In Part 1 of this series of articles we looked at the systemic motivations in the civilian firearms training market. In this article, we’re going to look at some of the business and financial factors that help define training structures in the civilian marketplace. Then, in the next article, we’ll examine some different approaches to delivering training to civilians and discuss some of the strengths and weaknesses of each approach.
Before diving into the subject matter though, we want to clarify that, from our perspective at least, there’s nothing inherently “wrong” with any of the market motivators that we talked about in the first article (Regulatory Mandate, Experience, Entertainment, Education—in order).
On a personal level, these aren’t all market demands we are particularly interested in servicing (ie. we personally aren’t entertainers) but that doesn’t mean that there’s something necessarily “wrong” with providing an entertainment or experience driven product to the market.
We would caution however that sometimes these types of programs are delivered in such a way that they can prove detrimental to the students’ performance potential and possibly even personal safety as well. When this happens, it can be (in our judgment at least) “wrong,” especially if this potential harm isn’t disclosed to the customers beforehand. More to follow on this thought in Part 4 of this series.
Back to the topic at hand…
Since we all have to live in the real world, we can’t just look at training structures (especially for civilians) through the idealistic prism of neuroscience, behavioral psychology, tactics, and training results. It would be nice; however, it’s not realistic.
The greatest training system in the world is useless without students who are willing to sign up for it and go through it. And, in the practical world, they need to also be willing and able to pay for it. This means that, as instructors, we need to consider things through the prism of economics and business as well.
While this isn’t intended to be a business article per se, we are going to define and discuss a couple of basic terms here for your consideration. After all, the civilian market is fundamentally a free marketplace and market forces are critical in defining it. For most readers, this will be stuff you already know but, for those who may not, please bear with us.
The first term is scalability. What we’re talking about here is basically the flexibility to expand your services in order to reach and service a larger market and thereby generate more revenue. If you’re trying to run training full-time and live off it – this is probably important to you.
For example, let’s say you have a small range that can allow two shooters to train on it at a time. This is great for personal training, private instruction, or personal mentoring; however, from a revenue perspective, you’re limited to the income that can be generated from two students during any given time period. (Ignore varying class types – we’re just defining terms.)
In this example, if you can charge $200 for a day of training, you can only bring in up to a maximum of $400 of revenue in a day of training. It doesn’t matter how great your training is, or how awesome the results, or if you have other instructors who can deliver the same results concurrently during the same time period, you still can’t bring in any more money in a day.
On the other hand, if you have a range that can support up to 16 students at one time, your scalability changes, as does your daily revenue potential. You can still train one or two people at a time; however, you can also put 16 people on the line and bring in up to $3,200 in a single day at the same price—a 700% increase in revenue. If your range can support 50 students at one time, now you can bring in up to $10,000 in a single day, and so on.
The more scalable that your training is, the better time investment that the training tends to be—at least economically. (Learning value for the customer may be a different matter.)
The second term we want to define is overhead. Scalability is great, but if that were the only concern, everybody would simply build—or rent—a massive range and make boatloads of money. Unfortunately, ranges are expensive.
In the context of this discussion, overhead can be thought of as the fixed costs associated with the event, business, or project. For our purposes here, we’ll ignore the types of costs that you can scale with the incoming revenue.
For example, let’s say that you buy two bottles of water per student for a class. If you have 10 paying students in a class, you have a reasonable level of certainty that you will receive payment from 10 people on (or before) the day of the course. Therefore you go and buy enough water for 10 people the day before; there’s no chance that you end up paying for enough water for 50 students. The scalable revenue comes in before the equally scalable expenses go out.
Overhead, as we’re using it in this discussion at least, doesn’t work that way. If you own a range, you have to pay insurance, utilities, taxes, mortgage payments, etc. If you have full time staff, you have to pay them. It doesn’t matter what happens. These costs are, more-or-less, fixed—regardless of whether you have students or not. Whether you have zero students or one thousand students, you still pay those costs.
Likewise, if you rent a range, the costs for a facility or portion thereof are usually fixed. If it costs $500 per day to rent a bay, you commit to paying $500 for that bay. It’s not relevant to your bottom line whether you have one paying customer or sixteen paying customers actually show up.
