Bringing dead space to life
7 June 2018
Most clubs have grown amoebically over time and as a result often find space that was once heavily used in a former layout, now lies dormant....if not dead. When was the last time the committee discussed the dollars per square metre being generated from a floor plan, area by area?
Logically the gaming room tends to be the best generator of cash flow, and also profit per square metre, while function rooms are the worst, mainly because of sporadic use patterns. So, what can you do with "dead" space in a bid to revitalise it and generate better cash flow?
Some clubs have turned small awkward spaces into kids play zones, which also brings in their mums, while other have opened up additional services. Investing in function room divider walls can be one solution in better utilising that big space, creating the ability to offer smaller, more functional training or conference space that will be utilised more often for service or sub-club meetings, corporate training and small to medium-sized functions.
Inthe CBD, the small bars trend, popular with both millennials and Baby Boomers, often features single-spirit or drink focus - such as whiskey bars and cocktail bars. There is nothing stopping a club creating a small bar within the club, to target a key feature demographic in millennials, or even reviving a former wine bar which would be a big hit with Baby Boomers and can often tap into the local beer and spirits producers in your area.
As each situation is different here are five key steps required to implement any changes.
1 DO YOUR RESEARCH
Conduct some research with members and the community to find out what products, services or facilities are lacking locally in your area or surrounding region, they'll soon tell you what they want. There may be more than one good idea (and no doubt some silly suggestions) but you can sort the "wheat from the chaff" and probably find a great idea to investigate.
2 DO YOUR COSTINGS
Once you settle on an idea or two, complete your due diligence to find out what is involved in implementing it. Is it a coat of paint or a more complicated renovation? It might just be cleaning an area up to make it servicable again. Examine all the costs: equipment installation or removal, furniture, technology, refrigeration, coffee machine, cinema projector and seating etc. and do some projections on possible revenue. Look at additional or reallocated staffing required to operate the additional service or area. Look at payback period and calculate the longer-term contribution to the bottom line. Decide how much the club can afford to invest in the project and decide what the trigger is for saying, "This isn't working, so let's close it down".
3 IMPLEMENT YOUR PLAN
If steps one and two pan out, then create a plan to put everything into place. Be realistic in assessing how long it will take to renovate or build the new facility, including getting the necessary Council or Liquor & Gaming approvals, so you have time to deliver without huge stress. Look at tendering for the provision of services and try to work with local contractors where possible, to create an additional benefit for the local economy.
4 MEASURE REVENUE CHANGE
Once the new product, service or facility is up and running, monitor its progress. You have already decided what the "nope it's not working" trigger is, so you need to measure this diligently over the first few months. Some things might take a little while to kick off so be realistic in your expectations, and give it a chance to prove itself. Hopefully after the investment of setting it up, training (possibly additional) staff and promoting the launch, you will start to see returns in both gross revenue and profit terms. For those things that require little or no investment and no change in staffing numbers, the returns will hopefully be more obvious.
5 COMMIT OR CANCEL
As mentioned, you need to be ruthless on the outcome. If you are not getting the returns projected, your contingency needs to kick in and you may need to cancel the project. On the other hand, if it is delivering, you can happily continue to provide the additional product, service or facility to your members and the community.
Depending on your location and surrounding market size, and the underlying financial strength of your club, work on implementing the change in the most cost effective manner - and breathe some new life into that previously dead space.
(SOURCE: Ron Browne, ClubsNSW Manager - Professional Development, ClubLIFE May 2018)