Matt Arroyo has credentials on the mat and off it. He's a Brazilian jiu-jitsu black belt who competed on The Ultimate Fighter, fought in the UFC, won the ADCC trials and competed at ADCC 2015 in Brazil. He opened his martial arts academy in November 2007. Today it has more than 500 students, two mat rooms and over 200 leads a month.
It almost didn't survive. Early on, Matt taught two morning classes, four private lessons and two evening classes every weekday, and he burned out so badly that he thought about closing. What saved the school was business education: seminars, books and coaching groups starting around 2010. Here are the systems he built from that, and how they turned a draining job into a business that runs without him on the days he doesn't teach.
Buy Back Your Time, Starting With the Phone
Matt recommends Dan Martell's Buy Back Your Time. The idea: look at everything you do each day and hand off anything someone else could do for $15 to $25 an hour. Keep only what truly needs you. For Matt, that's teaching, his personal brand and leadership. Perfectionists have to accept that a trained employee may do a task at 80% of the owner's standard. A written playbook means that when someone leaves, the next person can step right in.
He delegates in this order:
- Phones and sales. Get a dedicated gym phone. One person answers it, sets the appointment, builds rapport and signs the new student up after their trial.
- Classes. Hand off some teaching early, before students expect the owner at every class. In his words: "Don't get them to fall in love with you. Have them fall in love with your program."
- Cleaning and everything else.
Matt has three front-desk program directors on rotating shifts. He cites Dan Kennedy's line that "the worst number in business is one," so a sick day or vacation never leaves the desk empty. Nearly all of his roughly 19 staff were hired from inside the gym. Most are part-time, and the front-desk staff all train at blue belt or above. One shift runs from 10 a.m. to 4 p.m. and the next from 4 p.m. to 8:30 p.m. Each comes with a checklist that ends up on Matt's desk, plus a 15-minute handoff between shifts. The team meets every Monday to review leads and upgrades.
He's candid that if he were starting over, he'd hire a few full-time salaried instructors with bonuses instead of so many part-timers. That's the model he has seen work in kids-focused karate and taekwondo schools.
The Five Profit Centers
Matt measures the business by five profit centers:
- New students: answering every call, text, email and social message, and setting appointments.
- Upgrades: moving students into the next, more expensive program.
- Renewals and retention: supported by events like UFC pay-per-view nights at a partner bar, a parents' night out ten months a year, quarterly barbecues and in-house tournaments.
- Special events: seminars, camps and the like.
- Merchandise: often bundled into enrollment offers.
He counts private lessons as a sixth. The benchmark he learned in his current coaching group, the Martial Arts Industry Association (MAIA), is that only about 50% of revenue should come from monthly autopay tuition. The rest should come from down payments, events and merchandise. Most owners he asks say 80% to 90% of their revenue is autopay.
He also tracks student value: monthly revenue divided by active students. A school doing $100,000 a month with 500 students has a student value of $200. He considers $200 to $250 excellent; his own sits in the $220s to $230s. And he keeps it in perspective: "Profit feeds the family; gross revenue feeds the ego."
A Down Payment on Every Option
Matt's biggest single change was a pricing structure from MAIA. He says it lifted revenue by about 15% in the first month. Before, only one of his options had a down payment. Now all four do:
- ✓Option A: paid in full for 12 months, plus a free high-quality gi (or rash guard and shorts for no-gi schools).
- ✓Option B: $399 down with the lowest monthly rate.
- ✓Option C: $299 down with a higher monthly rate.
- ✓Option D: $199 down with the highest monthly rate.
The monthly prices change over time, but every student puts money down. Option C is mostly a decoy: next to it, Option B looks like the better deal, and when schools in his group removed C, more people picked the cheapest option. He gets roughly five paid-in-full sign-ups a month. His rule of thumb is that about 20% of new students should choose paid in full; if more do, the price is too low.
All billing runs on the 25th of the month. That makes cash flow predictable and leaves a week to sort out failed payments before the 1st. It also gives a new student who joins early in the month a few weeks before their first monthly charge. Because every renewal also includes a down payment, the benefit grows each year as renewals stack on top of new sign-ups.
Host Brian "Barn Cat" Debes adopted an early version of Matt's system years ago. At his own gym, down payments now bring in about 80% as much as monthly tuition.
Upgrades Built Into the Journey
Upgrades are explained at enrollment, so nobody is surprised. Jiu-jitsu students become eligible at two stripes, about four months in. Kickboxing students become eligible after passing a test at the end of a 10-lesson curriculum. The program tiers are Basic (two classes a week), Elite (three a week) and Ultimate (unlimited, 36 months), with a lifetime Legacy option above that.
When a student upgrades, the unused part of their original down payment is prorated and credited. The new agreement then starts with its own down payment, about $50 more at each option level. Students hear about the program's benefits before they ever see the prices.
Key Takeaways
- ✓Delegate phones and sales first, then classes; keep only the work that truly needs you.
- ✓Staff critical roles with at least two or three trained people, ideally hired from your own students.
- ✓Aim for no more than about half of revenue from autopay tuition.
- ✓Put a down payment on every pricing option, and use a decoy option to steer choices.
- ✓Explain upgrades at enrollment and tie them to clear milestones like stripes or a skills test.
- ✓Track student value and profit, not just gross revenue.
Listen to the Full Episode
Hear Matt Arroyo explain these systems in his own words on Spotify or YouTube. Red Belt Software was built with this kind of school in mind, with split down payments, revenue breakdown reporting and tools that help gym owners improve retention and grow.