Kung Fu Originated here. In Sanskrit they may be collectively referred to

as astravidy or dhanurvidya. The former is a compound of the words hastra (weapon)

and vidy (knowledge), meaning "knowledge of the sword" or "knowledge of weaponry". The

latter term derives from the words for bow (dhanushya) and knowledge (Veda), literally the

"science of archery" in Puranic literature, later applied to martial arts in general.

The Vishnu

Purana text describes dhanurveda as one of the traditional eighteen branches of "appliedknowledge" or upaveda.

The location of Gurukulam and its surrounding area (a market of over 50,000 potential

members) has traditionally been a hot bed for Martial Arts training. Competition is keen. In itsinitial phase the Gurukulam will be operated as a part-time basis (for the love of the art) offering

little. The following business plan (the Gurukulam¶s first) was developed as a vehicle to identify potential. What was found is that there is tremendous opportunity in the Martial Arts

marketplace and that the Gurukulam is in a solid position not only to exist, but thrive inthe Martial Arts industry.

The following plan will show how the Gurukulam can be put in existence with an incremental

sales growth year by year. Sales growth, based on an expanded membership would increasefrom Rs. 5 Lakh in 2012, to Rs. 20 Lakh by year-end 2014. The business plan suggests the

Gurukulam can generate considerable cash flow, if the business is operated on a full-time basis,offering its owner and any investor a healthy income. In order to accomplish this growth, the

Gurukulam requires a Rs. 50 Lakh loan to be repaid over eight years, secured by the owner'scollateral in the form of a house.



1.1 OBJECTIVES

y Remodel and upgrade Gurukulam by year-end 2012 including a new computer, newtraining mat, new store-front and visitor area, dressing room upgrade and repairs to

sauna.y Increase paid membership to 200 by year-end 2014 (equivalent to 80% of Gurukulam

capacity).

y Reduce membership turnover by 30% by year-end 2014 (measured by number of studentstaking belt testing from white to blue).

y Develop a cash flow that allows for an investment build-up to support future expansion.

1.2 Mission

Gurukulam was established to provide a place where one can learn the art of karate, have fun inthe experience, and make a commitment to that learning and to use the knowledge as a "stepping

stone" to an improved self, family and community. Students will leave the Gurukulam, with anexperience that will last a lifetime. Women will leave Gurukulam with the confidence of

defending themselves from the odds of the society.

1.3 Keys to Success

y Create a unique, modern, clean and safe Gurukulam environment.

y Establishment, implementation and tracking of a budget and business plan.y Building a solid Board of Advisors base for both karate training and business issues of

the Gurukulam.



Company summary

Gurukulam will serve a large area offering group and individual classes in the art of karate and

self-defense. The dojo is located in the center of an outlining community near Andheri on amajor business street.

2.1 Company Ownership

Gurukulam will be a partnership firm. In the plan, the business will be changing from a

partnership firm to a limited liability company with Aditya as its principal. Under Section 58 of the Act, a firm may be registered at any time by filing an application with the Registrar of Firms

of the area in which any place of business of the firm is situated or proposed to be situated.

2.3 Company Location and Facilities

The Gurukulam is located in the heart of the city Mumbai (Andheri). It is a 2,000 square footfacility with a 1,000 square foot training area, 200 square foot viewing area (lobby) with a

receptionist desk, large men's and women's dressing areas, showers and a sauna. There are twooffices in the Gurukulam, one used for storage, the other for the main office.

The building faces a major street and has considerable foot and drive by traffic. There is some

parking on the street and considerable free parking in the rear of the building, with a back entrance to the dojo. The facility had a long-term lease (25 years) which has three more

years to go. A 10 year extension is available, but the current Rs.30,000 monthly rental will go upwith that extension.



Services

The Gurukulam is a school where one can train in the art of traditional karate. Similar to a health

or fitness club the dojo relies on membership to survive. Products (services) offered are: trainingin karate, self-defense, aerobics and weapons training.

3.1 Service Description

y Services currently provided are:

An open training facility for members during non-class hours. Morning and evening classes, taught by experienced black-belt instructors.

Private lessons for individuals and groups. Outside seminars on self-defense.

