EP1: How I Scaled My First Million-Dollar Business

Hi, welcome to the Simple Profit Podcast. I'm your host, Tu Ley, the founder of my studio, which is the leading membership management and building software for your business. The Simple Profit Podcast is focused on one thing and one thing only, and that is to provide you insights and strategies on how to build million dollar grossing businesses. That's it. That's the only thing we're going to do in this podcast, whether it's me or whether it's our guests, sharing information with you. That's our main goal. So if you are running or operating in or aspiring to build a membership-based businesses like Marshall R's, yoga, gymnastics, or even online membership businesses, how do you grow that into a million dollar grossing platform or business? This is the place to be, our guests have all done it, myself have done it. We've done it over six times, and we're going to show you the secrets and strategies how to do it. That's that's plain and simple. That's what we're doing in this podcast, and I'm so excited to get this kicked off with you guys. Please do us a favor, subscribe on YouTube, or your favorite podcast platform. We're on all of them. Let's just start with who is too late. Some of you know me, some of you don't. Why listen to me, and why the name Simple Profit. What does that mean? First off, I'm a CEO and entrepreneur. I've been doing this all my life. I love business. Business is my passion. I wake up every day. I'm excited. I'm super excited today for this podcast. I actually just start something new. I love starting new things. That's something that I enjoy doing. What I want to do is just share that passion with you. Maybe hope I can give you some shortcuts and don't make some mistakes that I have. My background is actually in martial arts. I used to take martial arts on a 13. I started Taekwondo as a student at 13. I started teaching. When I was 14, I just fell in love with it. So much that I started training and competing with members of the US team and coaches of the US national team. I look forward to making the Olympics and all of that. I did that from 18 to 22. At 22, I realized that, hey, you know what? Competing is cool, but it's not going to put meals on the plate. It's not going to make me money. When I realized that, teaching martial arts and running a martial art business can be pretty profitable. You get recurring membership business while doing exercise. I get to teach and do things that I love and make money on it. Let's go. You know, so I dropped out of school out of George Mason University, actually. You go Patriots. I had a full scholarship, guys. You know, being Asian and being an immigrant from Vietnam. Let's just say my parents weren't too happy. When I say, hey, I'm going to drop out of college from a computer engineering degree, 12 credits shy, 12 credits shy. I'm going to go pursue my passion, which is teach martial arts full time. Some uncomfortable conversation at the dinner table. Let's say it that way. But I was convinced that that was it. That was my calling and I just went for it. At 25, I was given the opportunity to actually purchase the martial arts studio where I worked at, which was an amazing opportunity. It was really cool because I'm 25 years old, right? I've been doing this for a long time and teaching since I was 14. You kind of think you know what you're doing, but you really don't know squat. For me, at least, I'm speaking for myself here, teaching and knowing everything about martial arts and knowing how to run a business is actually two very different things. It's like, okay, great. I got a black belt, right? I'm good. But actually, I was the Nobel in business, which is really funny. But I thought I knew everything. I thought I knew everything. So I was grateful for John Cassidy, who's my instructor and mentor. He says, you know what? You know, why don't you take this opportunity by the school and just run from it? So I did. And we grew that single location to five encouraged martial arts schools right now serving the Northern Virginia area in Fairfax and Loudon County in Virginia, which is about 30 minutes south of Washington, DC for those that you don't know where that is. And we average $900,000 in gross income per studio per unit, okay? Which equates to about $4.5 million in gross income annually. And we net 30%, which I will go over more like the net percentages and things like that you should look out for. But we net 30% annually, guys. That's a take home pay of 1.3 million. If you take me back to what I was 18 or 22, right, saying, hey, I'm going to quit school. And then teach martial arts full time and maybe be able to own my own business one day. Have you told me that one day you would make $1.3 million annually and not be in your business, by the way. It would be like a pipe tree. But it's actually not. It's actually very repeatable and very doable because we've done it now six times, okay? And then in 2015, I decided, you know what? I maybe should go back to school and completed. But this time I want to do business, right, graduate school. So I applied to Harvard Business School without a college degree, which I'll share in a whole different podcast. Is that's different. And in 2016, I graduated from that program, became an alumnus of Harvard Business School. And during that time, I really studied the martial art industry. I had time away from my business, right? Because at that point, I was no longer necessary in my business. We built systems and built things in place that allowed