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Developing a Sports Facility Financial Strategy

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Developing a Sports Facility Financial Strategy

This is the fourth in a series of posts on creating a business plan for a sports facility – sports facility financial strategy.

Now that you’ve thought out the details of your products, staff and operations, you can use that information to estimate your business’ finances.

We’ll do that by estimating your revenue, comparing it to your expenses, and determining if you’ll make enough profit based on those numbers.

Step 1: Monthly Revenue Estimates

First, you’ll need to review the marketing plan you created, including your plans for busy seasons, major events and promotions. Then, estimate how much revenue they’ll bring in, based on your pricing.

You should be conservative in your estimates. It’s always better to exceed expectations than to come up short, especially when trying to attract investors.

Here is an example of how you might chart out your revenue estimates for your various services:

Step 2: Monthly Expense Projections

Now it’s time to get totals for all your business expenses.

  • Check the marketing section of your business plan. Add up the monthly costs of all your marketing tools.
  • Check the operations section of your business plan. Add up all monthly staff costs, such as the salary, apparel, unemployment and bonuses.
  • Check the operations section of your business planagain and add up all the monthly costs for your building and equipment. This includes utilities, monthly payments plus interest on any equipment that you’ve financed, rent costs, and any other regular building costs.
  • Add up the monthly cost of any other ongoing expenses, such as taxes, accountant’s fees, insurance, internet and phone, scheduling software, cleaning and maintenance, and security. Larger, one-time or semi-regular annual expenses, such as legal fees, should also be split up into monthly amounts and added here. Even if you paid certain expenses upfront, you should still account for them in the month they’re due, so you’ll have the money ready when the expenses come up again next year.
  • Total all of your expenses to get a final monthly number. If your costs and revenues vary on a monthly basis, it’s OK to list each month’s expenses separately.

Step 3: Calculate Your Profit Margin

The profit margin is a handy figure that lets you know what percentage of your revenue is going to profit. Best practices for target profit margin depend on what kind of business you have, but it is a good idea to aim for 30% minimum.

You can find the profit margin by dividing the expected profit by the total expected revenue.

Step 4: Troubleshoot and Adjust

If your profit margin drops below 30% consistently, it’s time to make some adjustments to your financial strategy.

First, determine your least profitable piece of equipment and get rid of it. Is there a less profitable area of your building that you can eliminate? Do it. What about your staff — can you justify each staff member’s pay based on the revenue they’ll bring in? Maybe you should switch to a commission-based pay structure.

Your sports facility financial strategy is the meatiest part of your business plan and incorporates all the previous steps. If these numbers don’t look right, you NEED to fix them before you move forward.

Next, you’ll need to consider and plan your exit strategy — a particularly important aspect of your business plan if you have investors or partners. We’ll look at that next month.

The team at eSoft Planner has experience helping businesses like yours be more profitable. If you’ve run your numbers and found lower profit margins than you’d like, talk to us about scheduling, marketing, and package ideas that can improve your financial performance.

How to Start a Volleyball Facility with Players

How to Start a Volleyball Facility

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Beginning the Process to Start a Volleyball Facility

Running a facility with multiple indoor courts requires a relatively large space. Because of this, most volleyball clubs start out practicing on the rented courts of school gyms, health clubs or multi-sport complexes.

But if you have a club that is well-established and have the capital, you might consider finding a more permanent location.

The Benefits of Volleyball Facility Ownership

For many volleyball club operators, owning their space can be appealing. Among the benefits:

  • More control.When you have exclusive ownership, you have the power to manage your facility’s schedule, noise level, cleanliness, accessibility and more. But the main appeal for many club owners is the ability to customize the space for your own needs.
  • Better branding.You can use club colors and logos throughout your facility’s decor and signage, which helps make your volleyball club look more professional when you begin your marketing and recruiting efforts. You can also create your ideal atmosphere for players and their families, which can boost player retention.
  • More ways to make money.When you have full access to a reliable space, it’s easier to provide additional services. You might consider offering private lessons, skill-specific training, team parties or even retail sales. The extra money might even allow you to hire full-time coaches, which can improve your club’s quality.
  • Easier to add teams.Relying on rented court space can limit the number of teams you can host each year. Your club might even grow more easily if you have your pick of scheduling hours and courts.
  • More consistency for your players.If you remain in charge of your space, you won’t be at the mercy of last-minute schedule changes, closings or price changes from your landlord.

These benefits don’t come cheap. In addition to a big upfront investment, you’ll have to cover overhead costs every single month. We often advise new volleyball clubs to hold off on property investment for as long as possible to make sure they are able to keep their doors open.

Research and Planning for Your Volleyball Facility

When you start a volleyball facility, to avoid cash-flow problems and make sure your volleyball facility remains viable, you need to create a business plan.

The facility will need a lot of scheduled activities for as many hours as possible each day. For that reason, many businesses choose to rent their space to local teams and other sports, or change their business model for more customer appeal.

