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Financial Strategy

An important step in creating a business plan for your sports facility is the financial strategy. Read our blog posts for advice on estimating your revenue, comparing it to your expenses, and determining if you’ll make enough profit based on those numbers.

Refund Customers Using Instore Credit After A Purchase

Maximizing Revenue: The Benefits of Instore Credit for Sports Facilities

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Facilities are always looking to enhance customer loyalty and boost revenue. One popular (and effective) strategy is implementing in store credit systems.  This strategy encourages loyalty among your customers, as well as increases your cash flow. In this blog post, we discuss the different benefits and strategies for adding instore credit at your sports facility. 

Types of Instore Credit

Credit Via A Refund Policy

One of the ways that a facility can utilize instore credit is by building it into the refund policy. For many facilities, their biggest problem is their clients canceling at the last minute. It can be hard for some owners to say they can’t have a refund at all, especially when it’s for unavoidable situations. Instore credit allows the business to give a version of a refund. This can be beneficial for your business in many ways.

First, this will keep customers happy and able to come back in the future to book another service. 80% of customers redeem their store credit within 2 weeks of receiving it. Also, it lets facilities keep the revenue they would have otherwise lost. Think of it like cash – it can be used for anything within the system. Another benefit of this refund policy is that it lowers credit card processing fees. You’ll get charged for each transaction. If a client purchases a service, you refund them, and they rebook a service later on, each transaction will cost money. Keeping the credit instead only charges you for the first transaction. Our scheduling app utilizes this approach so that facilities can benefit. 

Credit Using Prepaid Accounts

Using prepaid accounts is a great way to work with point of sale, especially for swim clubs. Use your instore credit to fund your account to a certain amount and use it elsewhere in the facility. Most swim clubs use it for concession stands. A great example of this is a kid’s lunch at school. A parent will put in a certain amount and the kid will use that account to purchase their lunch. 

Prepaid accounts are really good for increasing your cash flow. That prepaid amount is in your account from the beginning. The credit can then be used at any time, by any member of the family within the account. One of the biggest benefits of this type of credit is that it can create a cashless system. Our software can utilize this type of system for your facility as well. 

Conclusion

Using instore credit can be incredibly beneficial for your business – that’s why our software implements it into our processes. It encourages repeat business and offers flexibility while streamlining your payment processes. To learn more about how else eSoft Planner can increase your cash flow, request a custom demo of our software. 

Volleyball for sports facility financial strategy

Developing a Sports Facility Financial Strategy

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Developing a Sports Facility Financial Strategy

This is the fourth in a series of posts on creating a business plan for a sports facility – sports facility financial strategy.

Now that you’ve thought out the details of your products, staff and operations, you can use that information to estimate your business’ finances.

We’ll do that by estimating your revenue, comparing it to your expenses, and determining if you’ll make enough profit based on those numbers.

Step 1: Monthly Revenue Estimates

First, you’ll need to review the marketing plan you created, including your plans for busy seasons, major events and promotions. Then, estimate how much revenue they’ll bring in, based on your pricing.

You should be conservative in your estimates. It’s always better to exceed expectations than to come up short, especially when trying to attract investors.

Here is an example of how you might chart out your revenue estimates for your various services:

Step 2: Monthly Expense Projections

Now it’s time to get totals for all your business expenses.

  • Check the marketing section of your business plan. Add up the monthly costs of all your marketing tools.
  • Check the operations section of your business plan. Add up all monthly staff costs, such as the salary, apparel, unemployment and bonuses.
  • Check the operations section of your business planagain and add up all the monthly costs for your building and equipment. This includes utilities, monthly payments plus interest on any equipment that you’ve financed, rent costs, and any other regular building costs.
  • Add up the monthly cost of any other ongoing expenses, such as taxes, accountant’s fees, insurance, internet and phone, scheduling software, cleaning and maintenance, and security. Larger, one-time or semi-regular annual expenses, such as legal fees, should also be split up into monthly amounts and added here. Even if you paid certain expenses upfront, you should still account for them in the month they’re due, so you’ll have the money ready when the expenses come up again next year.
  • Total all of your expenses to get a final monthly number. If your costs and revenues vary on a monthly basis, it’s OK to list each month’s expenses separately.

Step 3: Calculate Your Profit Margin

The profit margin is a handy figure that lets you know what percentage of your revenue is going to profit. Best practices for target profit margin depend on what kind of business you have, but it is a good idea to aim for 30% minimum.

You can find the profit margin by dividing the expected profit by the total expected revenue.

Step 4: Troubleshoot and Adjust

If your profit margin drops below 30% consistently, it’s time to make some adjustments to your financial strategy.

First, determine your least profitable piece of equipment and get rid of it. Is there a less profitable area of your building that you can eliminate? Do it. What about your staff — can you justify each staff member’s pay based on the revenue they’ll bring in? Maybe you should switch to a commission-based pay structure.

Your sports facility financial strategy is the meatiest part of your business plan and incorporates all the previous steps. If these numbers don’t look right, you NEED to fix them before you move forward.

Next, you’ll need to consider and plan your exit strategy — a particularly important aspect of your business plan if you have investors or partners. We’ll look at that next month.

The team at eSoft Planner has experience helping businesses like yours be more profitable. If you’ve run your numbers and found lower profit margins than you’d like, talk to us about scheduling, marketing, and package ideas that can improve your financial performance.