The Value of Benchmarking at Private Clubs
Benchmarking is a tool that provides Private Club boards and management teams a way to compare their Clubs with peers. Here's what to consider when benchmarking.
Benchmarking is a process for entities seeking to compare financial performance and operating metrics to others in the same industry. By analyzing the results and practices of others in the same space, an enterprise can potentially improve on its own understanding and management of operations and practices.
A Process For Private Club Benchmarking
Benchmarking is an important tool to be used by Boards and Management Teams of Private Clubs. There is good benchmarking data available. Our friends at Club Benchmarking, Inc. and Condon, O’Meara, McGinty and Donnelly, CPAs have been at the forefront of providing such information.
For Private Clubs that either currently benchmark or are evaluating the use of benchmarking processes, there are some factors to consider:
- Benchmarking is an important tool that a Private Club has at its disposal and should be considered during budgeting, strategic planning, and Board training sessions.
- Benchmarking helps Boards and Management Teams think about plans and operations in new and more intelligent ways. It may also help minimize Board input drawn from other industries that may not apply to Private Clubs. The operating, financing, investment, marketing and governance practices of Private Clubs have their own unique characteristics.
- The first thing the Board and Management Team of a Private Club should do is understand the goals and limitations of benchmarking. It is, after all, a tool and not an answer or mandate. Comparing your Club to others of similar stature should identify variations that are worth understanding. It’s not a case of right or wrong, it’s just a process to help develop more thoughtful questions and a better understanding of the surprising complexity of Club business. Be sure to benchmark against a comparable set of Clubs.
- In selecting Private Clubs to benchmark against, it is important to choose a peer set with similar amenities. Comparing a golf-only club against club that includes those that provide pool, racquet sports, fitness centers, multiple dining venues, etc. would make the comparison less meaningful.
- For the same reason, simply selecting clubs in your geographic area may not produce the most meaningful result. Comparing yourself with clubs of your general revenue size and, to the extent available, other factors including number of golf holes, amenity offerings, F&B revenues, etc. will help produce more meaningful results. Studies by Club Benchmarking have proven that geography means far less than one might intuitively suspect.
- In addition to financial data, benchmarking operating data such as golf rounds; the financing of capital expenditures, long-term debt member counts, dues and initiation fees; restaurant covers, governance practices etc. can be very valuable.
- It is important that a small group is tasked with leading the benchmarking process, ideally including a member of the Board (Treasurer) and either the General Manager or the Controller.
We recommend that benchmarking be an annual process and the Board supports benchmarking as a tool that encourages improved understanding and management of Private Clubs.
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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