Friday, September 4, 2009

Private Club Strategic Planning

By Michael D. Vogt, CGCS

Charles F. Kettering, American inventor and the holder of over 300 U.S. patents once said, “My interest is in the future because I am going to spend the rest of my life there.”

At the foundation of most Private Club Strategic Plans there rests a simple question, “Where do we want our club to be in five years, and what must we do, and when must we do it, to get there?”

The question is a great one. The answer will have all the attributes of a sound objective. Asking, “Where do we want our club to be in five years?” entices us to paint a picture of what we want to achieve. We can call this picture our “Vision” or “Vision Statement”; in either case it creates a goal worthy of our attention.

Since these achievements don’t happen by accident, “What must we do, and when must we do it, to get there?” outlines our footsteps towards a rudimentary project plan. Since we know what we want to achieve, we now define the “what” and the “when” of our “To Do” list for the next few years.

Most strategic planners would agree that this question lies at the core of the planning process. It is certainly the most common approach, and while oftentimes the objectives we choose are overly simplistic, even ambiguous i.e., “We want to be the leader in private club golf and social membership in our local metro area”; they provide something to work towards.

And that’s the underlining issue. Unless the next problem is addressed by some hidden assumption, this type of planning cannot succeed other than by luck, no matter how much effort is put into that club’s long range project plan.

Here’s the problematic obstacle, we cannot answer the question, “Where do we want our club to be in five years?”, unless we first answer a bigger and more complex question, “Where will the World be in five years?”

The National Golf Foundation recently recommended that, “The development of a strategic plan is a must. Too many clubs operate without one.” “The strategic plan should include a financial forecast that takes into account realistic member attraction and retention goals, a schedule of capital improvements, projected initiation and dues levels and more.” [1]

In a recent McMahon Group survey when comparing spending on golf course capital, not including equipment, 45% of 226 clubs surveyed responded that the club spent between $50,000 and $200,000 annually.[2] However, clubs reported only 42% have a formal written strategic plan in place. Likewise, 41% of clubs report a current mission statement, where only 1% of those same clubs had a vision statement. [3] There exists a disconnect between plans, visions and dollars.

Fabricating a Strategic Plan is like running to catch a football; you don’t go to where it is now, but to where it will be, when the football finally arrives at its indented target.

Have we stated the obvious? Of course we did. Yet most Strategic Plans make no attempt to determine where the World will be, they plan as if the World stands still in time, when in reality it is sprinting off in some unknown direction under the influence of politics, robust and poor economies, demographic trends, diminishing resources, new opportunities, aging populations, shifting alliances and a thousand other trivial and monumental forces.

If we do try to target the future, we plan for it based upon our understanding of the past. Club memberships have been unchanged for the last seven years, so we will plan for zero growth in the coming years.

New developments, or Future Unknowns, can erase all credibility from this type of reasoning. A classic example is the development of digital photography and the ease of production via computer. Now photographs are shared and manipulated over the Internet, this technology eroded the relevance of all consumer film cameras and historical sales figures for the film and camera industry.

However, our real problem remains, that is answering the question, “Where will the World be in five years?” this is the challenge… as Yogi Berra, the great philosopher and baseball player said, “It’s tough to make predictions, especially about the future.” Even if we choose to ignore them, there are developments we know will affect us in the future.

Here are a few worthy of consideration:The Collapse of Constraints: (Moore’s Law[4])
Computer and telecommunication technology is going to get more powerful, faster, cheaper, more reliable, more accessible, and smaller, operate cooler, better, more convenient and user friendly. In the past 15 years we have witnessed this trend in golf course irrigation control systems to a great extent.

The Implications?
What technologies would you like to implement in your organization today, but can’t because of some limitation? Chances are that within the next five years, the natural advance of technology will collapse some of those constraints. Then what?

Here are some reminders from our recent past, imminent future, their impact and possible implications:

Club Manager → General Manager → COO?
Lifestyle Shift → Declining Golf Participation → Changing Club Business Model?
Golf Course Management →Improved Science → Better Course Conditions → Water?
Ageing Private Clubs → Strategic Plans →Facility Updates and Improvements?
Educated/Professional Club Staff → Higher Salaries → Pay Equals Performance?
Golf Equipment Technology → Longer Yardage Golf Courses → Over-Priced Golf?

An off topic question we might ask ourselves, “Which solutions implemented a decade ago, are the wrong solutions considering current technology?” (One answer - Web TV, even Bill Gates gets it wrong sometimes)

The Passage of Time (Demographics)We’re getting older… all of us, soon the elderly will outnumber the young.

The Implications?
No secret here, as we get older we change in predictable ways. How do you differ from your parents? Imagine their buying habits and lifestyle rolled out today as the norm. Imagine the bulk of marketing targeted at something other than teenage tastes, how does that affect your business… more importantly, the business of your members.

