Develop a Business Plan and Be Ready to Change It
June 22, 2015 | Categories: Blog, Facility, Club Director
By Steve Lenderman, Delaware Juniors Club Director
When I restarted Delaware Juniors Volleyball Club in 2006 we had a Five Year Plan in place to help guide us. One of these goals was to open our own facility in year 5. To accomplish this we set up yearly goals listed below. During the 2007- 2008 season we began to write our business plan, in 2008 - 2009 we began our capital funding and started working on the design of the facility, in 2009 -2010 we were to start construction and in 2010 - 2011 to open the facility. The business plan was our first challenge, I can't tell you how many revisions and amendments we made and continue to make today. The business plan is a living document that most importantly steers the business. Our business plan was good but not great, and it has a daily impact on the business.
My advice is to find another small business owner and seek his/her guidance in business plan writing. It is very difficult if not impossible to do it yourself. Once the business plan was created we were to move on to our capital funding in 2008-2009. This was delayed mostly because our club experienced a huge growth surge and doubled in size to 24 teams. While this growth was great, it devoured much of the time we should have been devoting to raising money for a facility. Finally in 2010 we found a location and began the next steps. Location for us was critical; many of the warehouses that were available were located in industrial parks, which are not always the most parent/player friendly. The ones we could afford were not in clean, safe looking areas and location was less than ideal. It took us over a year to find our current location. Location is everything in real estate. We were following the "3 Turn Rule" common in commercial real estate. It should take no more than 3 turns off a major highway to get to your place. If you can't get customers to your facility you are doomed.
Construction started in the summer of 2011. Two rules for construction: it is never finished on time and it will cost twice what you are told so plan accordingly. We opened 7 weeks late and $100,000 over budget. These are tremendous hurdles to overcome with any new business. We opened in November 2011 just in time for tryouts, but missed the entire Fall and about $30,000 in potential revenue. Once open, it was all a blur. Another piece of advice is be prepared to be there all of the time. If you are not open you are not making money while the bills still keep coming. To manage the finances we use QuickBooks online. We went this route because I, the owner and any of the other staff can access the books from anywhere instead of on one computer. It really is a huge help. We also made some initial mistakes on our website. We tried to save some money and wanted a fancy website for as cheap as possible, when we got the finished product it was not what we wanted and provided little functionality. So we are now using EZ Facility, another online software package that is designed to manage sports facilities, which I highly recommend.
Our overall business model is a little different. We knew that volleyball was not going to be big enough to support the entire facility; we need other sports and programs to help. We went out in search of partner groups that would also benefit from the facility. We found field hockey, lacrosse, basketball and even roller derby groups to partner with. These groups not only bought into the facility as investors, but also guaranteed us rental revenue and allow the groups to have a home and competitive advantage over other groups. It is a mutually beneficial situation for all. We also decided to not hire program experts. We wanted to run the facility with very limited staff, allowing the rental groups to run their own programs; we just rent them the space. While we may miss out on some revenue we also save on staffing and all other program costs. We don't have to worry about all of the headaches associated with running a program. We just collect the rental fee.
Our facility also has three other sub tenants. We have a 3,000 square foot ATI Physical Therapy office in the Delaware Sportsplex that treats only athletes and gives our partner groups access to athletic trainers, PT and training equipment. In addition to ATI, a Velocity Speed Agility franchise will open in late summer. Having two well-known sports names in our facility only adds value to our customers and helps bring in potential customers, while basically covering half of our rent to the owner. The 3rd tenant is a local restaurant that runs our snack bar. Our first thoughts were to let somebody who is in the business handle this; one less thing to worry about. We would just get a cut of their profits. However we quickly found out that running a restaurant and snack bar are not the same. We have struggled to make any money with this and are now looking for a way to terminate our agreement. Snack bars make money, if you treat them like a snack bar. My advice here is don't give up the snack bar to anybody and make sure you don't allow outside food into the building to help your sales.
We are now in month eight of business and the summer is the toughest time for any indoor sports facility. We did not have the cash reserves we would have liked to have had are now trying to create new revenue streams to compensate. Plan accordingly, put cash away. You never know when you will need it.
Well back to running the business, it has certainly been a huge learning experience and a fun ride so far!
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