Expanding the Capital Base of your Private Club | Invest for Membership Satisfaction
Using Capital Spending to Preserve, Modernize, and Reinvent Your Private Club To Ensure Membership Satisfaction.
Your Club’s Property and Equipment, net of accumulated depreciation, is what we refer to as your capital base. If the balance has steadily increased over the past five to ten years, your capital base is expanding. It’s an important measure of the health of your club. It means that you are replacing and improving your equipment and facilities faster than depreciation consumes the value of historical investments. It also implies you are generating sufficient additional capital to do so; a sign of a successful club. If your capital base is declining, your Club’s relevance in the market is at stake. You are not preserving, modernizing and reinventing a critical component of membership satisfaction and the future of your Club.
As noted above, we divide capital spending into three categories: preservation, modernization, and reinvention.
- Preservation and replacement of existing assets, typically furniture, fixtures and equipment, are critically important investments. Deferring them will signal the start of a downward spiral. Catching up will be problematic.
- Modernization spending, or significant upgrades to existing facilities, will be more noticeable and improve the current user experience. These investments will lead to greater membership satisfaction and make your club more desirable to prospects.
- Reinvention spending will add amenities or enhance existing offerings on such a scale as to help redefine the Club in the eyes of members and prospects. They are transformative. Reinvention spending is critical in an era of rapidly evolving expectations of Clubs, competitor upgrades and the desires of several generations of current and prospective members.
Many factors go into a Club’s financial sustainability: a self-perpetuating, highly-satisfied membership, a valued culture, a defined vision and effective governance are certainly significant parts of the equation. However, none are as tangible as the physical assets of the Club. Continuously preserve, modernize and reinvent your capital base. It’s one of the most important actions you can take. To ensure consistent execution, be sure your Reserves Study and Facilities Master Plan are current and update your long term financial plan annually.
Club Board Professionals is a strategic financial consulting and training firm. The Principals, Dave Duval and Joe Abely, assist clubs achieve excellence in three areas: governance, financial sustainability and membership satisfaction. Contact us for a complimentary initial assessment of your club.
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