By Michael D. Vogt, CGCS
• We can’t start a new budget when we don’t have final numbers for 2009.
• We haven’t decided what we are going to do with our operation in the off season.
• We’re too busy.
• We don’t know what the cost of good will be in this crazy economy. • We’re scared of what it might look like.
• We’ve tried that before and it did not help us.
• It takes too much time and we don’t ever use it for anything.
• Budgeting doesn’t require reinventing the wheel.
• Our financial plan is adequate based on past history.
By beginning the planning and budgeting process early management can head-off pitfalls!
The reality is that many golf clubs either don’t have the skills, commitment, discipline, or desire to put together a well planned budget. Planning and budgeting is work! Hard work! But like any other hard work well done, it provides benefits.
A forward thinking approach with a financial plan in place for the entire year and variances that are updated on a monthly basis with forecast and focus on creating the future is a paradigm that any successful business utilizes. Yet, I find that in most cases golf clubs do little more than take a perfunctory look at the numbers from the prior year and usually add a factor to account for price increases, several increases in wages and call the plan good.I have seen amazing transformations in the actions Clubs take when the financial realities of their business are made known to them in black and white terms with a well thought out, financial plan and a goal orientated budget projection. I have implemented budgeting where it previously was not properly utilized and immediately new plans were developed for better expense controls and member satisfaction. Important priorities where addressed instead of just “Shoot from the Hip” afterthoughts. Directing focus towards creating the future through a thorough, well crafted business plan and budget is what separates great clubs from average clubs.
But putting together a business plan and comprehensive budget is more than just crunching numbers on a calculator all day. There is a lot groundwork that must be completed in order to get the proper foundation to a new financial plan. A solid financial plan is the final results of a thorough Business Planning process which includes:
1. SFSWOT Analysis
This is an analysis of each Club department’s and the Club’s overall:
• Successes • Failures
• Strengths
• Weaknesses
• Threats
• Opportunities
It provides a critical self assessment of your Club and provides a great foundation for goal setting for both qualitative and quantitative improvements in the upcoming year.
2. Competitive Analysis
Who is your competition? What resources does your completion exploit that you don’t? What is your clubs unique advantage?
What should be the standard at your Club; is it white table cloth dining or casual fare in a relaxed atmosphere? Are the greens mowed by six men by hand daily or triplexes just ahead of the first group? These standards will all have impacts on the business plan and formulation of the budget.
What are your Club trends for both membership enrollment and attrition? What real growth do you want to plan for in 2010? What has been the trend with downgrades and upgrades? What are you doing with Initiation Fees? Do you have enough financing in place? How will you handle members wanting to resign?
4. Pricing Plan
What dues price increase will you take this year and when? Will guest fees increase? How will we retain our members with increased pricing? How will you price your golf cart and guest fees? Remember, golf course maintenance isn’t a revenue department but knowing the big picture gives knowledge to the superintendent and makes him/her one of your business partners. With the exception of a very few elite private Clubs, cost does matter.
What payroll increases are you authorizing for the Club’s employees in 2010? Are the wage increases performance based or just “no thought” across the board raises? Is it smart to give increases in pay during this recession? Do you have incentive based compensation plans in place or do you just pay for showing up regardless of the performance?
6. Expense Planning
What expense increases are you anticipating? Have you reviewed each department on a line item basis to determine if the expenses may have significant fluctuations either up or down? Items that can change significantly include general liability insurance, property taxes, utilities, fertilizer, chemicals, and fuel. Have you reviewed these thoroughly to ensure you have an accurate view of the expense side of the financial plan?
7. Marketing Plan
Do have a written quarterly game plan for driving the revenue sources that are important to your Club? Are specific timelines and people assigned to carry out the plans? Did you make sure you budgeted the needed dollars for marketing to ensure you will be able to achieve the results you need?
8. Retention Planning
Do you have a comprehensive calendar of events that appeal to all segments of your membership to keep them using the Club and providing needed revenues. Is your calendar planned ahead at least 3 months at all times? Or are you trying to come up with things at the last minute because the newsletter copy is due?
9. Qualitative Improvement Planning
Do you have a written quarterly plan in every department for qualitative improvement? Specifically, are you challenging all of your golf club departments to implement 2 or 3 initiatives that create a better member experience, provide for improved employee efficiency, introduce a new product or service, or produce a better financial result?
10. Capital Planning
Do you have a written capital replacement plan in place for 2010? Replacing depreciated assets on an annual basis is a major component of a successful business. Do you have the necessary cash to replace what is needed in 2010? Are you going to lease or finance needed equipment? Have you made sure you have done the analysis? Is your plan at least looking ahead 5 years?
If you don’t know where you’re going, you might wind up someplace else.
- Yogi Berra
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