There are two additional business concepts that we want to quickly define. They are return on investment (often shortened to ROI) and recurring revenue.
Return on investment is self-explanatory as a concept. You want get something back for what you put in. It’s easy to think of this just in terms of money (if you spend $100 to set up a class, you want to get more than $100 back in fees). Money, however, isn’t everything.
A great deal of investment in the training industry comes in the form of time and effort. These go into building and maintaining personal skills, developing lesson plans, arranging and setting up facilities, cleaning up, meeting people, establishing a reputation, marketing, traveling to and from training sites, writing, reading – and the list goes on.
When you put in this kind of time, effort and, often finances as well, you normally expect to get something from it. This doesn’t have even have to be money necessarily (for those part-timers who just love to do it), but there normally must be some sort of perceived return before an instructor will put in the types of resources necessary to actually deliver a functional training program.
Recurring revenue is another simple concept that is nevertheless critically important when it comes to developing sustainable training models in the private sector. Like we mentioned when talking about ROI, a great deal of work (if not financial investment as well) goes into finding students and establishing a reputation in this industry.
Especially when financial compensation is part of the instructor’s expected ROI, the sustainability of his or her efforts are severely limited if they only have one opportunity to generate revenue each time they “reach” a customer.
To generate revenue you need to establish a reputation, find a customer, communicate with a customer, convince the customer that your material is worth paying for, then take care of the scheduling, logistics, and financial exchange. After going through all that, a “one and done” model makes things really difficult, especially if you’re trying to make a living doing it.
On the other hand, if you can find a customer and then continue to generate consistent and sustaining revenue from that customer – without the need to re-establish a reputation, find the customer, communicate, and re-convince the customer that your product is worth their money – the business model starts making a lot more sense.
OK, enough with the terminology. If you’ve done this for a living (or owned a small business), you probably know all of this already. If you haven’t worked full-time (or seriously worked as a trainer part-time) in the civilian side of the industry, hopefully you’re getting the picture.
Hopefully you’ve also noticed something else.
There’s usually a directly proportional link between overhead and scalability.
If you have a great big range with a bunch of staff instructors, you have a lot of scalability in terms of how much training you can run and how much revenue you can generate. Unfortunately, you also have a lot of overhead—which can become a real financial liability. More than one training business and range facility has cratered financially.
This is greatly oversimplifying things, but basically the name of the game (on the business side) is to decrease overhead while, at the same time, increasing scalability and scaling products to generate recurring revenue from the same customers.
If you can find a way to train fifty people using the same resources that you currently use to train five (to include time, after all—time is money), then you can not only theoretically make more money delivering your training, you can also reduce your prices at the same time. This, of course, makes your training a bit more attractive than your competition—therefore you will be likely to get more students, or at least have a competitive advantage.
If you can get most of these 50 students to keep paying you – without having to put in a ton of effort to “sell” to them again – now you’re really in business. If you want to make money, this is the name of the game.
The essence of the free market is that competition in the supply side and consumer discretion and choice on the demand side balance each other to control products, prices, and quality. In a well-functioning system, the consumers demand excellent goods and services. This keeps the quality of the products high.
In turn, the suppliers compete with one another to deliver the best quality product at the lowest price because lower prices attract customers to you instead of the competition—as long as the quality meets market demands. This keeps prices in check.
Unfortunately, for this system to work effectively, the consumers must be fairly well-educated about what a quality product is. They must also care about the quality—enough to pay for it.
Often though, they don’t. At least not the way “we” (professional level instructors for armed citizens) would prefer.
Don’t be too judgmental. You do the same thing; we all do.
Here’s an example. Would you pay $10 for a pen? How about $100? $1,000?
Probably not right? We sure wouldn’t; not when we can buy a pack of 20 for a couple of bucks and just throw them away and replace them if they stop working or get lost.
Buying a more expensive pen wouldn’t make sense—unless there was another reason to do it.
If you needed to write underwater for a functional reason—you might spend $10-$100 dollars for a special pen that would do it. If you really wanted to get a status boost in certain circles (think esteem – sound familiar from the first article?) maybe you would even shell out $1,000 or more for a pen.
