The
Legends
Golf
Course
December 2
2010
Comprehensive business plan for establishment of a world-class golf
course in the community of Warman
A.J. Nolin
Table of Contents
Executive Summary…………………………………………...……….. pg. 2
Mission …………………………………………………………….... pg. 4
Objective of Organization……………………………..………….. pg. 4
Operation Plan
Location……………………………………………………………… pg. 4
Site Plan …………………………………………………………….. pg. 6
Organizational Structure…………………………………………… pg. 7
Typical Operating Day…………………………………..……….… pg. 8
Typical Customer Flow…………………………………...…….….. pg. 9
Suppliers…………………………………………………………….. pg. 9
Expenses for First Year & Capital Budget……………………….. pg. 10
Human Resource Plan…...................................................... pg. 11
Wages Breakdown…………………...…………………………….. pg. 12
Marketing Plan…………….……………………………………… pg. 12
Competitive advantage…………………………………………….. pg. 12
Competitors……………………………………….......................... pg. 13
Marketing Strategy…………….…………………………………… pg. 13
Marketing Budget…………………………………………………… pg. 15
Revenue Projections ………………………………………………. pg. 16
Financial Plan……………………………………………………….pg. 17
First Year Start-up Expenses……………………………………… pg. 17
Working Capital………………..…………………………………… pg. 17
Break Even and Feasibility………………………………………… pg. 17
Summary………………………………………………...………….… pg. 19
Appendices…………………………………………...………….… pg. 20
1
Executive Summary
The Legends golf course is a new community run, course built in and
around new housing development in Warman, SK. The course itself is
built with an emphasis on quality and provides golfers with a track that
offers a challenge, exceptional practice facility, member services, and a
fully licensed restaurant and lounge. The Legends is rated by the RCGA
as the second most challenging golf course in Saskatchewan and is a
top contender for the prestigious “best new course in Canada” award
presented by Score Golf Magazine.
The purpose of this business plan is to outline the process of operating
this world-class facility. It outlines the operations, human resources,
marketing, and financial plans. These plans explain in detail how the
business will be run, at what costs, and who will manage the course,
and what projected revenues are over a 5-year time frame.
Included at the end of this business plan are projected financial
statements, expected costs for the first year, break even analysis, and
projected price rates for the 2011 season.
With the establishment of a quality, world-class golf course in Warman,
the community will not only receive a beautifully manicured piece of
property, but will also realize economic value from the traffic that this
establishment brings in from around the province.
2
The Legends:
The Legends is a world class golf course built and operated by CPGA Professionals to
provide the community of Warman a place to play. The club itself will be run by a
member selected board of directors in a not-for-profit setting. The Legends has 18
challenging holes, 14 of which feature massive water hazards. The course is 7300
yards from the tips, and is rated at 74.5 strokes according to the Royal Canadian Golf
Association. The clubhouse features a full service pro-shop on the lower level, drive up
concession, full menu restaurant and lounge, and a beautiful glass deck overlooking the
entire golf course.
The Idea of building a new golf course in Warman was originally conceptualized by
Dave Holst. He is the owner and operator of the Warman Homes family of companies.
These consists of the Warman Home Centre, Warman Truss plant, Warman Homes
ready to move division, sheet metal factory, and has in recent years expanded into the
real estate development. Mr. Holst owns a substantial proportion of land around the
town and began to subdivide and sell lots for new housing expansion. One of the
requirements of the town is to build into new housing developments green areas and
parks. So instead of building parks all over he would build a brand new golf course
among his housing development. He would spend 10 million on the course, and in trade
he would receive the land where the existing course is located, not to mention the
benefit of fitting more housing into his development, and the prestige of having a quality
golf course backing your property. In 2006 the board of directors decided that it in the
best interests of the club, and signed a contract with MR. Holst to move forward with the
agreement. In spring 2007 they broke ground for the first time on the land that was to
become the Legends.
