Managing Club Profitability 2
We continue our series of articles on managing club profitability by looking at the income component of the ‘club profitability formula’:-
|Bar Takings Equal =
|1 Membership x
|2 Usage x
|Other income including events
|5 Expenditure and bar
This formula provides a tool to help a committee turn around the profitability of the club. There are basically five ways in which a club can increase profits. This article looks at maximising income by increasing membership, encouraging greater use of the club and the management of bar prices. The ideas are only suggestions and would not be suitable for all clubs. Any changes made must be carefully considered by the committee before implementation.
1 Increasing Membership
Few clubs have a strategy or plan for encouraging new members. Few have an idea on how to obtain new members or where they are likely to come from.
It is not just a question of increasing members they have to be the right type of members. A member who attends once a year is of little use. Increase membership fees to £5 or £10 but provide more benefits to the members who use the club regularly. To encourage new or existing members provide a list of benefits they get from being a member, cheap prices, annual outing, Christmas events, holidays, free checks, games, events, etc etc.
The most progressive clubs give back to members more in checks than the cost of the annual subscription. Give checks out at the Annual General Meeting to encourage more to attend. The members need to be shown it is their club. Poor general meeting attendance is usually the sign of a downward spiral. This is because it results in committee shortages, lack of officer and eventually to poor management of the club’s affairs.
Many clubs complain about the lack of young members, but do little to encourage them. What services can the club provide to encourage the right young people to join and stay as active members? A club provides may social activities and facilities, some can be aimed to encourage the younger member, e.g., a club football team.
Life membership rules need to be reviewed and numbers reduced. Many clubs have a large list of life members who for various reasons never use the club. Life membership should be a privilege granted to only the minority of loyal members. An accurate list of active members is a key record for all clubs.
2 Increase the usage of the club by Members
All clubs have a hard core of good members, but more are usually needed. The most successful clubs have the best facilities, good hall, bar seating, decorations, fittings, etc. Many clubs have been more adventurous and have added new facilities and services such as canteens, beer gardens, large TV screens, etc. Solicit the ideas of members as to what facilities they most want to improve. If it’s practical agree an implementation plan. Annual competitions, shows, major rugby and football matches can bring in the crowds, especially if food and other entertainment is provided. Obviously, not all activities will be a success.
Many clubs are poor at marketing their facilities. Consider collecting members email addresses and implementing a monthly flyer or marketing campaign using products such as mail chimp.
3 Bar Prices
Club prices are usually low but changing prices up or down frequently has little impact on the amount of beer sold. Members often complain if prices rise but provided they enjoy the club’s social life and facilities, tend not to leave provided increases are small. Similarly, unless exceptionally cheap, lowering bar prices tend not to increase sales.
Many clubs faced with declining bar takings have been successful in increasing income from other sources, e.g., lottery machines, lucky four, etc. Many have targeted specific markets such as weddings, but the club needs to have good facilities to compete in these competitive markets.
Example of a Plan – let’s say a club targets a 5% increase in membership, a 4% increase in usage (say two new major events in a year) and a 3% increase in prices. Using the ‘club profit formula’ the increase in profits for the year can be projected:-
|500 Members x 337
|units sold x £120 net
|525 Members x 350
|Other income increased with new members
|Expenditure – bar purchases and wages up
Summary – the above gives an example of how small attainable targets, perhaps planned over a number of years, can increase the performance of a club. Further gains may be achieved by the better management of expenses. None of the ideas suggested may be suitable for your club, the key is that a plan has been drawn up and agreed. The ‘club profit formula’ is merely a tool to help the committee develop a plan based on their knowledge of the club and what they think will help reverse a decline in its fortunes. The club in the example has managed to more than double profits to a level which will provide the club with enough funds to improve services and premises and help ensure the long term success for its members.