Strategic planning is a vague term in any set of business circumstances. When considered in Country Club management, it takes on yet another set of meanings. What does strategic planning mean for country club managers? It can mean a whole host of things.
Strategic planning, for capital improvements, could be reflected in the day to day operations of club management. For instance, suppose that the country club has decided to pay for capital expenditures in advance so that financing will not be necessary (an excellent strategy to avoid future issues). The desired funds could then be added to club minimums along with budgets for allocating indirect costs to functions and parties. If the project is to begin in five years, the budgeted expenditures could then be raised over the next five years and could possibly have minimal impact on member assessments. The funds raised could then be put in a reserve status (non-current asset section of the balance sheet) for the explicit use of capital expenditures. This would allow for a given country club to build financial strength and avoid eroding the current ratio (current assets to current liabilities). In addition, fixed assets currently placed in service and subject to depreciation could have their respective depreciation amounts placed into this capital expenditure fund for future improvements and repairs (a concept known as funded depreciation).Find additional information at Northampton Country Club.
Strategic planning also involves maintaining and expanding membership levels. This should be a regular part of managing a country club. The more often this is discussed, the more likely a club is to develop a strategy that will promote its long range goals. Member value is a very important concept that often gets overlooked when managers are mired in the operations they face each day. The country club atmosphere can be one of exclusivity where members might entertain their most cherished business relationships. It might be that the club is just a weekend retreat for golf and tennis. Whatever its purpose, it should match the intent of the membership and be consistently reflected in initiation fees. There might be conflict with members who have paid larger initiation fees when new members are offered smaller fees to enjoy the same benefits. It makes sense to have regular discussions with the membership in order to avoid membership “fire sales”. Even when things are going well with the club, it is necessary to discuss membership increases and replacements.
During these troubled economic times, strategic planning may take on a meaning of survival. There might be a huge debt that cannot be paid with the current membership revenues. There might have been a major exodus of members seeking to cut unnecessary personal expenditures to avoid financial disaster. The immediate solution is to bring in revenue any way possible. It might make sense to invite the public to use the facilities but keep in mind; this creates nonmember income that will cause income tax consequences for certain and could possibly put in jeopardy the tax exempt status afforded some country clubs (IRC 501(c)(7)). If non member revenue exceeds 15%, Internal Revenue may revoke a club’s tax exempt status. If the status is revoked, a seven year period begins whereby tax exempt status can be reestablished without inducing liquidation taxes on a club’s assets. A strategic plan might be one involving the opening of club facilities for public use, paying the income taxes due, and even letting the club lose its tax exempt status if 501(c)(7) applies. It might be appropriate to offer memberships to these new patrons, but consider doing so at current (or even increased) initiation fee rates. The plan might also involve dissolution of club assets if at the end of the seven year period (period by which the country club can reapply for tax exempt status without liquidation taxes) new memberships are not increased and the club continues to struggle. It might also make sense to let the club operate as a “for profit” entity but there might be difficulties in determining ownership control and the like within the current membership.
As mentioned earlier, strategic planning can mean many different things. It can be a pay as you go option for maintaining buildings and improvements and it can be a process for building memberships that are perceived to bring great value to each individual member. If these first two strategic planning techniques are considered, it might just eliminate the need for a survival strategy. Whatever the situation, the Country Club Manager will need to develop a strategic plan that matches the goals and desires of the club membership.