Last Thursday’s Midwest Entrepreneurs class was different than most.
This is because our guest speaker focused more on “survival” than “growth” or “success.” While most entrepreneurs hope to not have to worry about merely surviving, far too many “close their doors for good” unnecessarily; that is, without first trying any of a variety of innovative means of staying in business.
This is just the sort of lesson learned in Midwest Entrepreneurs class last Thursday.
Today’s student blogger is Drake Decker. Below, he nicely captures the essence of the critical lesson learned via the captivating tale of ongoing struggle and survival shared with the class.
Our ‘guest’ speaker last Thursday was Monmouth College’s Professor Mike Connell who spoke on behalf of the Monmouth Country Club. Professor Connell served as the club’s President of the Board for nine years. Before getting into the specifics of Monmouth’s golf position, he first discussed the three ways to “sell golf” and how the market for golf is changing. He then addressed how his business, Monmouth Country Club, is adapting–to keep its doors open and survive–in the face of a changing (and increasingly challenging) marketplace.
Dr. Connell informed the class that there are three main ways that golf courses traditionally operate.
- They can be run as government owned, public courses where anyone can pay a fee to play a round.
- High demand locations in states such as Florida, Arizona, and California can support resort courses as tourist destinations where golfers stay and play.
- Lastly, some courses are private country clubs.
The traditional Country Club offers exclusive, invitation only memberships to a select group of people. Often times, there is a waiting list for membership. Members are charged an initiation fee, monthly or yearly membership dues, and any other fees that need to be paid to cover the club’s costs. These courses usually offer higher quality golf, dining, tennis, swimming, health clubs, and social events.
Country clubs especially thrived in the 1940’s, 50’s, and 60’s because people had the time to support this kind of lifestyle. These clubs were “the place to be” for professionals and members of “high society.” Business transactions often took place on club grounds, and country clubs served as the primary networking location before modern connecting platforms such as Facebook. The traditional country club existed as the foundation of a lifestyle that many people desired to live.
In recent times, however, country clubs are struggling as golf is decreasing in popularity and lifestyles are changing. This is particularly true here in the Midwest.
Country clubs were popular when golf was most prominent. There was a time when people of all ages and abilities enjoyed spending a whole day at the course. Professor Connell also argued that the “Tiger affect” increased fondness toward the game while Tiger Woods was dominating the sport at the professional level. Since Tiger’s era of dominance has passed, golf’s popularity has taken a hit.
Country clubs took advantage of the fact that their facilities were often the only golf course, pool, and social arena in town. These assets, combined with the desire to have country club status, allowed managers to “exploit the market.” Assessments (customers are billed a portion of the club’s losses for the year) were passed on to members in increasing amounts, and people got tired of paying, which decreased membership.
Another key factor that led to the downfall of clubs was the opening of public alternatives to traditional country club exclusives. Governments and park districts began to build municipal golf courses and public pools that gave community members an alternative to joining a country club. Some people chose to use these facilities instead of paying to belong to a club.
Possibly the most crucial factor that has led to the downfall of the traditional, “small town American” country club is a shift in lifestyle amongst a large segment of the population. This major societal change consisted of most people becoming busier with employment, children’s’ activities, and other, less time consuming activities. Parents are always on the go, attending activities. Women no longer have time to sit around the club and play bridge because they have become part of the workforce.
Golf is an expensive proposition, and it is an extremely difficult and frustrating game to play. This makes for a very low retention rate of people who start golf. Professor Connell explained that a very low percentage of people who purchase new clubs are still playing the game in five years. Also, golf has become too slow, too expensive, and too difficult for enough people to support country clubs.
Many courses have felt these affects, including several in the Monmouth area. For example, the class was told about a golf club in Nauvoo, Illinois being sold off at auction just last weekend. Its buyers will likely use the course as farmland, hunting ground, or another activity that has surpassed the demand of golf. Professor Connell suggested that it could even become a pet cemetery. Such “other usage” of golf course land is becoming increasingly common in the Midwest.
Monmouth Country Club (MCC) is also struggling to adapt to changing circumstances, but it is staying alive thanks to innovative and at times counter-intuitive changes in business practice.
MCC’s business model when Professor Connell became President of Board eight years ago was closely modeled after the traditional country club model developed in the middle of the 20th century. The club was prospering, hitting its maximum of allowed members at 300.
After the societal and psychographic changes mentioned earlier took place, profits took a turn for the worst. MCC hit rock bottom when its line of credit with the bank reached its limit. Thankfully, legendary local businessman John Twomey stepped in and helped the club. John became a volunteer manager and helped the club pay its debts.
A combined entrepreneurial effort from Mr. Twomey and Professor Connell revamped Monmouth Country Club and returned it to stability. Many changes made the comeback possible. These changes involve cutting costs and increasing membership.
The first decision that was made entailed closing the dining room and leasing it to an outside vendor for a low price. Instead of losing $42,000 per year operating a restaurant, the club was now receiving a small rent revenue.
The next major change was putting the pro shop on an honor system. Members could still purchase items from the pro shop even though there was not an employee tending the desk. Connell admits that people will sometimes take advantage of the lack of supervision and not pay for what they take, but the amount that people ‘steal’ is less than the eight dollars (twelve including taxes) per hour that an attendant would cost.
Dues were reduced from $1300 per year to just $800, which makes membership more attractive to a wider demographic. MCC is sacrificing exclusivity for affordability in order to increase its bottom line. This is necessary to keep the doors of the facility open.
Members also stepped up to help their club. Several members followed John Twomey and Professor Connell’s lead and have volunteered their time. Members chip in with maintenance by cutting grass. This eliminates the need for a greeenskeeper, once again decreasing total expenses for the club.
Upon further review of the dining aspect of the club, MCC decided to close the dining room. They have instead chosen to enter the catering and banquet hosting market. Individuals can now rent the club’s facilities for their events. The public can rent the clubhouse, the bar, the dining room, and the outdoor facilities to host events such as weddings and class reunions.
A final change that MCC has made comes in the form of course improvement. New greens were put in last year, and Connell and the rest of the board hope that improving their facilities increases membership and current member satisfaction.
The drastic changes that have taken place at Monmouth Country Club in recent years have saved the business. A total of 143 members currently belong to the club, 30 of which are “social” members. While the club is still losing some money, financial improvements are clearly taking place because the club was able to pay the bills for the past three years.
Overall, Monmouth Country Club is a great example that markets are constantly evolving and that, as a result, businesses must adapt, sometimes in order just to survive.