As you know, I connect with the owners of small sports facilities across the country regularly because they use eSoft Planner sports facility scheduling software. Unfortunately, over time I’ve noticed a high turnover rate with new facilities: Many just don’t stay open more than a few years.
When owners call to tell me that they won’t need the software anymore because they’re closing, I note patterns that have contributed to their failure.
I’ve mentioned before that running a sports facility takes much more than passion for sports instruction. Passion can make you a great coach, but has little do to with being a great business owner. Being a great business owner, especially when your business is small, is all about managing your resources and your cash flow so you can keep your doors open.
Here are some of the biggest contributors I’ve noticed to sports facilities closing down.
1. No guaranteed income
Meeting your financial goals each month or quarter is much easier when you can depend on regular revenue. Long-term commitments save your clients money, make payments more convenient, and guarantee regular cash flow. Failing to promote memberships that make it easy for customers to be re-billed automatically for their favorite services leaves facility owners worrying about the short term and unable to plan with confidence.
2. Not collecting upfront payment
Some facilities operate on an invoicing system and bill their clients only after their services. Others allow clients to reserve time at the facility for free and expecting payment when clients show up for their events. Both practices leave you at risk to late cancellations and no-shows, which can drain up to 13% of your potential revenue. Or, in the worst case scenarios, you may never get paid for those services at all. Even valuable clients should understand that paying for their time upfront is a reasonable request for a business to make.
3. Relying on rentals
Rentals can be great for getting new clients into your facility, and they can be great when they’re sold as part of a membership with monthly payments (see #1 about guaranteeing recurring revenue). However, rentals are the least profitable programming option for your space. In particular, renting space to instructors who want to use it for lessons cuts you out of valuable marketing information from their students, and can leave you vulnerable legally if students don’t have a verified facility waiver on file. Allowing instructors to control everything about their lessons gives them a big advantage, and this is doubly true if you’re not expecting the instructors to pay for the space upfront (see #2).
It’s always disheartening when I see our clients using these practices. eSoft Planner was built around the sound business concepts of upfront payments and establishing recurring revenue, but sports facility owners often don’t think that they can charge more or earlier for their services because it’s not what their customers are used to. It’s best to be aware of these common missteps as you start out, and establish consistent rules and standards that your clients will come to expect. However, its never too late to adopt these practices. Ignore them at your own risk.