EDITORIAL What if There Were a Recession, But You Chose Not to Participate? by Master Toby Milroy First, are we ‘in’ a recession or not? It’s somewhat nuanced, and I don’t profess to be an economist, but the ‘non technical’ definition of recession for about the last 50ish years has been 2 consecutive quarters of negative GDP. In the first quarter US GDP contracted by 1.6%, and in the second quarter by .9%. Since the total US GDP is roughly $<strong>22</strong>.8 trillion, that in real dollars, in the first quarter we shrunk by $364 billion, and in the second quarter by $205 billion. Now, “technically” there are other considerations and factors, but in general terms, we’re ‘in’ a recession already. We’ve seen recessions and disruptions before in our industry, and we’ve learned over time how to respond. We’ve learned what works ‘better’ in recessionary times, and what works ‘worse’. We’ve seen some models do even better in tough times than in ‘boom’ times. We’ll either learn the lessons of the past or be doomed to repeat them. Second, how do we build our business to be more recession ‘resistant’? In general terms, economic downturns tend to affect the market unevenly. The more financially stable, higher skilled sector of the economy tend not to feel much disruption, while the less financially secure, less skilled, tend to feel the pinch more than others. This might help us consider what segment of the market you’d choose to serve in your community. Do you choose to build your livelihood and business, relying on clients that are more at risk of economic disruption, or less at risk? I’m not suggesting that we shouldn’t have systems in place to help serve people on the lower end of the income scale, in fact quite the opposite. I think it’s important to be financially stable enough that you CAN offer scholarship programs and have the flexibility to assist families in need, but it’s virtually impossible to do this if your business is barely ‘getting by’. In my view, with abundance you can make a far bigger impact on your community than you can with a lack of abundance. So, we try to choose a market segment that is best able to fund the business, in good times and tough times, what else can we do to make our business more recession resistant? Schools that build a business model more like a ‘health club’, with month-to-month agreements, lower tuition, less ‘program’ structure, and less relationship with their students tend to get hit far harder by difficult economic conditions. When times get tough, these schools see their attrition rate skyrocket, and students simply ‘disappear’ without a trace. Schools that provide ‘program’ based memberships, focus on outcomes not just ‘lessons’, have higher tuition, and deeper relationships tend to feel economic disruptions less, and in some cases FAR less than the previous model. We saw this play out during the COVID crisis in spades. It’s your choice to build the business you want. If you need help building a business that’s more resistant, and will allow you to virtually ignore most economic disruptions, give my team a call at 1-800-275-1600 and we can help! MASTER TOBY MILROY is a 5th degree black belt. Known as “The Master Systemizer,” Master Toby Milroy has positively influenced more martial arts schools than anyone in our industry. He has built a successful multi-school organization, lead the national trade association for the martial arts industry, and coached some of the most successful martial arts school operators in the world. 6 MARTIAL ARTS WORLD NEWS VOLUME <strong>22</strong> | SPECIAL EDITION Image by Makhbubakhon Ismatova
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