5 things boards of small clubs need to wrap their heads around with planning

Wednesday, November 15, 2017

 

 

In this previous blog post, I wrote in general about planning and aspects for small clubs to consider heading into 2020. Recently, I have worked with some boards of small clubs who have struggled with the concept of planning. Here, I discuss five reality checks.

 

1. You are playing a different game in small club land

Using round numbers, there are approximately 70,000 poker machines in clubs in NSW. Of those, around 40 clubs have 25% of the machines, or around 17,500 between them (not counting the machines of their amalgamated clubs). Only 2 clubs in the top 40 are out of the Sydney metro area.

 

There are 810 small clubs in NSW, and we’re defining small clubs as clubs with under 60 machines. It equates to around 70% of the total number of clubs. Between the 810 clubs they share 17,500 machines.

 

The number one club earns around $87 million from its gaming machines. A club with 40 machines is going to earn around $2 million from its gaming.

 

Most industry events and consulting businesses are fighting for the top end of the pie. In that top 40 clubs, you’re talking about around $1 billion dollars of revenue. Compare that with the small clubs with their lower daily machine averages and you get a smaller revenue pie spread around a massive area, mostly regional.

 

Put simply, the business of small clubs and their capacity to grow is very different to the business of large clubs and clubs that are supported through amalgamation.

 

2. Your general manager is under resourced

A CEO of a large club is paid a handsome wage, has a highly competent management team, and a hive of consultants to manage and grow the business.

 

A CEO running a club of around 70 machines is going to be paid around $150k and with 200 machines is going to be paid around the $200k mark. These CEOs often have specialised managers in key areas and still utilise consultants for big tasks such as elections, strategic planning, and catering reviews.

 

The CEOs of small clubs, however, are on anything from $70k to $140k and usually are supported by an administration person and maybe another operational manager. However, the boards of small clubs seem to imagine that their manager can do everything. There is no support for investment in specialised assistance in governance, strategy, marketing, catering… anything!

 

The excuse I hear often is that the board will help, but they never do. Statistics show that 70% of clubs in NSW have no strategic plan. It is no coincidence that small clubs make up 70% of total clubs… and I could put money on the correlation.

 

Boards of small clubs, your CEO is already doing everything and having to work highly operationally. It is unfair and unprofessional to tell the manager to also conduct a specialised research project like strategic planning.

 

Planning for small clubs using a consultant like me is not the expensive and time intensive process it is for the top 40. But it must be done to get your game piece moving in the right direction.

 

3. Every part of business is important, and boards need to know when to get out of the way

When planning, every part of the business is important.

 

While boards may want to get their hands into the operations of the business, the planning process is an opportunity to set the direction and vision of the operation… then get out.

 

Planning also needs to consider governance, staff and leadership, as well as facilities, master planning, and saving money for investments so the business can grow and be sustainable.

 

Research for planning is usually where you discover untapped resources and opportunities. It benefits from a fresh set of objective eyes, which no board member or GM possesses!

 

The quickest way for boards to put their club into a precarious position is to be far too involved in operations and hand out jobs-for-the-boys. Hospitality is probably one of the most unforgiving careers. There are so many moving parts that need a single manager, not a committee.

 

4. Every driver of business needs funding, resourcing, and measuring

As an extension of the above point, each element of the plan needs to be funded, resourced, and measured. I have seen many boards of small clubs struggle with setting appropriate measures. The CEO often struggles with financial reporting as well, with a career path less about accounting and more about bar and operations.

 

I wrote a small book on setting out monthly financial reports this year which a zillion people downloaded. Contact me if you’re interested in receiving a copy.

 

I include simple measuring tools in the strategic plan so the board and CEO can measure the financial and non-financial measures against the plan. This helps the board and manager make timely adjustments and avoids the blame-game in which I see many untrained small club boards indulge.

 

5. Managing a small club is a tough gig and recruitment is key

Attributes in a good small club manager include resilience, ability to lead a small team, and make something from nothing in some cases.

 

However, it is not a good idea to try and recruit everything from one person – it is a tough ask especially when the board pays low wages (compared to the rest of the industry) and there is a limited ability to grow the business to increase bonuses.

 

That is what makes planning critical for a small club. There is a requirement for boards to match the businesses’ priorities (not their personal priorities I might add) with the skills of the manager. The skills that the manager does not possess is where you can engage consultants, recruit other team members, or develop skills of incumbent team members.

 

Summary

Boards of small clubs, remember these constraints and challenges with governing a small club;

  1. While you may go to the conferences and seminars, most products and services are geared to the bigger end of town

  2. The manager running your club is under resourced in terms of time, so support them in getting specialist help when necessary, and get help for yourselves with board training – I thrive providing this service

  3. Planning considers every part of the business, not just the price of beer or quality of schnitzel

  4. If you don’t understand small club financial measures, then get someone in who does and get them to train you in monitoring what you should be monitoring in the boardroom… like me

  5. Expert planning will help you hire the best manager for the job, or help the incumbent manager recruit a team to help grow the business

 

Integrated Governance and Hospitality People are experts in working with small and medium clubs.

 

Contact

SHAYNE LESLIE on 0412 241 773 or shayne@integratedgovernance.com.au

ABIGAIL JONES on 0438 649 952 or abigail@hospitalitypeople.com.au 

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