The golf course industry is extremely competitive. There are over 100 courses within
Saskatchewan. The number of golf services developed around this industry is almost
five times the number of actual golf courses. These include lesson facilities, golf retail,
golf trip planning, simulated golf, and golf apparel. Golf courses provide many services
offered on an individual basis right at the course. This creates a great opportunity for
revenue by offering customers anything they would need when partaking in a round of
golf. Golf courses not only provide golf related services they provide physical recreation
for their target market, and are a beautiful aesthetic compliment to any community.
The Legends will be a Royal Canadian Golf Association certified course, which requires
the highest standard for quality of service, difficulty of playability, and many other
factors. The most meaningful of these requirements is having a Canadian Professional
Golf Association class “A” professional run the golf course. These people are certified
3
with business degrees, and also pursue further education specific to the golf industry,
and compliment this with on-the-job experience in all facets of the game. These people
are more than qualified to manage and facilitate the everyday operations of a successful
golf course.
Mission:
The Legends prides itself in providing golfers of all skill with a world-class golf
experience, at competitive prairie prices, and treating everyone like they are a member
of a private club, only at a public facility.
Objective of organization:
1.
2.
3.
4.
Transition current members and establish new memberships for new club
Provide a sustainable operating golf course to the community of Warman
Generate income of over $200,000 a year to pay capital investor
Have enough money in 5 years to buy all new grounds equipment, or buyout
lease on ground equipment
Operations plan
Location:
The Legends golf course is located on the north end of Warman, Saskatchewan,
viewable almost in entirety from highway eleven. The location is the biggest opportunity
for the venture. The major market of people for the course is the towns of Warman,
Martensville, Langham, Osler, and as well the north-eastern side of Saskatoon.
Currently the closest full service golf course is located at least a 30 minute drive.
Warman is a quick 20 minute drive, on double lane highway. The towns around and
including Warman are growing at an astonishing rate, because of the boom in
Saskatchewan. These small suburbs are becoming hotspots for people looking for small
town, community living, while still being close to the city. This influx of people will make
up the majority of patrons for the golf course.
4
The yellow Circle is Warman, the red circle encapsulates the target markets of
Martinsville, and the north end of Saskatoon, and the purple box is the area that is
serviced by all other golf courses shown.
Site Plan:
The Legends is built on prime real estate, in and among the legends golf course
community housing development. It’s comprised of eighteen challenging holes, with
massive ponds, and water retention areas, that provide a challenge as well as add
beauty to the establishment. On property will be a paved parking area leading up to a
two story, extravagant clubhouse.
5
6
The Clubhouse is the main attraction besides the grass that makes a golf course
appealing. The first floor of the clubhouse is designated for the pro-shop, club storage,
member locker rooms, and offices for head, and assistant professionals. The second
level consists of a fully equipped restaurant kitchen, lounge seating for 100 guests, and
glass enclosed patio seating 80 guests. The clubhouse is worth an estimated $500,000
when completed.
Organizational Structure:
Board of
Directors
Head
Professional
Superintendent
Grounds Crew
Assistant
Professional
Restaurant
Manager
X 11
X4
Back Shop Staff
X6
Kitchen staff
X8
Restaurant/Lounge
staff
X8
7
Typical Operating Days:
The Legends is open from mid-March until mid-October each season. This totals to
about 200 working days per year. The golf course is open 7 days a week, including
holidays. Operations can be segregated into restaurant, grounds, and pro-shop.
A typical operating day for the grounds crew starts at 4:00 am. All cutting on major
playing holes must be done before, and ahead of golfers starting at the first tee time of
6:00 am. This gap gives them a suitable cushion to finish changing pins, moving tee
markers, and cutting greens. Additional cutting and maintenance is finished in order of
priority, which is determined by amount of interference with golfers. The more a grounds
task interferes with golfers the quicker and sooner it must be accomplished. They work
eight hour shifts with a half hour paid break at 9:00am. Grounds crew shifts end at
12:00pm.