Children's ninja night (Gurukulam sleep-over) offered once a quarter Providing the facility for parties and functions after the class hours

3.2 Competitive Comparison

Martial Arts, specifically karate instruction is a very competitive field. Various styles such askarate, judo, kung-fu, kenpo, tae-kwan-do, etc., all offer the same basic "traditional" Martial Arts

training, self-defense, building self-confidence and providing exercise to varying degrees.While we promote our Gurukulam style, we fully understand that style is a matter of choice and

while style type may offer expertise in kicking, hand to hand, throws, etc., no "one" style can layclaim to being truly better than another. With this in mind, product (service) differentiation as a

matter of Martial Arts style is not the key to success; rather we feel that promotion of a clean,modern, desirable facility, with knowledgeable staff that can work with students, at a reasonable

price is what sets Gurukulam apart.

3.3 Sales Literature

Currently the Gurukulam has very limited sales literature. There is a color brochure identifying

the Shihan's (head instructors) background, history of the dojo and information on the dojoassociation it belongs. There is a one page monthly schedule of events published and available to

students at the Gurukulam and there is a nice but ³limited" website presence.

3.4 Fulfillment



Trained black belt instructors are our #1 resource. These instructors are well versed in thetraining of karate and are selected by the Shihan for their karate knowledge and ability to work

with students. Instructors are not paid; rather they are members of the inner circle of theGurukulam, a club of top students (sensei). Instructors are given free membership and access to

the Gurukulam and receive payment for private lessons they perform on a contract basis.

Instructor materials (gi, belts, and weapons) are provided free for their participation in training of students. Currently there are five members of this inner circle of trainers.Also, under the watchful eye of the Shihan there are several green and brown belts who have

shown interest in training. As they move up to black belt status they will be given theopportunity to join the inner circle.

3.5 Technology

We want to maintain a "traditional" sense to the Gurukulam, however we realize that technology

will help us better meet our business needs. With this in mind, we are going to upgrade our software and computer system. Included in this upgrade will be two new computers, linked to

allow sharing of data. Windows 7 will be used along with Microsoft Office products.

Gurukulam is using a database software product designed especially for Martial Arts schools(Gurukulam Master) which is utilized for membership data and billing. This software has not

been fully utilized for marketing and upon review we are finding that there exists a gold mine of data that will be emphasizing in future marketing efforts.

3.6 Future Services

The business plan is to get Gurukulam up to 80% of capacity and run it as a business, not a

hobby. The goal is to establish a "benchmark" school. Once established (2-3 years) we will copythe business model format and move it to other Gurukulam in need of similar "makeovers.



Market Analysis Summary

There has been considerable outside research and marketing of "Sports" in India, however we

find that several categories of sport were seriously overlooked in most analysis. Martial Arts isone of those sports. While basic figures are provided for Martial Arts by the Indian Census, andother major research firms, most of the available data has been obtained through other sources,

such as independent studies and published articles.Our demographic research has shown opportunity exists in our marketplace and while the market

appears saturated, it became clear as we dug deeper that our field is so poorly defined, marketedand organized that we have a tremendous opportunity for growth and expansion. Information has

been an eye opener and has led us to believe that our position as a potential leader in our market,and eventually the industry, is not an impossible task.

4.1 Market Segmentation

Extrapolating data from three national sources relating to sports in general and Martial Arts

specifically, it is estimated that 4% of the Indian population have participated in some form of Martial Arts training during their lifetime.

It is estimated that to 2% of the Indian population are currently active in some form of Martial

Arts training (the variation in numbers is a result of some surveys using Tai Chi, Kickboxing andYoga as a Martial Art form, and some include school programs, where others do not).

Gurukulam is located in a city with a population of 1.3 crore. Gurukulam is located in the heart

of the City. The population broken by gender is 59 % male and 41% female. The average age

in the city is 26.

4.1.1 The "Real" Market

The "Real" market figures are based on research to determine if our noted territory and the

surrounding area are saturated. we are confident that the market is not saturated, our dojo caneasily meet our 200 student goal and there is considerable room for growth.



4.2 Target Market Segment Strategy

Our target market has been broken into three age segments, all within the city limits andsurrounding area. The strategy is based on outside research, confirmed by our own internal

survey: parents want their children to learn karate to build confidence and to learn self-defense,adults take karate for exercise and self-defense, and seniors take karate for social aspects and

exercise.

Our target market breakdown is as follows:

1. Parents of kids ages 4-14: This market, while the smallest of potential clients, offers the most potential for new members. The male/female breakdown corresponds with national survey

results. However, our key is to grow our youth share to 60% of total membership, more in-linewith national figure. This group includes those individuals who think karate is ³cool´ and enjoys

physical challenge. In addition, parents desire their children to gain self-confidence anddiscipline, karate is one method of achieving that goal.

