With fall in the mid-Atlantic just weeks away, my usual reflections on the summer golf season—where I improved or didn’t, the rounds that got away, why I didn’t play more despite the resolve to do so—have been overtaken by thoughts of how different the 2018 season may be. You see, our club is for sale. It will be interesting to see who bids on this nearly 100-year old institution and what direction they eventually take things. Regardless of the new owners, it seems a safe bet that there will be significant changes that provide lessons far beyond some idyllic parcels of land and a stately but dated clubhouse:
· Do not lose sight of your core business. Our club is the last of a dying breed—corporate owned and/or subsidized entities intended originally for the use of their employees as a fringe benefit. Setting aside the environment (and arguably, the justified imperative in many cases) of activist investors pressuring companies to divest tangential assets and cut nonessential expenses, there are a lot of independently valid reasons why industrial companies (for example) should not be in the hospitality or entertainment business. If you are outsourcing your company cafeteria to a Sysco or its ilk already, why would you think you can successfully operate a more specialized entity with a generally less-captive audience?
· A controlled burn can save the forest. Whether it be a country club, a subsidiary business, or a major product line, it is worth evaluating regularly how you define success. Aside from anticipated major growth phases with corresponding investment needs to fund them, each entity should generally be able to stand on its own financially and operationally. Said differently, if your winners are regularly subsidizing your losers and the pieces in each of those categories remain consistent, it is probably (past) time to jettison those legacy businesses.
· Do not let history dictate how you manage your business. One of my guilty pleasures—aside from golf—is watching what could loosely be called turnaround consulting shows, e.g., The Profit, Bar Rescue, etc. One common theme in countless episodes of this genre is a lack of data-driven decision making within the failing businesses. Whether it be a genuine ignorance of key financial data or a reluctance to favor the use of that data over “gut instincts” or “the way we have always done it,” there are some big reveals that could and should have been apparent long before the consultant-savior came on the scene. Just like a restaurant that keeps rarely sold items on its menu because they have always been there, our club basically copies and pastes its event schedule from year-to-year without looking back at participation levels.
· Ask those who know. It remains to be seen how the new leadership will approach operations. It has been quite some time since the current club ownership conducted any surveys of its membership. Given the significant anecdotal evidence of proactive expressions of membership displeasure with one facet or another of operations, it is hard not to take this as a “hear no evil” situation. As we espouse regularly at EyeLevel, customer insight is about the most valuable commodity a business can have so leverage it when and where you can even if you might not like what you hear.
Hopefully, your company is not as close to the brink as our club. The good news is that even with all of its issues, it is easy to see a bright future there if the new management team demonstrates a basic level of competence and commitment to delivering a quality experience. Even just executing on some of the low hanging fruit above will no doubt yield significant profitability increases. If a second set of eyes might help you to realize the untapped potential in your business, we would love to hear from you and help.