Operating days for the pro-shop staff do not start as early. Each day pro-shop staff
works in teams of three. The first employee arrives at 5:30am and opens the clubhouse;
his duties are to prepare the pro-shop for the first tee-time at 6:00 am. The second proshop employee arrives at 12:00 am. These employees are responsible for all duties
listed in the duties section of this business plan. The third employee arrives at 1:30. This
ensures that in the pro-shop there are 2 people at all times working within the pro-shop.
Business days end at 9:00pm for pro-shop staff.
The restaurant is also required to open at 5:30am. One of the major markets for
Warman is the senior demographic. The seniors usually play earlier in the mornings
before the heat of the day. These customers also enjoy the breakfast and coffee
services offered by the restaurant. To service these customers it is required that the
restaurant be open before the first tee-time. The restaurant and lounge will be open
from 5:30am until 11:00pm Monday through Thursday, and 5:30am until 1:30pm Friday
and Saturday, and only open until 9:00 Sundays.
Grounds crew 
4:00am to 12:30 Monday to Friday
4:00 am to 9:00 am weekends and holidays
Employed from May 1st until October 31st
Pro –shop 
5:30am to 9:00pm 7 days a week
8
Restaurant 
5:30 am to 11:00pm Monday through Thursday
5:30 am to 1:30pm Fridays and Saturdays
5:30am to 9:00 pm on Sundays
Typical Customer flow:
The experience for the customer starts with the drive into the parking lot. There is
opportunity to drop-off bags within a specially designated equipment drop-off loop.
When their vehicle is parked they can then enter the clubhouse from one of two ways,
walk up the main stairs and into the clubhouse entrance, or they can walk around to the
ground floor and enter the pro-shop. If they choose to enter the main entrance they are
greeted by a spectacular glass chandelier, and can either proceed down the stairs to
the pro-shop, locker rooms, and main offices, or they can head directly towards the
lounge.
Once patrons have paid for their round, they can either choose to ride a power cart, or
walk. The power carts will be staged outside the main pro-shop entrance where they are
easily accessible. They can then proceed to the practice tee, putting green, chipping
area, or they can head directly to the first hole. Once a golfer has finished their round
they return the power cart to the back-shop staff, and then have their choice of further
practice, or a meal or beverage in the lounge afterwards.
Suppliers:
There are a number of suppliers for this business. A few are relied on heavily, and
others are just utilized as needed.
Major suppliers are:



Ace of Carts Saskatoon – Provider of Clubcar electric power carts and
maintenance services
Toro – supplier of all grounds equipment, range cart, and beer carts.
Ackalands Granger – provides oil, hydraulic fluids and tools required for grounds
equipment
9


Taylormade Addidas Golf – provides all golf equipment, rental sets, and majority
of apparel being sold within the pro-shop
Costco – Bulk food items and miscellaneous equipment
Secondary Sources:



Titleist golf - supplier of golf balls
Clarks supply – maintenance of out of warranty grounds equipment
Wholesale club Saskatoon – additional restaurant supplies
Expenses for first year and capital budget:
Operating Expenses
Lease Payments ( Equipment)
Lease Payments to town
property Taxes
utilities
135,000
35,000
40,000
25,000
135,000
35,000
40,800
25,500
135,000
35,000
41,616
26,010
135,000
35,000
42,448
26,530
135,000
35,000
43,297
27,061
Pro-shop Supplies
175,000
178,500
182,070
185,711
189,426
Kitchen Supplies
Advertising Expense
Grounds expense
170,000
8,062
173,400
8,223
176,868
8,388
180,405
8,555
184,013
8,727
325,000
331,500
338,130
344,893
351,790
385,000
404,250
424,463
445,686
467,970
Grounds & back shop salaries
310,000
325,500
341,775
358,864
376,807
employee benefits
capital cost allowance
105,223
49,303
110,484
76,419
116,008
42,031
121,809
23,117
127,899
12,714
payment to capital investor
200,000
200,000
200,000
200,000
200,000
Debt interest
-
-
-
-
-
Total Operating Expenses
1,962,588
2,044,577
2,067,358
2,108,018
2,159,704
Total salaries (kitchen & proshop)
The total lease payment to the town is $75,000. This is further broken down in $40,000
in property taxes payable to the town, and $35,000 for a mandatory insurance policy
stipulated by the town of Warman.