us to really expand and continue to expand without me being a key driver. And so freeing myself full of time allowed me to really study the martial arts business and see, hey, where can I take and encourage to the next step? And we realized that, hey, if we provided a way for us to do business quicker for customers to buy faster from us, instead of having to sit down and do contracts with everybody, you know, they can buy a Tesla right now from their phone. Why did they need to sit in front of me to buy a membership? That's 200 bucks a month, you know what I mean? So we launched a platform called my studio to help us to manage our studios, right? It wasn't meant to be in a marketplace. But friends of mine, colleagues of mine were so intrigued as I share that is, hey, you should really open this up to the marketplace. So we did. That was in 2018. We did that now my studio has over 3000 businesses worldwide. We processed close to a billion dollars in volume for all these businesses. It's an amazing, amazing journey to go from, you know, martial arts entrepreneur to now software and tech and, and, you know, looking at the impact that we can make today. So that's kind of my background in entrepreneurship and, and the thing that you want to know about me and about our business and what makes us special, right? What's our secret sauce is let's just say martial arts is my passion is what I love, but business is where my true calling is, okay? And, you know, I will tell my young son as he starts to get into like, you know, the Marvel movies and looking at superhero like Batman Superman, he says, daddy, what's your superpower? I thought about that. And, and I think my superpower is the ability to simplify business complexities into manageable task that can be delegated. Okay, so that I can build million dollar grossing businesses that delegated part is a big part of his own, but that that's what I do. I simplify business processes into manageable tasks that I can delegate to other people. That's how you grow multiple million dollar grossing businesses. Okay. So that's maybe some of the reasons why you may be intrigued to continue listening to this podcast. And being that I've done this over six times and continue to do it every day, the goal of this podcast is to share insights that I've learned on this journey. And, alongside colleagues and friends of mine, who are also multi million and some billionaires, business operators to share those insights along the way. Okay. So let's get to the meat of this particular podcast episode. Why are you here? Okay. And, and what is the main thing I want to start off with, which is this? If you're going to listen to only one podcast episode, this would be it. Okay. So, what are the three essential business practices that are common along all multi million dollar studio operators or business operators in general, right? This doesn't only pertain to martial arts yoga, gymnastics, children education, swim school. This is just business overall, right? What are the three main essential practices now I've worked with over 3000 businesses with my studio and kind of see the end and outs of every single studio. We kind of have this data pretty locked down. Okay. So the first thing I would say is data focus. So the first first essential business practice is data knowing your data. Okay. Why, why did we say or why did I start off with this and say, hey, of all the things that that I can put out, why data? Like what is data, right? It doesn't matter the size of your business, if you're Amazon or Apple or Google or your encouraged martial arts, a local business. The size doesn't make it matter data matters data matter at a large scale data matter matters at a small scale. Okay, because our gut instincts is okay. Maybe gut instincts is what got you where to where you are now, right? I know my master's degree. I know my yoga studio, you know, I know my children educational centers. This is what we got to do. And this is the decision that we make. And then your staff is like, okay, I trust you. or two, let's just go with it, right? And you're like, okay, I speak with such a good confidence and you probably do as well, that everyone just believes you. And that's fine. That's gonna take you to a certain point, but it's not duplicable, okay? Once you have data to back up your gut instincts or show that, hey, you know what, that maybe not the right decision, based on data, you now can guide your decision making to a different level, amplify and accelerate your decision making process so much better in a way that you can sell this vision to your teammates, to the co-workers that work with you, much more effectively. Rather than just saying, hey guys, just believe me, I just know it, you know, this is the way we should go, like left, right? And then, or you can say, hey guys, this is the way I recommend for us to go left, this is because A, B, C. This is what we've seen from our customers. This is what I've studied, this is what I've seen, and this is where the market tells us we should go, right? It's a more educated decision that's back with data, okay? And a large part of that is knowing the correct data, KPIs, we call this key performance indicators, okay? If you know the main key performance indicator, it should not be 30 of them, right? It should probably be three to five max, by the way, for your business. If you know your KPIs and your business, it will instantly separate you, you, the business operator, self from the pack. Like I can pull out 100 businesses operators, and I