A round-up of additional revenue streams open to golf clubs

Jenny Yu
By Jenny Yu October 4, 2018 16:55

Today, most golf clubs need more than just the offer of 18-hole golf in order to break even or make a profit. Here, Jon Dawson, a partner at top 20 accountancy and business advisory firm, summarises the most successful measures clubs have introduced to boost their cashflows.

Golf clubs are complex businesses, with physical assets, multiple revenue streams, different costs and a diverse customer base to manage. Many small (and often large!) golf clubs don’t accurately measure profitability across their different business streams, which makes running a successful club difficult.

Like any business, to increase profit, your club needs to maximise the use of its assets – your golf facilities and clubhouse. First, understand when and how your club generates cash and profit, varying between seasons. Track income and expenses in each profit centre and allocate costs across the club, apportioning shared costs where necessary.

Ask your customers and potential customers what they want. A simple survey, maybe with a free drink or meal to showcase your facilities, works well. It will allow you to define your proposition, work out a business plan and prioritise your ideas.

Harnessing hospitality

A key source of income for any club is from hospitality. This not only covers food and beverage sales but also event income from meeting facilities and venue hire. This will depend on the facilities available, which will vary from club to club.

Bar and restaurant – this can be seasonal and naturally revolves around golfers. Most clubs have great catering facilities that should be used in off-peak times too. The setting for clubs, with rolling green spaces and car parking, is fantastic. It certainly offers a different experience from a high-street coffee shop or restaurant chain. So attracting non-members to the club all day from early morning to late evening should be easy and is vital.

Meeting rooms – remember that they don’t just have to be used for meetings. They are ideal for private dining and events that may disturb regular members, such as parent / toddler groups. While regular income from non-members is a good source of additional profit, you must consider the impact on your core customers, the golfers.

Venue hire – such as wedding receptions and corporate days. Make sure you have a hire agreement drawn up which clearly states the terms and payment schedule, including the cancellation policy. Insist on taking a deposit on booking (even from loyal members!), with the balance being collected well in advance of the hire date. This not only helps your club’s cashflow, it commits the hire arrangement. If there is a cancellation, it allows you time to find a replacement booking.

Surprisingly, we have seen some clubs even forgetting to invoice for events or not taking deposits in advance, resulting in last-minute cancellations and a drop in cashflow.

Some of the more successful clubs we know actually make more money from other leisure facilities, such as a fitness centre. They use the space their club has but often with a very significant capital investment. The knock-on effect can however be significant, increasing revenue in the bar and restaurant from members and guests.

Flexible membership models

Attracting more visitors to a club can also benefit the core activity: golf! Younger members are really important to the future life of a golf course, so having them around the club setting from a young age can pique their interest.

Some clubs have fallen into a trap of alienating existing members by heavily discounting course fees and deals for new members or visitors. It is a balance but making it fair for all will make sure you don’t lose revenue in the long term.

For newer golfers, you can offer lessons with the pro alongside a membership. Or if they spend a certain amount in the pro shop, they get a discount on fees. Some golfers might want a monthly bar credit at a discounted price. Lockers can also be an added extra.

Some clubs are investing in different formats of the game. While this may not conform to the true format of the game, it can attract young golfers to the game. Catering for people who are short on time and can’t spend four hours on a round is also a key consideration. Promoting nine-hole rounds to local non-members may entice more people to dust off their clubs or even pick up a set of beginner clubs!

Flexible membership models and a menu of services cater for the different requirements of members. Cashflow is also important, with discounts for a full membership paid up front as opposed to spreading the cost. Of course, this results in more administration but you can manage this via a basic CRM system and having a direct debit collection service in place.

Summary

Successful golf clubs have tidy books, transparent cashflow and a business strategy. Put simply, they record, measure, report and forecast.

Accurate accounting enables you to analyse your club’s current financial health and make effective decisions. Plan your strategy in relation to your resources and facilities. Forecast your cashflow and report your club’s performance against it on a yearly basis. Your club will reap the benefits of this practical approach.

Jon Dawson is from Kingston Smith.

Email jd@ks.co.uk or telephone 020 7566 4000

 

Jenny Yu
By Jenny Yu October 4, 2018 16:55
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