10
Human resource plan:
The organization known as the Legends Golf Club will be considered a not-for-profit and
will operate under the nonprofit organizations act. In the case of the Legends, a board of
directors has been established. The board consists of 10 member appointed positions,
1 Town council representative, and 1 Warman Homes honorary member, which make
for a total of 13 board members. The positions available within the board are:
President, Treasurer, Club Captain, and secretary. The board’s job is to audit the head
professional, and superintendent, as well make major decisions regarding the golf
course. Underneath the Board of directors are the Head Professional and Head
Superintendent.
The superintendent - This person must be a Saskatchewan Turf Grass
Association member in good standing, as well as have all required fertilizer
tickets, and chemicals courses. Experience within the turf business is essential.
Additional duties of this position include the staffing and management of all
grounds needs. This includes such things as cutting, renovations, equipment
maintenance, and other essential tasks.
The Head Professional - The requirements for this position is to be a Canadian
Professional Golf Association Class “A” professional in good standing. The
requirements of this classification more than qualify the person for this position.
The goal of the CPGA is to provide the individual with the proper certifications
and education to handle this sort of position.
The grounds superintendent specifies and budgets for a crew of 11 people. These
people are trained on the job and their classification is general labor.
The Head Professional has bigger responsibility on his or her shoulders. The head
professional acts as general manager for the course. His duty is to oversee operations
for the entire clubhouse. This includes the overseeing of a restaurant manager, who is
delegated to run the restaurant/lounge under the general guidelines the head
professional puts forth. The restaurant manager is responsible for staffing the kitchen as
well as the lounge. The kitchen is budgeted to have 8 full time staff, and the
lounge/restaurant is budgeted to have 5 full time staff as well as 3 part time staff. These
minor positions facilitate the day to day operations of the lounge/restaurant, as well as
accommodate banquets, and functions as required.
11
The pro-shop also falls under the delegation of the head professional. Under CPGA
regulations a golf course is permitted to staff four CPGA designated assistant
professionals. Complying with this there will be 4 assistant professionals on staff. These
staff book tee-times, facilitate merchandise sales, as well as teach lessons, and provide
essential services for golfers on a day to day basis. Under these four assistant
professionals will be employed six back-shop staff. These part-time positions are
responsible for staging power carts, golf club cleaning, managing club storage, and
operating the driving range. All of these positions account to a total creation of 28 fulltime positions, and nine part-time jobs.
Wages Breakdown:
Clubhouse Salaries
Head Pro - $70,000
Assistant Professionals – $30,000
Back shop staff - $ 14,400
Restaurant Manager – $35,000
Kitchen Staff - $72,800
Lounge Staff - $72,800
Grounds salaries
Superintendent - $70,000
Grounds crew laborers - $240,000
Marketing plan:
Competitive advantage:
The competitive advantage of the Legends golf course is location, quality, and uniqueness.
These are the main attributes that set each and every golf course apart from the others. The
course was designed by the same person who designed Dakota Dunes, and Deer Valley in
Regina. These courses both won the “Best New Course in Canada” for their opening years.
The course has also been seeded with the highest quality bent grasses, fescues. This makes
the course aesthetically pleasing and also gives championship quality playing conditions.
The location of the Legends golf course is a prime location, just north of Warman on highway
11. The main advantage of this is that all competitors are located south of the South
Saskatchewan River. The closest of these competitors to the northern and western ends of
Saskatoon is 20 – 30 minutes away. Warman is a close 15 minute drive from the north end of
Saskatoon, and 5 minutes from Martensville.
