In the January issue of the Golf Pro Advisor (Are You Ready for the 2017 Season?), I discussed the importance of setting both “performance” goals and overall financial goals.
A performance goal, for instance, would be the number of lessons you want to generate this year. That in turn drives your overall lesson revenue (financial goal).
In this issue, I provide an Excel model that will help you forecast your revenue with performance targets. Here is a link to the model.
To achieve your goals, you must have very specific performance targets such as “x” number of lessons per month.
How the Model Works
As an illustration, the model uses a hypothetical example – the Fictional Golf and Country Club (FGCC) with a six month golf season. You, of course, should input the numbers that apply to your club.
FGCC has 500 member families. There are 1500 potential golfers (husbands, wives, and juniors). But there are only 500 active golfers.
The model covers four “revenue streams”:
- Driving Range
Golf shop revenue is generally a big part of a head pro’s income. But that is a more complicated model. I plan to address the golf shop model in a future issue of the Golf Pro Advisor.
This model assumes that a certain percentage of Active Golfers will take lessons and clinics, spend time on the range, and play in tournaments. Key “performance drivers” are:
- Active Golfers – Number of active golfers
- Participation – % of active golfers taking lessons, participating in clinics etc. (Participating members)
- Frequency – Number of lessons, clinics etc per participating member per month
- Fee – Average lesson fee, average clinic fee etc.
Here are FGCC’s performance drivers, based on 500 active golfers:
The Excel model has two tabs: “Targets” and “Summary”. The “Targets” tab has grids for each of the four revenue streams (Lessons, Clinics, Tournaments, Range).
The “Summary” tab shows a summary of the performance drivers (see grid above) and a revenue summary (see “Set Your Targets” section below)
Make assumptions about your club’s performance drivers (Active golfers, Participation, Frequency, and Fee) and then set performance targets for each area.
Input that your performance drivers into the appropriate grid in the “Targets” tab and the model will generate monthly and seasonal performance goals as well as monthly and seasonal revenue.
The summary for all four revenue streams will appear in the Summary tab.
Let’s look at lesson revenue as an example. The other three revenue streams. (clinics, range, tournaments) work the same way.
The model assumes that 25% of active golfers take an average of two lessons a month during a six-month season. That’s a total of 250 lessons a month. Here are the calculations:
- 500 active golfers x 25% = 125 Participating Golfers
- 125 Participating Golfers x 2 lessons/month = 250 lessons a month
- 250 lessons/month x $100 a lesson= $25,000 a month x 6 months = $150,000
Set Your Targets
Here is an overview of the annual revenue generated for FGCC. (See “Summary” tab in the Excel Model)
The key point is to set monthly goals for your golf operation. A lesson target of $150,000 is very vague. How are you going to achieve it?
A target of 250 lessons a month (10 lessons a day) is very specific.You can easily track it. Set monthly performance targets for each of your revenue streams.
If you have good records, you can set targets based on history. If not, make assumptions and then tweak them as you get more experience tracking activity.
Also, your targets should be ambitious but realistic.
Is it realistic to assume that on average each of your active golfers will take three lessons a season?
- 1500 lessons divided by 500 Active Golfers = 3 lessons per golfer
Is it realistic to assume that that on average that each of your active golfers will spend $500 a season to improve his/her game?
- $256,000 (Total Season Revenue) divided by 500 Active Golfers = $500 per golfer
Achieving Your Goals
Now comes the hard part. How do you achieve your goals?
If your goal is 250 lessons a month, does that mean:
- 250 members each take one lesson?
- 50 members each take five lessons?
- 500 members take one lesson every two months?
There is a big difference.
If it’s 250 members, the challenge is to get each member to take more lessons. If it’s 50 members, the challenge is to get more members to take lessons.
In the next issue of the Golf Pro Advisor, I will explore this further.