Profits Versus Overhead Costs

[Epee Scherma]

I'm researching buildings to start my own fencing club. I understand the management and marketing of a fencing club is some hard work for sure. I'm working on making my own plan/program before I lease out a building.

In my research I see how much the rent is. For a small space in a poor facility it can be even 2k minimally.

How much does your club's income surpass the necessary overhead? (How much profit?)
How many members do you have?
How many classes, and numbers of students?
I'm looking for some hard figures. I would greatly appreciate anyone's input regarding this, it will give me a greater idea of whether I should continue in this endeavor.

[Craig]

Those are some good questions. Are you looking at only the cost side, or are you also figuring in the variables of how much cost new members have as well? (In other words, a baseline of X in revenues for their monthly fees plus an additional Y in revenues from classes/lessons minus the extra coaching cost of those lessons.)

If anyone has a financial model to share that would be great, otherwise I'll have a look at some other business plans that have similar aspects and see what I can put together.

Craig

[Epee Scherma]

Hi Craig, yes I think this information could be very useful. I'm more interested in learning how much fencing clubs are paying for lease/utilities and how much the administrator/head coach takes home at the end of the month.
Thank you for your response. For sure if anyone has a financial model this would be most interesting.

[jfarmer]

I'm not sure that 1. any specific answers you get would be usable and 2. I doubt most small businesses would tell you their profit margin in an open forum.

Rent on space varies around the country (or world) and your requirements are going to be different. For example, if your climate is a moderate one, then you might not need cooling for the summer months, unlike here in the Southern US.
Types of space available also vary. Perhaps in your area there is inexpensive rental spaces with decent wooden floors in large gym size rooms. Around here, most space like that will have a poured concrete floor, thus requiring additional expenses for suitable flooring. So the best advice I can give you is to determine your needs, then spend time talking to rental agents and looking at properties. That's the only way to determine you space costs.

As to some of the other questions. You can easily find out what clubs charge for classes, etc. from their web site. The size of classes and the number of instructors and assistants, etc. have been debated in various threads here n f.net. "Use the search, Luke!"

Profit margins, salaries for coaches, managers, etc. This is going to vary and are often considered sensitive and private information (rightfully so). As a coach or small businessperson, you should have, or be able to develop, a sense for what these are going to be. (And if you don't have a background as a coach or businessperson, then I suggest that you think a couple of dozen more times before jumping into it.)

As for business plans, these are going to vary widely based on the type of club you are envisioning. The plan for a non-profit recreational club is going to look very different from a for-profit competitive club. Craig is sitting in the middle of several decent business schools. An interesting exercise might be to sponsor a class project to develop business and funding plans for several different types of fencing clubs.

It will take work to develop the information you're asking about and to develop the business models and plans that use it. So you have to make a choice, 1. learn the business end and do the work yourself, 2. throw money at it and hire consultants to do it for you (my contact info is available, but I ain't cheap! ), or 3. wait to see what others make publicly available for your use.

John Farmer
Coach, Oak Ridge Fencers Club

[EdGardner]

Some general small business advice, start the other way around, figure out what you need to 1) pay for the overhead you are seeing (rent, utilities, insurance, etc, don't forget taxes), and what you want to get paid (don't forget taxes), what you might think you have to pay per employee (don't forget taxes, see a trend?), put it all in a spreadsheet and start tweaking the numbers. Have an entry for everything income related, numbers of students, cost per student, etc. Get all those totals toegther, then start playing with the spreadsheet with questions like "what if I got paid more/less", "what if I got fewer students" etc. It's a simple way to model it, but gives you those first approximations you can use to see if you want to take the next step.

You pretty quickly get an idea of how much income you need to support an operation of X size and a salary of Y, and can start sliding the numbers around, and will see how much you need to make gross to support the operation. If certain costs are fixed (rent) then you might end up making short term sacrifices in salary until the business establishes itself (if it ever does).

But start with hypothetical "what do I want" and see what you need to get there.

[JEC]

This is an interesting "free" link for a business plan of a Paintball park.
http://www.answers.com/topic/paintba...an?cat=biz-fin
The general structure of the business plan could be followed for a fencing club.

[EdGardner]

That's a nice business plan summary (esp. for free), and biz plans are great vehicles to get your thoughts together, required for seeking external money, and good sanity checks for your idea. If you can't convince yourself or your partner with your own plan, you probably have an idea that will cost you more money than it will make you. Good, convincing plans end up being a fair amount of work, solid research, etc.

I still heartily suggest the spreadsheet game, it will actually help you define attainable goals for inclusion into a future plan, things like whether the market analysius matches your fiscal needs based on the simple spreadsheet model, before putting the work into a "real" business plan.

[Hauptman]

I've owned my own small business and my advice is be paranoid. You've taken the best first step by doing research and talking with people who have done it before, but be suspicious of all information. I found that most small business owners have a greatly inflated opinion of what they actually know. Small business owners tend to be in business because they either are very good at the activity that their business does (eg. hairdressers owning hair salons) or they have a great love of the industry. But neither of those means that they have any skills that are required to run a business.

In addition, I would recommend vastly over-estimating your expenses and vastly under-estimating your revenue. Give yourself as large a cushion as possible because your estimates, no matter how much research you do, could still be very inaccurate in the end. If you come within 10% of your startup estimates then you've done a very good job

[Craig]

Originally Posted by Hauptman

In addition, I would recommend vastly over-estimating your expenses and vastly under-estimating your revenue. Give yourself as large a cushion as possible because your estimates, no matter how much research you do, could still be very inaccurate in the end. If you come within 10% of your startup estimates then you've done a very good job

The rule of thumb that I learned from talking to other small business owners is to double your expected expenses and halve your expected revenue for the first year. And you should also push your expected start date out two to three months to account for all of the stuff you have to do to get an occupancy license and meet your local codes.

Craig