If your club is experiencing exciting revenue growth but rising expenses are eating into those gains, you're not alone. Inflation is a major factor driving up costs across the board, from wages and materials to utilities and interest. This, coupled with staffing challenges and regulatory burdens, can leave management feeling overwhelmed.
The first solution that normally comes to mind is to increase sale prices to combat the costs of expenses. However, this could be detrimental to your business for a few reasons. First, it might price out existing customers who are accustomed to a certain price point. Second, it could open the door for competitors to undercut your prices and steal market share.
Take control of these 3 expense categories.
Expense category #1: The often-overlooked suppliers' costs
Here's where you can make a real impact, as it is one of your biggest expense categories.
Reliable suppliers are crucial to any successful business, but are you getting the best deals? When was the last time you compared quotes and services? Reviewing suppliers (at least every 3 years, especially if quality dips) can yield significant savings.
Our recommendation? Take action now.
Pick your top 15 suppliers by cost and request quotes from competitors. Investigate references and negotiate better rates. You might be surprised at the potential savings.
Expense category #2: Uncovering hidden costs
Schedule a cost-benefit review of all subscriptions and licenses. Are they essential for business performance, or can you do without them? You'd be surprised how often you find unused subscriptions eating away at your profits.
Expense category #3: Equipment maintenance
Repairs and maintenance are significant costs, especially post-COVID. Understanding your machinery's age, replacement costs, and maintenance history can help you plan strategically for replacements and prioritise preventative maintenance.
Understanding your expenses, suppliers, and industry trends can help you make informed decisions. Talk to industry contacts and alliances to identify better deals and best practices.
Not sure where to start?
Cutcher & Neale measures and compares our club and hospitality clients on a number of members and club size (square meterage) to understand key expenses for the industry. Benchmarking tools like our reports can help you compare your costs to similar clubs.
By implementing these strategies for managing expenses, you can free up resources to reinvest in your club, improve member experiences, and weather future economic uncertainties. Remember, a proactive approach is key. Don't wait until rising costs become a crisis – take control today and set your club up for long-term financial success.
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Nick is a registered company auditor and strongly believes in the value of the audit function for clients and is strongly committed, both personally and with his audit team, in providing extensive feedback and advice in respect to key systems and controls. Strong controls improves governance and financial reporting throughout the organisation.
His broad experience in the club and hospitality industry and also not for profits, mining and manufacturing, coupled with his strong analytical skills have been invaluable when working with Boards and Management to implement risk management and business improvement strategies.