will ask them, hey, can you give me your three most important stats that shows me your successful business? Probably 95% of them, or 95 of them, won't give me a straight answer, but of the five who says, oh yeah, too, sure. This is A, this is B, this is C, these are my three data, and this is where my school sits. I know for a fact, I will invest in those five people, immediately, any smart investors will do this. Someone who is just bidding information at me, and just like, you know, I'm just making (beep) up, or someone who actually knows their data, that says like, hey, this is A, this is B, this is C, and this is the Y, we track it, and this is where I'm at, this is where I wanna go. That person is already operating a multi-million dollar business, or is well on their way on doing that, okay? And again, in podcast episode two, I really dive deep into the KPIs. Like I'm gonna share the main performance indicators or data that we track that make or break each one of our business unit, the six of them that we operate, okay? And I don't need to ask them anything, I'll just say, hey, give me your KPIs for this month. All six of them will send it to me, and I will know, hey, if that business is doing well or it's not, where is it trending, right? So if the only data you're measuring is how much money you have in your bank account, which is an important one, I will say, or at the end of the year, you have a profit and a lost statement or a tax return from your accountant. If that's the only data that you're looking at, the episode two, the podcast will really help you, okay? Because I will share what we do, and I think it's gonna be universal across all membership-based businesses, by the way. And another cool thing too, fun thing too is, once you know your KPIs that you go hang out with your friends who operate the same business, you can actually call BS on a lot of that, right? You say, like, hey, how's your business? Oh, I'm doing great, you know? I got 300 students, you're like, oh, that's cool, okay? That's really cool. I only have 100 students, they're like, ah, you suck. I'm like, okay, well, what's your net profit? I don't know. Okay, you have 300 students, but your net profit could be negative. You can have 1000 students, you have net profit is negative. Does that make your business better than my business who I have 100 students, but I'm profiting $100,000 a month? You see what I mean? Data matters, I don't care how big your school is, I don't care how many members you have. I wanna know one thing and one thing only. What is your net profit last month, last year, last quarter projected this year? You see what I mean? There's some metrics that just matter and you can just call BS on your friend all day. You know, oh, cool, you get a 10,000 square foot studio. That's awesome. How much is your rent? Are you effectively using that studio? You have 10,000 square foot studio, that's great, but you have 50 students, you probably only need a 1000 square foot of that, right? So knowing your KPIs and all of these little metrics is beneficial because then you can actually help your friends out too. Or just call BS out and some of them and they're kinda trying to lie and pad their stats, right? And like I said, since we have 3000, membership businesses on our platform at my studio, we kinda have a good sense of an aggregated sense of data that are coming in as a whole, right? Not just five studios or 10,000, you kinda get like the whole data of where how everybody's doing. And those are insights that we're gonna be sharing on the podcast as well. So again, episode two, I recommend you tuning in on that. If you really focus on how do I get the data that I need to, like what is it that I should look for for my membership-based business? The second essential thing that I've seen for most successful million dollar businesses, actually for all of them, not even most, all of them, all of them, anyone who runs a successful big business always has this. They are system-driven, okay? All right, okay, that can be a trigger word, I understand. Trigger, like system, it sounds complicated, it sounds sophisticated, and it seems like a lot of work, right? Those are for like franchisees, like the McDonald's of the world, they have systems together. That is not true. There's two things that you can be, okay? Some people call themselves business owners. I actually think of it two ways. Most of people who say they're business owners, I think that the business owns them rather than opposite way around, right? Okay, let's talk about emergency funds. You should have an X amount of money in your bank account for when emergencies happen, right? Maybe that's three months of operating income, which is pay-roll rent, typically, you know, for our business membership base, you're renting a space, and you have payroll for yourself, or for your staff. But have you ever looked at your emergency time? Like how long can you be away from your business before your business shut down? Okay? And what that number is, and again, I'm gonna go over that in a different podcast because we are running out of time today, is how do I increase that value, right? And what does that mean? Where I can really say I own my business. You can only truly say I own a business if you can let's say buy a stock in Apple, or like Google, or you buy stock, and you don't do anything, you just invest your money in, and that business makes you money. That's when you truly own your business, okay? All right? So systems and building systems allowed you to be more