New Markets; New Competitors (The Third World is no Longer Third)
China, India, Russia, Middle East, all new global players with emerging resources and technology.
The Implications?
According to some statistics, United States of America makes up 5% of the world population and consumes 30% of the world resources. Imagine a new nation (or two), with the buying power, consumption, resources and production capability of 5 or 10 USAs. Therefore; can you imagine the future where these new super-power nations do NOT affect your business? Are the United States of America and specifically the private club business insulated from world change?

Resources, such as power, raw materials, oil, technology, value of currency and even water will become limited in supply when other countries compete for markets and resources. Efficient end users will be in a position to succeed, this much we know. The “GREEN” movement by all measures is not a 21st century fad; it’s a long term societal fact!

Declining Memberships and Club Participation
Disposable income has an effect on private clubs. After all monthly monetary obligations are met the member or perspective member allots time and resources for recreation based on their feeling of security with regards to disposable income. Even in bleak economies people look for the best value, this is where continued club improvement, vision and a strong strategic will pay dividends.
The chart above illustrates America’s disposable income as a percentage of total income. Generally speaking, private golf enjoys a robust business in years that disposable income increases as a percent. The past 25 years have experienced several quarters that have shown at or near 0% disposable income. We have learned a rebound always follows a decline in disposable income. Planning for the rebound will position clubs to be at their most competitive when disposable income is available. Banks are offering very low-cost money to invest in facility renovation and upgrades with interest rates at 25 year lows.

These are just several of the many developments you might choose to incorporate into your club’s strategic plan. Which ones do you factor into your planning? That depends on how far you choose to cast your attention. What could provide a threat or opportunity to your business? Or are you convinced that tomorrow is just today, plus another day?

How exactly do you factor in these future forces? There are no easy answers, yet there are lots of different approaches, tools and methodologies; from, ‘What If’ sessions to more involved Visionary Brainstorming (Club Board and/or Management Retreats). The goal is not to do the impossible, we cannot predict with great accuracy what tomorrow will bring, but we can get a sense of what tomorrow might have in store for us and put together a Long Range Strategic Plan which will perform well against a handful of likely future possibilities. Private clubs today need to have a tool box for construction of the vision and strategic plan.

The tools needed are:

Current Existing Conditions Report
Without the existing condition of the property and components it is very difficult to formulate any type of plan for improvement or replacement.

Asset Reserve Study
As the club’s assets require replacement the plan can take into account a refurbishment and replacement strategy and funding to accomplish these goals.

Survey the Membership
Examples of topics that require answers can be. What is the purpose of the club today and in the future? Do members agree with the existing vision statements? What are member priorities with respect to potential facility improvements in the long and short term? Are members willing to support potential improvements from a financial standpoint?

The ultimate value of any survey is not just a quantity of collected information. The real value is the understanding of the survey results. A survey company that specializes in clubs has the accumulated data from many past club surveys. A large database of information helps to interpret the specific data into meaningful club membership desires and future direction of club goals.

The Proper Information
Now that the club has accumulated the current conditions, the expected life of the clubs components, quality and quantity of all assets and the wishes of the membership, the club now possess the tool box for assembling the vision and long range strategic plan.

“Where will the World be in five years?” We certainly know that the business model for private clubs will not remain the same. The recent growth of private clubs worldwide in countries never before imagined has grown by incredible proportions. By studying these examples we can certainly learn valuable lessons on future trends to assist our clubs to be forward-thinking and proactive to change.

“What must we do and when must we do it to get there?” The question is still a daunting one even equipped with the tools and membership consensus and desires. The future will reward those that make efforts to prognosticate based on gathering and digesting of high quality information and future needs. We can not all be blessed with the talents of Nostradamus but equipped with the proper tools we can travel into the future with a well crafted vision and plan.

No matter how we factor them in, the sooner we do it the better. Visions, Vision Statements, Long Range Strategic Plans are ethereal, living, evolving ideologies by virtue of these attributes; these visionary statements and strategic plans must be updated on regular basis. As the quote at the start suggested, we’re going to live in the future; we might as well plan and look forward to it.

Michael Vogt, CGCS, CGIA, is a Golf Course Consultant for McMahon Group. He can be contacted at 800-365-2498 or .

[1] National Golf Foundation, The Future of Private Golf Clubs in America, By Joseph Beditz Ph. D. and James Kass, 2008[2] McMahon Group, Inc., 2008 Private Club Industry Survey, Sports and Recreation Operations
[3] McMahon Group, Inc., 2008 Strategic Planning Private Club Marketing Survey[4] Moore's law describes a long-term trend in the history of computing hardware. Since the invention of the integrated circuit in 1958, the number of transistors that can be placed inexpensively on an integrated circuit has increased exponentially, doubling approximately every two years. The trend was first observed by Intel co-founder Gordon E. Moore in a 1965 paper. Moore's law describes this driving force of technological and social change in the late 20th and early 21st centuries.
[5] National Economic Trends, December, 2008, The Federal Reserve Bank, Saint Louis, Missouri[6] National Economic Trends, December, 2008, The Federal Reserve Bank, Saint Louis, Missouri

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