12
Competitors:
Competitor
The Willows
Moon Lake
Holiday Park
Dakota Dunes
Wildwood
Rosthern
THE LEGENDS
Location ( travel time)
Cartwright street (25 mins)
Valley Road (45 mins)
11th strt Saskatoon (35 mins)
Whitecap first nation (1 hr)
East 8th strt Saskatoon ( 35 mins)
Rosthern, sk (45 mins)
( 20 mins)
$ per round
58
56
41
60
28
40
49
The table above shows a list of competitors, and gives their relative driving distances from the
north end of Saskatoon. These courses are all courses that have eighteen playable holes, and
standard member facilities. It can be seen that the Legends is in the higher range of prices,
however the position of the legends is towards this higher price range. There are only two
other courses within the vicinity of Saskatoon that can offer the same services. These are
Dakota Dunes, and Moon Lake, and these courses all have higher prices than the Warman
course. The criteria for pricing of a round of golf takes into account such things as:






Course rating
Clubhouse quality
Practice facility
Power carts
Pro-shop services
Back-shop services
All these things considered it can be said that the Legends will have an extremely competitive
pricing strategy, which adds to its competitive advantage.
Marketing strategy:
The first year for new golf courses is the hardest. Creating hype and establishing a member
base cold turkey is extremely challenging. The Legends golf course is fortunate enough that all
members at the existing nine-hole facility were given a preview in fall 2010 of the new golf
course. This established a base of members that will be transferring over to the new club.
Encouraging public players is where the course makes the most money, and is where most
marketing and positioning will take place. The Legends will use various advertising techniques
to reach their desired target markets, these being of legal age players living in Warman,
Martensville, and the North-end/River heights area of Saskatoon. These patrons usually rent
power carts, and play during weekends and holidays. The Legends will be positioned as a
13
challenging facility that welcomes all skill levels. It is not only the individual that will be
targeted, but the family of individual public players as well.
The Legends golf course will use various means of advertising to target thee target markets.
These include a professionally designed website, Print paper adds in the StarPheonix, Clark’s
Crossing Gazette, as well as a full write up covering the grand opening in Score Golf
Magazine. Other mediums include radio and television ads, transit bus wrap/signage, and
potentially billboard space posted around Saskatoon.
Website – GolftheLegends.com is a fully functional website designed with exquisite graphics,
and flash menus. The website offers detailed information on every aspect of the golf course.
This includes things like an interactive course layout, pictures of the clubhouse, rates, and
banquet forms. There is also opportunity for customers to check the local weather and current
forecast, as well as book tee-times online. This provides interactive functionality while
providing golfers with all required information. The website is foundation upon which all other
marketing tools are based. The website will be referred to as well in all other advertisements.
Print adds - Print advertisements will be distributed across numerous distributions. The ad in
the StarPheonix will be run on a month to month basis, and will reach the Saskatoon target
14
market. The Clark’s Crossing Gazette is a local newspaper based out of Warman, and is
distributed to several townships including Martensville, Warman, Hague, and Osler. This paper
is also given to local shops and businesses to be distributed to patrons. Finally Score Golf
Magazine is a national publication distributed to all RCGA Members. This includes individuals
as well as corporate golf facilities. The magazine is the go to publication for showcasing
various golf courses across Canada, as well as new facilities. Score Golf also presents the
prestigious “Best New Course” designation for all courses in Canada.
Radio/Transit adds – The Rawlco Advertising Company is a great way to bundle advertising
across different mediums. Rawlco Advertising provides advertisements on all Rawlco radio
stations, as well as billboard services, and advertising on public transit services.