of a business owner rather than the business owning you, which is your time, okay? So how do we do it? So systems, what does system driven means? To start, let me just simplify the definition of a system for me, okay? A system is a list of simple tasks that can be replicated by an ordinary human being, okay? These are tasks that you've remedial tasks that maybe I do every day. For example, going to the mailbox, opening mail, throwing away mails that doesn't matter and keeping the mail that has to be done. That is a task, I do that, okay? One day I said, "Why am I doing this task?" I wrote that down, I wrote down all of the instructions that I want to be done, and I say, "Great." All right, I put that task down, and I say, "Who's gonna do this for me if I'm not gonna do it?" Right? If I'm gonna do it, fine. I'm gonna follow the simple task, right? The result is the result of this task of going to the mailbox, opening of the mail, is I want only the important things that I need to look at in front of me, nothing else, right? That is my desire-specific results. If you put down a task, put down what needs to be done and how to do it, and here's the desire result, guess what? You just created a system, okay? You have documented a system that now can translate to somebody else to be able to do that. It's as simple as that, right? And once you put one task, you can start another one, right? Let's say you run a martial art studio, let's say. Task number one, I open up my door to my dojo, or my dojo, or my studio. I go in, I check messages, phone messages, right? But that's a task. Well, what do you do after you get a message? Create a task or follow-up sheet and execute, whatever that is. What is the desire result? The desire result from that particular task would be, there are no messages that are not listened to from the machine, right? And there are tasks that are created for follow-up and action for each one of those messages and execute them, right? So maybe that's your desire result. So you build that list and then you have a system. And the next thing is you have the task, when is it needs to be done? Is it a daily, is it a weekly, is it a monthly? OK, what are the steps of the task? And next you put an initial next to it. Who is doing that? Some of you guys are like, oh, man, that's me. Or maybe it's my wife, or maybe that's my secretary, or maybe that's my instructor. I would go a little deeper into that. Whose role is that? Not the name of a person, but the actual role. For example, is it the operation manager? Is it the front desk manager? Is it the instructor, right? So that's how you kind of start to create a system. And you just continue to add to that list as you go, right? Just continue to add to that list as you go. And then the second thing is delegation. Because once I said, like I said, once you're able to delegate a task to somebody else, other than yourself to do, and they achieve the same result that you would have gotten if you did that yourself, that's what I call the money principle. Okay. Once you've achieved the money principle where you are paying somebody else to do a task that you would have done and you may be paying them less than what you've gotten returned and now you're in the money, right? Because let's say this task A makes you a hundred dollars if you do it. And instead of you doing it, you delegate that to somebody else, you hire somebody else to do that task and they achieve the same results. They still make a hundred bucks for you, but you pay them seventy five dollars. There you go. You just made twenty five dollars while you slept. That is what I call the money principle. And that's actually one more step in delegation is actually automation, right? Artificial intelligence is here, but automation is here and without going too deep into that, if there's no humans that are needed to do that task, what does that do to you? What does that do to your business? So imagine making a hundred dollars without spending seventy five dollars now. Now you kind of really in the scaling stage, right? Where, and this is the reason why we started my studio. We needed a system. I wanted a system when we studied Harvard Business School to automatically do follow up and sell membership to potential clients, right? And allow them the clients to buy whenever, wherever instead of having to sit down because I did the math, we used to sit down with every single member to do a membership consultation with them and it took about 30 minutes at least. So the busiest time for our studios was between the hours of four PM and six 30 PM four o'clock, five o'clock, six o'clock. There's certain spots in there that I can only do sales to typically is five or six sales per day max because it was time-based, right? And if someone wants to come in and sign up, if I'm already busy because I'm already meeting somebody else, I kind of lost that sale. So we wanted to say, I don't want to lose any sale. When people are ready to buy, I want them to be able to buy and I want them to be able to buy right from their phone. That was kind of the goal. So we built my studio for that and it was pretty life changing in 2018. When I woke up one day, I looked at my email, I shouldn't do that by the way. I don't recommend you to do that. The first thing is wake up and check your email. That's a bad habit that I have. I'm trying to break away from. But I opened up my email and I saw that with four new registrations. I was like, what the heck? And it came at like, you know, eight PM, eight thirty nine nine thirty