If you’ve finished your business plan and are confident that you can cover your monthly costs, you can begin to estimate how much money you’ll need upfront.

How Much Capital Do You Need?

To determine your upfront costs, you’ll need to estimate how much money you’ll need for your property. This depends on whether you decide to build new, buy existing, or lease a building and install the courts and other infrastructure.

You’ll also need to estimate the cost of:

  • Office furniture and computers
  • Spectator seating
  • Signage
  • Plenty of volleyballs
  • Netting

If you plan to sell retail from your pro shop, keep in mind that distributors typically have a minimum order requirement. You’ll also need operating cash. For facilities focusing on seasonal sports in seasonal climates, we suggest beginning with nine months’ worth of operating cash.

Adding up all these estimated costs (space, equipment, operating cash) will give you an idea of the finances you’ll need to get your volleyball facility operational. You can then start looking for specific locations in your price range.

Hunting for Your Volleyball Facility Location

Finding the perfect location to start a volleyball facility can be tough. The facility needs to be wider and taller than boutique fitness and training facilities. This issue might limit the club to industrial parts of town, which lack curb appeal and easy access.

You might not get the perfect location, but you’ll probably find one that more than fits your club’s needs. Plus, the downsides of an out-of-the-way location can usually be overcome with strong marketing tactics.

Once you’ve found a location and you have general approval from members and staff, you should adjust your business plan with the new numbers. You can then use that plan to recruit potential partners and investors.

No business plan can predict all the operational challenges that you’ll face. Business plans are living documents – so you’ll have to constantly adapt to the environment. Don’t be afraid to challenge assumptions, get creative and rework your business plan now, before you’ve invested thousands of dollars and years of your life.

If you want to discuss how eSoft Planner can help streamline your volleyball facility’s scheduling and cash flow, contact us for a demo today!

Sports Facility Business Plan with Volleyball Players

The First Step in Your Sports Facility Business Plan: The Vision

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Thinking of opening a sports facility? You need to start by making a business plan.

It doesn’t matter if you aren’t looking for investors. To make sure your business idea is going to WORK and not just suck away months of your life in a frustrating failure, you need a vision.

Why You Need a Sports Facility Business Plan

A business plan won’t guarantee success (nothing can), but it will force you to think seriously about what you’re about to do and clarify what you’re trying to accomplish.

Unfortunately, many talented former athletes and coaches assume that their passion for their sport and their reputation in the community will be enough to sustain a business. A long list of loyal clients is a great start, but there’s much more to running a business — and not addressing those other areas is why so many sports facilities close.

In this series of blogs dedicated to business planning, we’ll guide you in the steps to position your business for success.

Don’t be intimidated. We’re not going to make you plot out a line graph with projections for financial scenarios including compound interest and inflation. We’re just going to make sure that you understand what it takes to get your business making enough money to be profitable.

Identifying the basics of any business plan is the first step. Let’s get started.

1. Mission/Objective

Can you describe your business’ objective in a few sentences? Clarifying your mission will be key to marketing your facility, as well as leading your company and keeping your staff focused. For example:

The mission of DNA Sports Center is to develop a new athlete by focusing on teaching kids how to move before they perform sports-specific training.

2. Products/Services

Describe the products/services you’ll offer and explain why your audience needs these products/services.

For example:

DNA Sports Center will offer speed, strength and agility training that focuses on building self-confidence for all athletes. Other services will include sports-specific training, batting cages, and use of the facility for parties and events.

3. Customers/Target Market

Add a few details about your typical customer. Briefly describe their age ranges, where they live, their income levels, interests and skill levels. For example:

DNA Sports Center’s services will benefit kids age 6 through high school, although programs for adults and younger children will also be available. Our services will appeal to those athletes who are striving to improve their skills. DNA Sports Center is in the suburb of Milford and is near many sports-oriented school districts and plenty of families.

4. Competition

Explain why the need for your services is not being addressed by current facilities or services that are already accessible to your audience. What will make your facility better or different? For example:

DNA Sports Center is home to the area’s only Parisi Speed School, which offers a proven successful curriculum for improving speed, agility and strength.

5. Revenue Plan

This is the big one: How specifically will your business make money? Don’t stress about the actual prices here. We’ll get there in the next steps. For example:

DNA Sports Center’s main source of revenue will be monthly payments for unlimited access to speed, strength and agility training. This income will be supplemented by revenue from facility rentals, sports-specific training, and commissions from private lessons taught by instructors at the facility.

Conclusion

By identifying the basic and essential parts of your business plan such as your mission statement, you’ll start to position your sports facility for success. Next month, we’ll look at creating a marketing strategy that lets your client know exactly who you are.

The expert team at eSoft Planner have worked with thousands of sports facility owners just like you. We know what it takes to succeed. Our implementation team excels at helping you use the tools to make your dream a success. We love to hear about your plans and be a partner in your vision.

Start the conversation today! Contact us for a custom demo.