Strategic Planning has stood aloft of the planning tree for some time. It is the central tenet of any functioning business and gives a direct focus that gives pause and motivation in equal doses. Long considered the lesser sibling on the tree is the discipline of Master Planning, but is that fair? This of course depends on the Club, its location and opportunity. What shouldn’t prohibit Clubs from undertaking a Master Plan is revenue. Any venue with an EBITDA over 12% must look at what the capacity is to improve the revenue versus cost line.
Many take the view that Master Planning starts with an architect, but there are some assessment steps before that to form the outline of what the ‘end result’ will be. In the graphic below, the involvement of design architects is at stage 4. Stages 1 to 3 are preliminary stages of incorporating the needs of stakeholders (community, membership, board, management), what can be afforded, permitted usage under zoning laws, then the ultimate opinion question – what makes the most sense?
The guiding edict for all this? Grow capacity and revenue – it sounds so simple, but revenue growth is a factor of capacity. Too little capacity and earnings are capped and put off potential customers, too much capacity and operating costs become an issue. This includes effective use of space, identifying the ‘pinch points’ in bar and catering offerings, lounge areas and gaming. How does your Club’s capacity limit its trade during peak times? Identifying that is half the battle and will be the first stage in a road map to improving capacity. If the business case stacks up, then incurring debt is an approach worth further investigation and not something to shy away from.
The term ‘diversification’ is somewhat misused in Clubs – the addition of another catering offering, or extended bar is broadening the existing business, while adding separate businesses with a new market would be considered true diversification. A Club’s core business is hospitality, and for most venues that is centered around food, beverage and gaming. Diversification makes sense when it enhances these business silos or is proven to work as a stand-alone business that contributes positively to the bottom line.
Terry O’Halloran B.Ec, MBA has over 20 years experience in Clubs and can be contacted at firstname.lastname@example.org