ten. And I was like, Oh, wow. We used to do everything manually and this thing actually is going to work. So instead of being stuck from selling, you know, from four to six thirty, I can now sell 24 seven. It was pretty eye opening. I'll say that, you know, and I was so excited to go to work that day because I realized that wow. Okay. Now we can start building this thing out and so we can sell 24 seven. So I'm going to be sharing more insights on how to properly delegate, how to what things that we do to put systems in place to remove yourself from your business so that it becomes a money making machine for you. Okay. Without even you needing to be there because if I was still at my martial arts school, I couldn't have built my studio, right? The third essential thing that I've seen in every business that has is making a million dollars or more than that. A lot of time these businesses are making a lot more than just a million dollar. Okay. It's simplicity. Simple profit is the name of this, this, this podcast and simplification is the main ingredient that I found for membership businesses to gross over a million dollar per year. Okay. So Bruce Lee, I think said it best. He said it best. I love Bruce Lee. Obviously, I'm in martial art. So of course, I'm a fan of Bruce Lee. He says that I fear not the man who has practiced 10,000 kick once, but fear the man. I fear the man who practiced one kick 10,000 times. So let's just kind of take that in a second here. Okay. So for me, when I read that quote, and when I studied it, it started with our product, how do we simplify our product? Okay. So the third essential practice is simplification and it starts with your product. For our product, it was martial arts instruction delivery. We deliver martial art instructions to people, kids, adults, etc. So martial arts, as you know, can be complicated. You got like in Taekwondo, I'll just speak for Taekwondo. I am not even getting into Jiu Jitsu and all of that crap. I got because it gets complicated. There are nine black belts in the martial art Taekwondo. Okay. Nine levels of black belts. And when you start as a no belt, okay, all the way to black belt, there can be eight or 16 more belts in between. Each one of those belt has a different what we call Pumse or form, a pattern of stances, strikes, blocks, kicks that makes up a pattern of techniques, right? Kind of like a dance, right? But a martial arts one. And then there's all sorts of, there's like five ways to punch. Like maybe even more than that. You got your straight punch, you got your hook, you got your uppercut, right? You got your double punch, you got your triple punch, you got your jabs, you got your power. I mean, you got your slide and hook, there's so many ways you can just do a single punch. And when it comes to kicks, there's so many kicks, there's a front snap kick, there's a roundhouse kick, there's a side kick, there's a back kick, there's a back hook kick, and then you add jumps to it. Now you got a jump side kick, jump back kick, flying back kick, it gets complicated. Imagine you as a brand new martial artist. Maybe you are, you don't practice martial arts, but imagine you as a brand new person coming in, and this is the curriculum you have to learn before you get your black belt. Okay? And your goal, by the way, your goal as a membership-based business is to keep your members as long as you can. But if they want, I say, how do I get a black belt? And you kind of lay out this really complicated thing for me to learn. And by the way, I'm nine years old because most of our students are kids, like, okay, that sounds hard, and that's why most students quit between months, zero, and three. We have this data. Most people who quit your membership-based business do so within months, zero to three. I don't care who you are. I don't care how much money you make. Over 3000 businesses that we do with, we have all the data, and we track specifically when people quit, right? Because it gives you data in my studio, it allows you to say, hey, if most of my students are quitting between months, zero, and months six, I got to do something about this, right? So we realize we have to simplify our product, and everyone who I've worked with has a very simple curriculum or product delivery system or product. Imagine you as a nine-year-old kid, how can I teach you things that are easy to learn, fun, safe, because that's what all people want. Parents especially, I don't want to put my kid in something that's not safe, right? If I'm a kid and it's fun, it's easy to learn, and for parents it's safe to do, I'm going to keep coming back. And I'm seeing progress because I'm learning simple things, right? So when we simplify our curriculum to tailor to our market, knowing that most of them are going to quit within the first year or so, right? And have to get new students. Now you can have students that stay with you forever. I get that. Some of you guys are like, oh, my students don't quit, you know, only in 12 months, they stay with me for years. Maybe you're that live. The average is less than a year, by the way, across 3000 studios. So we simplify our curriculum, and what it did for us at least is two things. It made learning for our members more fun and allowed them to actually be better, better martial artists because it no longer became memorizing all of these techniques, right? It's more of execution and good execution of some of the techniques. Okay. So, and then second, it allowed our instructor to teach more effectively, and learn how to teach faster. Episode