The question that needs to be identified and answered properly is “How is my business going to generate more profit or even a profit at all moving forward?” I have a quote that I wrote to myself and hung on my bathroom mirror for two years: “You cannot control the past for it is gone. You can control the future by doing the very best you can with what you have in front of you, right here and now!”
The overwhelming majority of what I see and hear not only in the golf business but business in general is “cutting expenses” and running the business on a tighter shoe string. Actually, truth be told, it is not the majority of what I hear and see, it is the only thing that I hear and see golf business related or not.
I have not heard one owner/manager/or leader in any business conversation in the recent hard time economic conditions say “What do I need to do to increase revenues?” or “How am I going to “grow” my business?” In my mind, this really is a head scratcher? Lack of revenue or the lack of enough revenue is the great majority reason why businesses struggle. There are golf facilities and businesses that have been established for a long time going through some extremely difficult times right now just to keep the operations from going bankrupt or keeping the doors open. The question or area of concentration should primarily be on “What has changed in the business or industry that I am currently in that has had the most impact on my revenues?”
In the golf business the first and foremost factor is obviously the “weather”. This is, unfortunately, something that is beyond control. The question for a golf course owner/operator is on a nice day for the time of year considered is how are revenues? On a nice day in the golf business, particularly in the middle of the summer, if a golf facility is not realizing maximum revenues then they are not doing something right.
Please do not make the assumption that I am saying the “expense” side of the ledger is not important as it is! Expenses in every category across the board have gone up and will continue to rise until there is enough competition in the expense related categories marketplace mandating lower costs due to supply and demand. What I am suggesting is the careful consideration when a business decides to cut back and reduce operating costs the only thought given to every cut back is “How will this expense affect my revenues if at all?” or “Can this expense be replaced for the current value that is has for my business be replaced cheaper in the marketplace?” or “Can this same expense related item be replaced for the same price in the marketplace but give me a higher return or value than it is currently giving me?”
When cutting costs or expenses start at the highest expense related item or category in your business first and then work your way down from there. The savings as a percentage from the top has a much greater impact on the bottom line than starting at the bottom. In most businesses one of the highest expense related categories is payroll. As it relates to payroll, take a look at the value that an employee is giving you for what his replacement value is in the marketplace? I think that being identified and addressed may be all that you need to do to make a significant impact on your bottom line. For those golf operations that have been established for a long period of time is to evaluate the requirements and value that you are paying your employees to fulfill that positions duties and requirements in “today’s marketplace”. That same position and requirements in today’s marketplace has changed significantly than the same positions requirements 15 years ago. Start at the top paid employee and work your way down. Take a look at what your top paid does for your business and the return on investment that employee is giving you compared to his or her replacement value is in the marketplace. That employee must be doing one of two things, if not both. Is that employee making you money above and beyond what he or she is paid so profit can be realized? Is that employee saving you money over and above what he is she is paid so profit can be realized?
If an employee has worked for you for a long period of time and has been given raises or bonuses or increased incentive packages and that employee has not improved their skill level to what is necessary in today’s marketplace as it relates to the replacement value that employee either needs to be terminated or pay scale adjusted down to the rate of what that employee can be replaced for. The tough thing for a lot of long time businesses with long time employees is that long term friendships and relationships have been established and that factor alone makes it a very difficult thing to do. Fact is though, if profitability and solvency of your business is important, then those very difficult things MUST be done in order for you to keep your doors open. To the employees that are currently working in today’s golf marketplace you need to understand that if you have not improved your skill level or your position requirements have changed you have no one else to blame but yourself for not improving and you must also understand that if you are doing the exact same thing you were 15 years ago and your pay rate has increased over this time, there is a pretty good chance that you are overpaid for what you do. You can and should be replaced for a cheaper wage or the wage that you are paid can be applied to somebody else for an employee that will bring your business more value than you do.
The other significant factor to consider with payroll is the simple fact that your employees are your business! To state the obvious the phone does not answer itself, the greens mower does not operate itself, carts do not get pulled and sold by themselves, the customer is not greeted by anyone but your employees. There is absolutely no question in my mind that there are overpaid golf professionals working in our industry today for the values that they bring to the operations rather it be in the form of what they produce in terms of revenues or what they are able to do to save your operation money. The mentality that owner/operators must grasp is the concept that some of these long term employees were working for you, doing the exact same job they do today when times were good 15 years ago. Having been in the golf business since the middle 1980’s I can attest to the fact that the most important thing a golf professional had to do during this time was make sure that the pro shop was unlocked and they showed up for work. The skill set of marketing/promotions/computer knowledge was not at all necessary during the early 90’s as golf courses were being overrun by golfers willing and ready to pay whatever the golf courses were asking, which was most likely more than their products were worth. But, what a product is worth is only determined by what someone is willing to pay for it.