Marketing Budget
2011 Marketing Expenses
Website
Print paper adds
$2,500.00
Gazette (1/4 page)
StarPheonix
$312.00
1 week
Score golf magazine
Radio adds
$750.00
$3,000.00
10,0000 impressions
2 issues and 2 add placements
$1,500.00
1 week 15 seconds 60 impressions
Total expenses
$8,062.00
Revenue Projections
PROSHOP REVENUE
MEMBERSHIPS
Adult Memberships
1/2 Couples Memberships
Senior Membership (60 and over)
Senior Mon-Thur (60 and over)
Student Membership (19-24)
Jr. Memberships
Jr.Jr. Memberships
Lockers, club storage add-ons
Total Memberships
Number
100
60
30
40
20
30
20
50
300
15
Amount
$1,600.00
$1,475.00
$1,400.00
$1,000.00
$1,200.00
$500.00
$300.00
$200.00
Total
$160,000.00
$88,500.00
$42,000.00
$40,000.00
$24,000.00
$15,000.00
$6,000.00
$10,000.00
$385,500.00
GREEN FEES
18 Hole Weekend (Fri-Sun)
18 Hole - Weekday
18 Hole Senior/Student Weekday
Junior - 18 holes
Corporate Passes (20 rounds with power cart)
Corporate Passes (40 rounds with power cart)
Corporate Passes (60 rounds with power cart)
Complimentary (includes contra, promotions,
sponsorships)
Total Green Fees
8000
4000
1000
400
10
10
10
$49.00
$46.00
$39.00
$25.00
$1,300.00
$2,400.00
$3,300.00
$392,000.00
$184,000.00
$39,000.00
$10,000.00
$13,000.00
$24,000.00
$33,000.00
600
14000
$0.00
$0.00
$695,000.00
POWER CART RENTALS
Power cart single seat
Power cart single seat lease
Power cart full seat lease
Power cart single seat weekday
Power cart full seat weekday
Total Power cart Rentals
10000
55
10
10
2
$20.00
$500.00
$700.00
$300.00
$500.00
$200,000.00
$27,500.00
$7,000.00
$3,000.00
$1,000.00
$238,500.00
DRIVING RANGE
Large Bucket
Small Bucket
Total Driving Range
1000
500
$10.00
$7.00
$10,000.00
$3,500.00
$13,500.00
350
300
$10.00
$25.00
$3,500.00
$7,500.00
$11,000.00
$70,000.00
$3,000.00
$5,000.00
$27,000.00
$45,000.00
$8,000.00
$80,000.00
$1,493,500.00
RENTALS
Pull Cart Rentals - 18 holes
Club Rentals - 18 holes
Total Rentals
Pro shop Merchandise Sales
ADVERTISING REVENUE
Hole Sponsors (5 years)
Hole Sponsors (10 years)
Other Grants and Advertising
Total Advertising
TOTAL PROSHOP REVENUE
9
9
KITCHEN REVENUE
Food Sales
Drink sales
Alcohol Sales
TOTAL KITCHEN REVENUE
$150,000.00
$50,000.00
$150,000.00
$350,000.00
TOTAL CLUBHOUSE REVENUE
$1,843,500.00
16
Financial Plan
The financial plan for the Legends is based around a simple break even analysis and feasibility
study. The perspective of this business plan is from the board of directors/head pro position.
This takes into account that all costs relative to the building of the golf course, outbuilding and
clubhouse will be absorbed by Dave Holst. The agreement outlined by the town and Mr. Holst
states that he will build the golf course and the Legends Golf Club will pay him $200,000 a
year for the next ten years. For this financial model the Legends golf course considers this an
expense paid to a capital investor. The financial model used will state that all costs of
furnishing the buildings, purchasing equipment, and all other required inventories. All
projected financial statements forecast a 5 year projection, and are provided in the appendices
that follow.
First year Start-up Expenses
The first year for the Legends has the highest amount of expenses, like any start-up business
venture. These expenses are generated by the need to purchase equipment and furnish the
pro-shop and restaurant/lounge. The costs for which are $111,000 and $108,123 respectively.
