Organizing

Many businesses in general and small businesses in particular are oftentimes adept at failure. A primary cause for the proneness to failure is the lack of business organization. Organization in this instance is not the hierarchical structure of the staff but rather the steps taken to ensure that the business heavily emphasizes its strengths in pursuit of available opportunities while it eliminates weaknesses and minimizes to the extent possible any threats. The Report entitled Organizing Business Plans, dated November 11, 2000, published by the Business Rules Group is an excellent primer to study prior to committing any money, time or effort to starting a new enterprise, large or small.

The SWOT assessment, to the right, is one of the many methods described in the Report to help in analyzing the preparedness of a business model to achieve success in its applicable market.

In starting a business, the objective is to minimize the probably of failure (the 'Y' axis) while maximizing the potential for gain (the 'X' axis).

This balancing act, while it may seem simple-minded, is a key area often overlooked by the novice entrepreneur or the business inept. Some with a great idea for a new business or for the recovery of an old business charge into the business set-up and opening without undertaking a SWOT analysis, understanding its results and without initiating remedial action to overcome any highlighted deficiencies.

Invariably, these businesses come crashing down, maybe not in the short term, but most are destined to fail.

To use my favorite hypothetical, my closed golf club, let's look at the possibilities for reestablishing the business and a possible reopening:

Strengths

• Close proximity to large potential customer base. Course is embedded in community of approximately 1000 homes.
• Apparent willingness of current owner to enter into a lease agreement with new management.

Weaknesses

• Little interest by outside individual or groups to purchase or lease premises and reopen as a golf or country club.
• Two large mortgages ...mortgage debt far exceeds the value of the property.
• Facilities / infrastructure in total disrepair ...greens, fairways, bunkers, practice areas, club house and other building structures at end of useful life.

Most recent management / ownership allowed club facilities to deteriorate and, consequently was responsible for large membership and per round play decline. Major hurdle to reclaim lost members, rebuild facilities and reputation of club to attract members and daily customers.

• Maintenance equipment, pumps, sprinkler system well past end of life.
• Left-over management and pro staff seen by many as detrimental to any recovery of the business in current form. Requires a complete restaffing, top to bottom.

If the club was to reopen in current condition, it would be well below the playing conditions, at the bottom when compared to the other golf clubs within the market area.

Opportunities

• Sell to willing buyer who reopens the club in its current form but with all facilities modernized, new equipment bought (and where applicable) installed. Employ new management and staff. Incorporate a fee structure that maximizes membership, per round and tournament play from the relevant market area.
• Split the club property into three or more entities.
• The pool, tennis courts and office space by the pool split from club and offered to the Home Owners Association and/or a business person who will provide as community service or lease to HOA for use as a community recreation destination.
• The club house, offer this space to the caterer as an events hall. Alternatively, offer to HOA as a community center. If neither is viable, demolish the building.
• Hold the golf course as a separate entity. If club house and pool have changed ownership, lease parking and golf cart storage for the short term.
• In the short term erect a small hut or rent small house trailer for (non-merchandise) pro shop.
• Longer term, build a new (smaller) golf club house, sports bar, golf cart garage.

Threats

• Other golf courses in market area have upgraded facilities or have upgrades in plans.
• Hostility of former members ...long memory cycle to overcome.
• Other clubs actively recruiting from old member base.
• Lack of funding to purchase, to upgrade, to reopen.
• Economy is limiting number of member candidates; shrinking the applicable market area (gasoline prices).
• Aging population, golf loosing its luster in the younger set. Need fewer golf clubs to satisfy emerging golfer community.
• Changed interests, values. Many organized sports, other activities supplanting golf as a recreational / family option.

Golf and golf clubs may very well be the dinosaurs of current-day America. Whether or not a golf business can be established or reestablished in this environment is very problematic. Personally, I would not invest(?) my money into a golf club.

Certainly, I would not do it without the expectation that anything invested is more likely to be lost than any potential profit gained.