2. Adults 30-49: This market offers the largest base of potential. Targeting this group will be tooffer an alternative to health clubs and/or fitness centers. In addition, this group "controls" our number one market, their kids.

3. Adults over 50: This is our unknown market. It is felt that our traditional karate services may be

too rigorous and may not meet their "social" and "exercise" needs. We are however approachingthis market in a different manner, which will be explained later in this plan.



4.2.1 Market Needs

Our marketing efforts will be to address the needs of these groups in the order given:

1. K ids 4-14 (as outlined by both the kids and their parents): self-confidence, fun, exercise,

discipline, self-defense and socialization.2.

Ages 30-49: exercise, self-defense, stress reduction and weight control.

3. Ages 50+: exercise, stress reduction and socialization.

4.3 Service Business Analysis

The business of running a Gurukulam is similar to that of running a health/fitness club,membership is everything. A Gurukulam is a Indian word defined as, "a place to learn where one

can practice some sort of physical endeavor." Martial Arts falls under the SIC (StandardIndustrial Code) 7999 - Amusement and Recreational Services. Under this heading we find

groupings from Astrologers to Card Rooms, from Carnival Operations to Yoga. In other wordsthe code is too broad to provide solid analysis benefit, but it will be addressed in our comparative

ratios analysis at the end of this plan.

4.3.1 Competition and Buying Patterns

The nature of the business of a Gurukulam is to offer a facility with Martial Arts training.Membership is everything and turnover (attrition) in the industry is high. Several reports place

the average turnover of a dojo at 40 to 60%. Selection of a Gurukulam by a potential member is,in-part done by the style of Martial Art (karate, judo, kung-fu kalari or kick-boxing) the member

wishes to participate. However, selection of a dojo by a new student is more basic in nature.

A recent local survey (supported by national survey results) show that dojo selection is based onthe following (most popular first):

1. Friends/family attending;

2. Location;3. Cost;

4. Facility environment;5. Class schedule (times);

6. Friendliness of instructors (personal attention);7. Class size.



4.3.2 Main Competitors

We have identified our city and its surrounding area as the boundaries for the business plan. This

covers approximately 36 square miles and 350,000 potential members. Within this boundarythere are 15 Martial Arts programs and 23 health and fitness clubs. We have narrowed the scope

of "direct" competition to four "like" martial arts centers in our immediate area and twohealth/fitness clubs.

Numerous grade and high schools and two local colleges provide physical education

classes nearby.

However they have limited Martial Arts programs and it is felt they are more of a potential partner, then competitor.

4.3.3 Competing martial arts centers and Health

Clubs

Two martial arts centers have been identified as being the most competitive with our location.All have a physical facility, all offer traditional Martial Arts training (different styles), all offer

competitive pricing and are open Monday thru Saturday (closed Sunday). In addition, eachmartial arts centers, Shihan (head instructor) is well versed in his/her field and well respected in

the community.

Three health/fitness clubs have been identified as being the most competitive with our location.They compete primarily for the single 18 to 40 market, but are moving toward offerings for the

younger and older age groups which is something we must watch carefully. All have nationaladvertising programs and have significant Yellow Page presence.



Strategy and Implementation Summary

Our overall strategy and implementation plan is based on the fact that Gurukulam has never had

an "on paper" business or marketing plan. Gurukulam will focus its efforts on a broad market, ina very competitive field. Considerable research was done to establish the fact that there is

opportunity in three areas: the youth market ages 4 to 14, the adult market ages 30 to 49, and thesenior market ages 50+.

A special note should be taken that a large potential market is not being addressed. The ages 15

to 29 market is considered to volatile and competitive (health/fitness clubs, school activities,etc.) for our services at this time. While we certainly accept membership at this age, we do not

plan to actively market this group.

5.1 Competitive Edge

Strengths:

y Martial Art existence since BC¶sy Shihan very knowledgeable (6th degree black belt) and an internationally recognized trainer.

y Shihan and Sensei have strong desire and patience to teach.y Shihan and most Sen sai speak Hindi and English.

y Competitive pricing and hours of operation.y Solid untapped database from which to market.

Weaknesses:

y Dojo facility needs remodeling.

y Student attrition.y Do not offer Tai Chi (alternative "soft" Martial Arts)

5.2 Sales Strategy

The overall strategy is to increase membership to 200 by year-end 2014, which is 80% of theGurukulam¶s capacity and an aggressive three year growth of 307%. Through marketing effortswe will make our potential customers aware of our facility. From this awareness we will increase

the number of potential members that walk in our front door.