For a detailed breakdown of all equipment and furnishings needed see appendix 2.
Working Capital
The Working capital structure for the Legends golf course is fairly simple. Working Capital
consists of Inventory and Accounts payable. All suppliers give credit rates of 2/10 net 30, and
payments to utilities give 30 days’ credit. The Legends will send payment to creditors twice
monthly, or within 15 days of receiving an invoice. The other account in working capital is
inventories. The credit terms are listed above and the average number or days to turn over
inventory is 31 days or roughly a month. This equates to inventory turning over about five and
a half times during the six months of operations for the club. There is some room for error in
this statement. Some inventory may be held over until the next season, such as clothing and
clubs. There are retail strategies that can fully eliminate the need to carry forward inventories;
however that is subject to some variability year by year and depends on point of sales staff.
Customers are required to pay by cash or an independent credit card company. This
eliminates all accounts payable for the Legends golf course.
The Legends golf course will carry over an operating line of credit from current operations at
the existing course. This is in the amount of $10,000. Bi-weekly payments will also be made to
this account, and total months payments should equal the monthly owning balance. This line of
credit is strictly used as an emergency financial source.
17
Break Even and Feasibility
Critical Variables
The legends golf course is faces with two critical variables that drive revenues. The first is
public player green fees, and the second is the utilization of power carts. Public players are not
members, and usually play weekends and holidays, when green fees are full priced. Power
cart utilization is the numbers of patrons, members or public, who choose to rent ride a power
cart instead of walk. Within this business plan the way that these critical variables contribute
towards revenue is in proportion to capacity utilized.
Total public green fees = total golfers per day X % capacity utilized X (public
players/member rounds)
Total Riding = total number of public green fees X (riding rounds/walking rounds)
Base Case
The optimal case for the Legends Golf Course is having total utilized capacity grow over the
first five years. The higher the utilization rate the more revenue is generated. This is especially
true because the first two years after opening a golf course see the highest ratio of public
players to membership rounds. In the next three to five years the proportion of public players to
membership rounds goes down, as public players buy memberships. Capacity in the optimal
case grows from 45% to 75% in the first 5 years. The assumption of this plan is that after 5
years the capacity utilization levels out to a constant level, and only the ratio of public players
green fees to membership rounds changes.
Break Even
Being a non-profit organization the Legends main goal is to break even over the long-term
lifespan of the organization. Looking at capacity utilization, to break even the first year would
require a capacity utilization rate of 44%. For the next 4 years to break even, would require
capacity utilization rates of 51%, 72%, 80%, 79%. The reason these rate become higher is that
the ratio of public player green fees to membership rounds is decreasing.
18
Break even vs optimal
90%
Capacity Utilization
80%
70%
Break even
base case
60%
50%
40%
2011
2012
2013
2014
2015
The above graph shows the base case vs. the break even amount of capacity utilization. In the
base case the capacity utilization rate grows at a steady rate and then levels off in year five.
Due to the cost structure, and falling ratio of membership rounds and public player green fees,
the capacity utilization rate must increase at a fairly exponential rate to break even. This has
been factored into the business plan in the sense that the break even value is the essential
goal of the business. If the scenario arises that break-even levels are not met within the first
two years, the town of Warman has granted additional emergency finances as a contingency
plan for not meeting revenue projections. This scenario is highly unlikely due to historical
trends in the business.
Summary
The Legends golf course is a great opportunity to add value to the community of Warman. This
facility will open 28 new jobs within the community, and offer a great pass time to players of all
ages. The Legends will be more than capable of competing with the top courses in the
province, as well as earning a world-class reputation. All the pieces are in place, the next step
is making the dream a reality.
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Appendix 1:
Projected
Financial
Statements
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Appendix 2:
Detailed
Expenses
Year 1
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Appendix 3:
New
Equipment
Needed
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Appendix 4:
Projected 2011
Rates Detail
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