Wednesday, November 23, 2011

Core Golfers & Technology

The National Golf Foundation recently released a report called “Core Golfers & Technology – Engagement with the Digital World, Including Social Media.”  I wanted to pass along some of the key findings along with my thoughts about their implications for golf entrepreneurs.

The data focuses on “Core” golfers, which accounts for 14.8 million of the 26.1 million total golfers in the United States.  “Core” golfers play 8+ rounds per year and are a critical market for most companies in the golf industry to capture. 

Here are the highlights:

Internet / App Use:
% or #
Researched Golf Equipment Online
84% (30% purchased)
Downloaded Golf Related App
2.4 million, or almost 20%
Would prefer high tech device in app form over dedicated device
4.3 million, or 29%
Regularly read blogs/reviews about golf brands, courses or travel
4.6 million, or 31%
Use Facebook, LinkedIn or Twitter
71% (compared to 56% of nt’l pop)

All numbers from this chart are increasing significantly by the year.  For example, mobile app downloads for golf-related items are double in 2011 what they were in 2010 across several categories, including apps to: receive industry news, engage with specific brands, book tee times, track scores/handicap and measure distances.

Turning now to marketing and brand engagement, core golfers had this to say about how they prefer to connect and interact with brands:

Communication Preference – Email vs. Social Media:
Social Network Service

Likelihood to Increase Loyalty & Expenditure:
Social Media Service

Email remains consumer’s overwhelming preference for engaging with golf brands but the gap is closing while both communication venues are increasingly important for building loyalty.

Here’s what I think it means:

The takeaways from this data will vary depending on your niche in the industry, but I think there are a couple of overarching themes for all of us:

1.    Golfers are increasingly using the Internet for golf research and purchases so you need to be there with an engaging website that includes blogs, reviews and other relevant information.

2.    A strong email marketing campaign (and thus a large and growing email database) is essential for communicating with customers.

3.    An active and relevant social media campaign is less important right now than email marketing but this gap is closing so it’s time to get on Facebook, Twitter, LinkedIn and others with a well-planned strategy.

4.    If a mobile application is relevant to your business in any way, develop and deploy it.

Good luck and happy entrepreneuring!

Friday, November 11, 2011

TGA is Now TENNIS & Golf Adventures

I’m pleased to announce that TGA has officially launched a second franchise company called TGA Premier Youth Tennis that closely replicates the model of TGA Premier Junior Golf.

The decision to enter the tennis industry has been under consideration for at least a year and it brought up a host of issues that drilled to the core of our company and its entrepreneurial spirit.  I wanted to share some of them with the hope that they’re applicable to you as you consider, pursue and/or manage your entrepreneurial endeavors.

Core Competency – What is the company really good at? 

Most people think of TGA within a golf context – that we’re really good at running golf programs on elementary school campuses.  For many years, we saw ourselves in this way too. 

But as the company evolved, we recognized that anyone can walk onto a school campus and try to teach golf.  Many have.  But no one has achieved anywhere close to our type of size and impact.  The reasons for this are twofold – 1) we created a viable business model for scaling a school-based youth sports business; 2) we focused heavily on being an “enrichment” program – i.e. building a classroom environment with instructors trained on educational concepts who deliver programs that include character development, life skills, physical activity and the integration of academic subjects such as math and science. 

Thus, our core competency is not about golf but rather the ability to deliver enrichment programs through a business model that is viable, replicable and scalable.  As such, we believe that any popular sport/activity not traditionally done on a school campus (e.g. tennis and golf) can be plugged into this model with success.

I believe that understanding a company’s core competency is probably the single most important factor to building long-term sustainable growth and I’m confident that we got it right.

Organizational Values – What does the company stand for?

Everyone involved with TGA is hugely passionate about golf.  Most people get involved with us to pursue this passion and it's one of our single most unifying values.  However, while some of these folks are also tennis enthusiasts, just as many are not and have no emotional interest in being involved with a tennis company. 

We put tremendous thought and research into whether a voyage into tennis would fracture the foundation of our organizational values.  We determined that the answer is “no.”  The reason is because we believe there is a deeper value we all share than golf, and that is a stronger passion to positively impact kids, families and the communities we serve.  We feel that tennis adds opportunities for us to do this in greater scale and effectiveness.

Additionally, franchise law forced us to offer tennis as a separate franchise from golf so people can choose which programs and passions they want to pursue – golf, tennis or both. 

I believe that having a corporate identity with clear core values is critical to building a strong organizational culture and I think tennis keeps ours intact while offering opportunities to make it stronger.

Risk vs. Opportunity – How much are we willing to gamble?

We ran pilot-programs for tennis in six markets nationwide and the early results were encouraging, albeit preliminary.  Then, various opportunities of high intrigue within the tennis industry started arising as people took note of what we were doing.  Joshua Jacobs, TGA’s CEO and my friend/partner, is an ambitious visionary who operates mostly based on experience and instinct so he wanted to move full steam ahead.  I am more of a quantitative, process-driven individual so I wanted to proceed slowly, if at all.

Ultimately, I remembered something my dad always says which is: “Things either get better or they get worse, they don’t stay the same.”  And I think that is very relevant here.  Josh was right – we have an opportunity to do something great with tennis and opportunities like this are few and far between.  So we compromised by slowing him down and speeding me up. 

Yes, there are definite risks and significant challenges with our decision.  But we’ve been diligent about our preparation and feel confident with our decision.  And that’s the key – understanding risk tolerance and making educated decisions.  For us, it’s time to take the leap and see what happens.  Ready Fire Aim.”

Or, as we say at TGA, “Keep Swinging!

Thursday, November 3, 2011

"Owner's Discretionary Income"

Everyone wants to know the same thing when analyzing a business – what’s the profit?

Prospective business owners want to know a company’s earning potential.  If analyzing a franchise, candidates should (and often do) ask existing franchisees how much money they’re making and what the financial viability of the system is.

Business owners want to know how much value they’re deriving from the company.

Investors, board members, franchisors and other interested parties want  to know the operational efficiency of the business.

The problem is that determining “profit” isn’t as simple as looking at the bottom line of a P&L – especially when analyzing a private company like TGA Premier Junior Golf that is usually home-based with a single owner/operator.  That’s because the P&L often includes a variety of benefits to the owner that are entered as expenses, such as an owner’s salary/draw, entertainment, etc.

At a recent conference, I learned of a financial calculation from a fellow franchisor that solves this problem.  It’s called “Owner’s Discretionary Income.”  Here’s the equation:

company profit (Net Income line of the P&L)
+ owner’s salary (including draw, dividends, etc.)
+ fringe benefits (things you’d likely pay for out of your own paycheck if not a business owner)
= Owner’s Discretionary Income

This calculation tells you exactly how much value a business is delivering to its owner.  It also tells you how well the business is functioning from an operational standpoint.  That, in my opinion, makes it extremely relevant and important for business owners and prospective entrepreneurs alike.