These new potential members will be met by either the Shihan or a well-trained salesassociate/receptionist who will have all sales materials, promotions and a computer for data

entry. The sales associate will be empowered to offer our promotions, however if the potential



member is interested in joining, an instructor and/or the Shihan will be made available for immediate consultation.

5.2.1 Sales Forecast

Membership is projected to grow at a steady pace, leveling off during summer months, our

slower time of year. Membership costs are expected to decrease as we better control studentturnover.

The special classes include rent of our facilities to contract instructors who are experts in Tai Chi

or Yoga. This class time will consist of one-two hour class per week (four a month) on Saturdayand/or Sunday when the facility has been traditionally closed. Seminars are projected based on

historic demand for the Shihan's services. Belt testing is held quarterly and fees traditionallytrack membership.

Also, revenue will be generated from the rent we receive when the facility is given for rent toseminars and parties for outsiders.

5.3 Marketing Strategy

In our Marketing Strategy we realize our target is very broad, kids 4 to 14 and adults 30 to 49. To

address this market we must understand that our facility is our "showplace" and in marketingefforts we want potential members to judge our "book by its cover."

y Our first strategy will be to remodel the facility into an "exciting," "fun," "traditional" place

where our members will, "want to train, not have to train."y Secondly, an internal strategy, we want to address our attrition ratio with training of the

instructors.y Third, we will utilize "paper" media for advertising our facility to our market.

y Finally, we must address a strategy to market our newly remodeled facility for rental to othersfor classes on weekends when the facility has been traditionally closed.

5.3.1 Promotion Strategy

Based on buying pattern research, we determined "word of mouth" was by far the most

successful means of promoting our facility, followed by the "storefront" andfinally "advertising." With this in mind we have established the following promotional strategies:

Our members (students) must like who we are and what we do, in order for us to succeed.

y To assist in promotion, we will offer an incentive to current members who bring in newmembers.

We want potential members to judge our "book by its cover."



y Our storefront (external and internal) will be redesigned to sell itself. People will want to go in just to see what a facilty looks like.

y We will be holding an annual for charity "kata" tournament at the facility with a "significant" purse. Proceeds will go to a local charity, in hope of gaining news play.

y Shihan will continue to offer free karate (self-defense) seminars to local grade schools, women

and retirement communities.y Our Web page will reflect our new image.

For the first time in five years we will have a significant advertising budget.

y The Yellow Pages, the #1 source of new recruitment in media. We will purchase "competitive"

ad space.y City Weekly, the local "entertainment and news" paper shows promise and we will be

experiment placing and tracking ads.y

5.3.2 Pricing Strategy

We must offer our services at a pricing structure that will both meet our financial needs and theneeds of our members. Our current pricing structure of Rs. 10,000 annual membership is

competitive for schools that own their own facility. We will keep this fee but offer promotionaldiscounts to current members for bringing in new students and/or assisting in improvements to

the facility.

There are as many introductory promotional pricing packages as there are facilities. All the programs are designed to draw or introduce the potential member to the dojo without requiring

them to sign a long-term contract. All offer the same basic package which includes anywherefrom 1-3 months training, 1-3 private classes with gi (uniform), and prices varying from Rs 250

to Rs 5000.

5.5 Strategic Alliances

Gurukulam¶s Shihan is well known and has considerable experience in the local market. We are

going to use this experience and build on our current "loosely" defined strategic alliances.

y We will contact select establishments for an agreed brochure trade, with emphasis on a positivewell designed showcase that will benefit both parties with possible discounts made available.

y Another alliance is to work with the local Community College to attempt to make available aclass that will allow physical education credit. The goal is to establish a relationship with the

school by January 2013. We also will try to offer classes through the schools adult education program.



Financial Plan

Gurukulam¶s financial plan is simple. We want to become a profitable business for the owner

and any investors. We are moving from a part-time to full-time business and expect our financials to reflect that change. Our growth is predicated on introducing a newly remodeled

gurukulam and a marketing and promotional strategy for the first time. Our goal of 200 members by year-end 2014 is very obtainable and if this goal is met we will have a very profitable

business. Our long-term goal is to have enough cash on-hand and a solid credit history to pursueour ultimate goal of expansion.

6.1 Important AssumptionsIt was necessary to make certain broad-based assumptions in planning for the future. The

financial assumptions are listed below in the table. In addition, we have made several other important assumptions:

y The economy will grow at a steady pace, without a major recession.

y There will be no major change in the Martial Arts industry other than those discussed in trends.y The State will not have impact legislation on the unregulated Martial Arts industry.

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