But, if you just go pen shopping as a basic customer who “just wants to be able to write stuff down if I need to” – you’re probably going to get something much closer to the bare bones, bulk model that costs only a few cents each.
The market and product may be different in this example – but it’s the same concept in action.
Now, how does all of this apply to the structure of the civilian market?
For an example, let’s go back to the customer.
Our little model from the last article tells us that a significant number of customers, perhaps even most customers, are in the training market for one simple reason: The government told them they had to do it in order to get a permit.
These customers are unlikely to have enough education about the subject matter to really tell the difference from one training program to another. Besides, all of the courses (at least related to carry permits) really are pretty much the same – at least on paper – especially if the curriculum is defined by the State. If this customer has any concerns aside from cost – they are usually more about comfort and safety during the course itself rather than training or learning value.
It’s not that this student isn’t looking for quality per se. They are just measuring quality based on their motivation for the training – safely and comfortably achieving the standard necessary to apply for the permit.
No legitimate instructor considers these programs quality “training” in firearms use – even their own program. Yet, if firearms skill development and related instruction aren’t the primary measures of quality used by the customer, then these factors aren’t really too relevant in that market space.
If a customer is so uneducated in the subject matter that they are seeking out a program that will provide effective “one stop shop” defensive handgun training over the course of a single day, then they are likely to pick an instructor who actually claims to provide this service. Unfortunately, this means the student will have chosen to learn from either a charlatan or a fool, likely both.
Please note that we differentiate here from an instructor who teaches a complete series of defensive skills in a one-day class and an instructor who claims that the one-day class will effectively prepare the students to use a firearm in self-defense. These are not the same thing.
The point is that the systemic level of quality is controlled more by the buyer than it is by the seller. It doesn’t matter what you offer or how good it is if people won’t buy it.
Also, the seller who provides what the customers DO actually want is likely to define and control both the expected price and the accepted “standard” of quality at the systemic level.
In our example either a low cost, comfortable course which provides easy access to a training certificate (facilitating a permit), or a “complete” one-day defensive training package are the two services that are likely to meet customer expectations of “quality.” The fact that both options are terrible in terms of learning? This isn’t relevant to most of the customers—at least not at the entry level.
Unfortunately – and all instructors reading this can see it play out daily in their profession – this means that a significant amount of the business goes either to folks running “cattle call” bulk courses at relatively low prices or fools claiming to be able to accomplish the impossible – often bolstered by little more than boisterous, insecurity-driven-swagger and frequent loud noises.
Such is the state of much of the civilian industry. However – it is encouraging to both see how far we have come in the past few decades and to look forward at the exciting possibilities for future improvement.
The truth is that, while more guns than ever may be in circulation, it is only the past few years (with the help of some hard-fought legislative and legal achievements) that average citizens in a lot of places have started becoming more comfortable with the concept of developing a functional skillset with firearms. It’s an exciting time to be in the industry.
We don’t talk politics in this forum; however, the recent election looks likely to cement both the personal and strategic security value of the Second Amendment for at least the immediate future. From a training perspective, this is great news.
As instructors, we have an opportunity to capitalize on this environment and the momentum of an increasing, main-stream interest in achieving higher levels of skill.
If we’re smart, we can use this to not only educate people in what high skill levels look like – but also educate them about how to get there safely, effectively, and efficiently. In short, we can educate them about what quality in training programs actually looks like.
Hopefully, the scientific research and training design and delivery concepts documented in Building Shooters and Mentoring Shooters, along with the continued efforts of not only ourselves, but others in the industry can help with this.
The closer we can get to teaching people in the same way that their brains learn, the more effective and more efficient our programs are going to be. And – the quicker and easier it will be for students to achieve a functional skill level, which (hopefully) is at least part of their objective.
It’s better for them. It’s better for us. It’s better for the industry. And – it’s better for society. A well-trained, well-armed society of moral people will be both safe and free. In fact, it seems unlikely that any force, be it internal or external, could make it otherwise.
So, with that rather long-winded foray into the business aspects that influence the structure of civilian training complete, we’re ready for the next article. In it we’ll look at the varying structures present in the civilian market and discuss their advantages and disadvantages in terms of not only business and training, but also of learning.