four of our podcast is where I go over more in detail about how to start the simplification of your product, which in our case is the curriculum that we taught. So, so very beneficial for us to do that, right? And once we did that, we're able to scale and move through our second location much faster. Okay. The second part of the simplification is the sales process. Okay. In a typical traditional membership-based business, you have two main people or two staff members. One would be the person who delivers the product or the service in this case. Let's just say who teaches on the mat instructors. And the other is who sells the product. Maybe the program director, the program consultant, which works the front office, right? They do that. The problem with that model is this. We are now dependent upon two people to run the business, which adds more risk. And if you are serving both of those roles, you are the risk to your business. Okay. And you can't do both those roles effectively. Let's be real. Okay. You can't teach and sell the same time. And however, when push comes to shove, you can't sell a product that doesn't exist. Right. So, if you have to eliminate one role in those two roles, the main person is your instructor, right? The one who delivers the product. And then if the kid or the student, their no student really loves your class, they're not going to be like, I can't come because there's no one in the front desk that show me how to buy your program. They're going to be like, Hey, master two. How do I sign up? Where do I pay? Right? That's kind of what they're going to ask you. So, what I found is that the more simple, the sales process, is for a business. So I'm going to say that again, the more simple the process is for your customers to buy from you, the bigger and more successful that business is. Okay. So in all my years of doing this, and especially now with all the data I have, the simpler the sales process is, the bigger and more successful businesses. So simplifying your sales process will not only get you more customers, it will actually decrease your payroll. Because now you're paying one person, not two, right? And because it's so simple to buy, you're doing to sit down and explain to them, whole membership A has option A, B and C, membership B has option one, two, three, membership D, E, F, G, X, Y, Z, dude. If you someone presents me with that, when I try to buy a Tesla, I will be so overwhelmed, I'll be like, you know what? I got taught to my wife. Have you guys heard that before? Oh, I got taught to my husband. I taught my wife. The reason why it's so complicated, I now have to go home, create an Excel spreadsheet and list out all the pros and cons of every single freaking membership option you have. Why would you do that? Right? You could potentially lose a sale. Okay. So because it confuses the heck out of the customers, because now they have to take time and think about it. Instead of that, just make it simple, make it really simple, because now you won't need that front person to sit down and explain all of this. It is just self-explanatory. Okay. I go to McDonald's. I know what I'm buying. I have a combo number one, common number two, common number three or four. Maybe that's not a good example, because that's not healthy for us. But you guys know what I'm talking about. When I'm buying a Tesla, I have pretty much three models, a model S, a model three, a model X and a model Y. Do I want a compact car? Do I want a crossover SUV or do I want the full Falcon winged doors? Right? And then I choose a color and I choose like, am I just okay with normal speed or do I want ludicrous speed, which accelerates really fast. Right? So that simple process and then you're buying it. When you go into a Tesla dealership, you actually don't sit down and they actually ask you open up your phone, you download their app and you buy the car right there. And then it's pretty simple. Right? And you kind of see how that company's going. If Tesla can make selling their car that easy, right? You can simplify your membership options. Okay. With my studio, we build the platform, the software for you to put all the information that you need in there, what we did. So that customers can sell serve. They can buy via an app that's personalized to your business like we did it. They can browse the product and simply just buy signed agreement, all of that recurring membership, all of that done easy setup. So then it's easy to go. Okay. And when we did that, it encouraged our sales rocket it overnight. We went from two location to five in two years and now it's added on the six. In episode five of our podcast, I will go over this in more detail and lay out our exact pricing structure for you. Okay. What are three? We only have three options. What those three options are? What are your payment options? That's it. Just lay it out more simple. And I will also tell you why we laid it out in the way we did with the data that we have. Okay. So that's episode five of our podcasts. I hope that you've enjoyed this first episode of the simple profit podcast. Please help us by subscribing on YouTube or your favorite podcast platform. Also, please help me with two things. Check out my studio.io as it will 100% elevate and amplify your business. And two, if you are already using my studio, I appreciate you. I thank you. And please refer a friend to my studio today. If you haven't done so already or if you've done so, please refer another friend. Thank you. And I look forward to seeing you on the next episode.