Facility: An 18-hole, 350 members country club with golf, pool, tennis and dining
Location: Northeastern United States
Ownership: Individual Private Ownership
Focus: Containing Costs and Return to Profitability
About: This is a well-established country club with an annual operating budget of $3 Million. When we were brought in, the club had been managed by another golf management company. The club was losing $350,000 annually
Challenges the Club Faced
The owner charged the new management company with finding a way to get this club to break even or into a positive cash flow in 2 years time. We were able to demonstrate past performance in similar situations, documenting the tactics we deployed and reporting on results. Upon inspection, and through open communication, we were able to earn the trust of ownership with respect to operating autonomously. Our mission was to turn around the club’s financials while simultaneously improving programming and services.
Strategies We Deployed
This project was a classic scenario that we have seen many times, and for which we have well defined blueprints for success. The primary areas of concern were payroll, and purchasing on the expense side, and facility systems and market positioning on the revenue and customer experience side.
Competitive Market Analysis
We began with intensive market research. Our study included a deep dive into current operations, deliverables, services and amenities at the facility. We evaluated every local club in the competitive set through secret shopping, surveys, discussions, and other means. From this work, we were able to better understand the competitive climate and where we would be best positioned.
This club was negotiating bad deals with vendors. Staff had become complacent and were not pursuing best possible buying options whatsoever. We initiated a very aggressive, and proven 4-bid system for all purchases over $200. While this is a lot of work for all department heads, and often met with significant resistance, it is always a successful strategy. As an ancillary benefit, it also has a way of revealing staff members who are buying into the new approach and management principles.
Clubhouse Systems Analysis
We hired teams to investigate all clubhouse systems – phone lines, internet & data, electrics services, kitchen appliances, etc. We systematically turned over every stone in what was revealed to be a significantly dated infrastructure in the main clubhouse facilities.
Payroll and Staffing
Statistical analysis of industry trends, along with metrics accounting for geography and location, we were able to demonstrate to ownership that payroll was substantially over market norms. Many long-standing employees had been issued substantial pay raises over the years, rising well above other similar position high water marks. We were able to address these issues on a personal level, trimming costs while also achieving understanding from each affected staff member. Although some of the salary adjustments were painful for the employees all employees stayed with the company once they completely understood that they were truly being treated fairly based on the marketplace.
It’s not uncommon for private clubs to fall into this situation. Especially during strong economic times, they continue to offer high employee raises year after year. Left unchecked, they find themselves paying much more than the marketplace is demanding. This becomes a competitive disadvantage.
Once these issues were addressed, this private club went from an annual loss of $350,000 to a gain of $450,000 in the first year of operation.
The owner was supportive of all the decisions made by management because of the clarity and objectivity of the data presented to them. In this situation, working with a single owner proved to be advantageous in terms of agility and his ability to implement change. On the other hand, it can often be more difficult for member-owned clubs to make this kind of pivot leading to such a turnaround in just one year.