Profit: essential for all

Decades ago I attended a multi-day conference centered on the retail industry. During one session the presenter emphatically stated that it was important to our customers that the business be profitable. Although that made total sense to one side of my head, I could also hear the other side pushing back in quiet tones, the number of times customers had asked me for a discount; many times a deep discount. These folks were concerned only about their pockets. They assumed we were doing what we needed to do to make money. We certainly wouldn’t be opening the doors every morning to break even, or worse, to lose money, right?

That is the assumption held by most consumers, that a business has its ducks in a row as they open their doors. The subject of this post may sound a bit silly, but I believe it to be timely and relevant. After working on the retail side of the street for many years, I can tell you this is a serious subject with important takeaways. In this In My Opinion post, I present three thoughts on the subject of running a profitable operation. Although I could write pages on this subject, this is simply a 3-idea blog post:

Educating and training the entire team in the areas of building profit, gross margin, shrinkage, and reducing service errors, is a vital part of a well-planned development program: How deep you dive is based on what you and the ownership want to reveal. It is important, however, for every staff member to know the do’s and don’ts of discounting, membership perks, and other potential decisions made too often in the heat of the moment. Once you and your managers build the pricing model, it is important to educate all on that model, with any freedoms you plan to add. 

Building in plenty of margin from the start is essential to growing and sustaining profit: There will be some products and services that members look toward as being negotiable. There are other items on the service menu, the restaurant, and in the golf shop where members appear to be fine with the sticker price. As you work with your leadership team in each area, you may want to set up pricing by item and not with a generic margin formula. I suggest doing spot price checks every quarter, searching for items that require an adjustment, whether it is higher or lower.

The world is certainly a different place: Shrinkage is rampant. Business leaders and their teams are required to be much more proactive with structure and control. The products and other property assets must be protected throughout the day. Ongoing education and reminding all of what is important is a part of this effort. It is easy to get comfortable and believe it happens only to other properties. In addition to protecting the assets during the day, executing the proper lockdown procedures every evening is a critical step in the closing process. Know the property, know your team. The shrink number I heard for 2022 was $95 billion. That is one very large amount of product! You can see that strict diligence and proactive efforts are more valuable than ever. Observation and common sense play a large part in controlling this issue.

The industry has had an amazing run since June 2020. New golfers, old golfers, and renewed golfers came to play, with many still on the tee sheet. It is easier to make money with a seemingly unlimited number of golfers. One day the tee sheet will soften. Even those who fell in love with the game will take a step back and adjust their calendars. Setting fair, competitive but profitable pricing can work for you, even when this season of plenty disappears. It comes down to a smart pricing strategy, an ongoing education of your team, and the control of price adjustments and unnecessary markdowns to keep profit numbers growing. Keep a close eye on the numbers. When you see a problem, stop and stomp it out in the moment. Profit is a good thing — a very good thing.

Jack Dillon writes the In My Opinion post. He is an author, speaker, consultant, and brand ambassador. Jack is available to help your club and team improve your success. Check out Jack’s new book, The Grand Tug of War: buying and selling in the Real World on Amazon. To learn more about Jack or to schedule a Zoom meeting to learn more, go to www.youdontknowjackd.com. You can also call Jack at 407-973-6136. Jack lives in Orlando.