Monthly Archives: March 2015

Three Steps to Increase Play at Your Club

As the author of The Golf Pro Advisor, I follow golf industry trends closely. I do this because those trends have significant financial impact on my readers and clients.

A recent annual survey of golfers from Pellucid, a research firm focusing on golf, caught my eye. The announcement summarizing the report had an ominous title:

The 2013 National Golf Consumer Base Scorecard:
Downward Drift Accelerates

Pellucid’s report noted that in 2013 there was a 5% decline in golfers from 2012. Furthermore, there were fewer rounds played. The number of golfers peaked at 30 million in 2002 and is now back to 1990 levels.

Many clubs are fighting to avoid a decline in membership. Fewer members means less revenue from initiation fees and member dues. That also means lower lesson fees, clinic fees and Golf Shop sales.

A membership decline has a direct impact on golf pros. It can mean lower compensation and fewer jobs.

Don’t wait for the numbers at your club to get worse. Show your golf committee and your club’s board that you are taking action to reverse the decline in play.

Here are three steps you can take:

1.       Design innovative programs to increase play.

2.       Get your golf committee on board.

3.       Use social media to connect with your members.

You want to show your club’s leaders that you are part of the solution, not part of the problem. You are essential to the club’s growth.

Step #1 – Design New Programs

To increase play at your course, consider programs that will attract more golfers, particularly women and juniors. You also need to show that golf is fun.

The PGA’s Golf 2.0 initiative offers numerous ways for getting more members on the course more often. The “Player Development Workbook” is full of ideas for creating and executing programs. I urge you to read it carefully.

You may also need to change the culture on the course to attract younger players. Relaxing dress codes is one way to start.

Step #2 – Get Your Committee on Board

After you’ve done some initial research on new programs, meet with your golf chair to get his or her feedback. Then, work with your committee to develop more detailed plans.

Getting started here is a bit tricky. You need to have some fairly well-developed ideas before you approach your golf chair. But you don’t want to present a complete program to him/her.

You need to involve him/her in developing the final product. You want this to be a joint effort with the chair and the committee.

The next step is convincing the club’s board. The golf chair can lead the charge on this.

Step #3 – Reach out to Your Members (Effectively)

An effective communication strategy is a key element in your overall growth plan.

Don’t rely exclusively on the club to promote your new programs. Of course, you should make sure the programs are prominently displayed on the club’s website and mentioned in club bulletins.

But you should also run your own communications program. This could include emails to members as well as an active social media program on Facebook and elsewhere. You may even need your own website.

This approach has two benefits. You are in control of the promotion effort. Also, with electronic communication you are more likely to get the attention of the younger members.

Accounting for Raffles

Our Golf Pro clients often contact with questions about raffles. Accounting for raffles can be confusing and complicated. But if you handle it incorrectly, you could have problems with the IRS or with your state tax authority.

Questions Golf Pros often ask are, at the time of the raffle . . .

·         Are the raffle proceeds income?

·         Are sales taxes applicable?

The answers are No, but read on.

The raffle proceeds are similar to issuing a gift certificate and or club credit to be redeemed at a future time. Even though no money changes hands later at the time of the redemption, the merchandise sold with these credits are subject to state sales tax at that time.

Still confused? Here’s an example. Assume the following:

  • You run a raffle and sell 500 tickets at $10 each. Your total proceeds are $5,000.
  • Your business entity/LLC invoices the club for the $5,000
  • You put that amount on the balance sheet as a liability to be transferred to income when the credits are redeemed.

In most cases raffle winners must redeem their merchandise by December 31 or the credits expire and at that time should be picked up as income.

There is no sales tax liability until the raffle credits are redeemed.

This is a summary of the accounting and tax steps:

Balance Sheet

  • $5,000 raffle proceeds recorded as a liability on your balance sheet.
  • $5,000 recorded as accounts receivable from your club. When the club pays you, the receivable is eliminated.

Income statement

The raffle proceeds are recognized as income when the raffle credits are redeemed or at year end when they expire. It may be simpler to just record all proceeds as income at the end of the year rather than record the income as individual credits are redeemed.

This can be handled by you or your accountant in one journal entry at year-end.

At the time of the redemption the merchandise sold will be recorded through the point of sales system as a sale.

Sales tax

Sales tax due is recorded as a liability on the balance sheet as the raffle credits are redeemed for merchandise; this should happen automatically when the transaction is run through the point of sales system.

Here is a more detailed description of the steps:

July 20

  • All raffle tickets sold

July 21

  • Your club bills members who bought raffle tickets.
  • You invoice your club for $5,000 which is recorded as a receivable from your club and a liability (to raffle winners) on your balance sheet.

July 22 – 31

  • Members redeem $4,500 in merchandise leaving $500 unredeemed.
  • Golf shop Point-of-sale system records transactions as merchandise sales
  • The appropriate sales tax liability is calculated by POS system
  • Point of sales system records transaction as club credit or gift certificate.

August 15

  • Club pays your $5,000 invoice.
  • Record $5,000 as payment of invoice and eliminate receivable from your club..

December 31

Any unredeemed credits, $500, are re-classed as income and reported as non-taxable income sales on the sales tax return being filed for that period.

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As you can see, this is complicated. I encourage you to consult your accountant to confirm that you are handling raffles correctly.

I am happy to give any Golf Pro a complimentary 30 minute consultation on this subject or any other.

Growing Your Golf Shop – Online

The biggest challenge that club golf pros face today is declining play. How do you make more money – or just stay even – when rounds are down and your club is not growing?

According to a 2013 survey of golfers by Pellucid, a golf research firm, the number of golfers peaked in 2002 at 30 million and is now back to 1990 levels. How can this be for the best game in the world?

Declining membership affects many clubs. Fewer members means less revenue from initiation fees and member dues.

It also means lower lesson fees, clinic fees and Golf Shop sales. And it can mean lower compensation and fewer jobs for golf pros.

In September and October, The Golf Pro Advisor will highlight ways golf pros can make more money even in this very difficult environment. In this issue, we will discuss getting more money out of your golf shop.

In October, the topic will be how to negotiate the highest possible salary.

I’ll be out at Bandon Dunes for the rest of this
week. I’ll be posting pictures from Oregon on

 Instagram on our account HermanCPA.
If you get a chance, please follow us!

More Merchandise for Your Members. More Money for You.

Running a golf shop can be a headache. You must purchase inventory. Then, you can be stuck with unsold merchandise at the end of the season.

You need to train and manage staff. You need adequate space to display merchandise. You need to carry enough variety to appeal to a diverse member base. You need a computer system. The list goes on.

To increase sales in your physical golf shop, you may need to add staff, expand space, and purchase more inventory. All that costs money and entails risk. What happens if you build it and they DON’T come?

There is a much less expensive and less risky way to increase sales – offer merchandise online.

The advantages to your members:

·         Broader merchandise selection

·         Greater convenience – buying anytime from anywhere

·         Lower prices than traditional retail

The advantages to you:

·         More revenue (without the inventory risk)

·         Increased member satisfaction

·         Increased member loyalty

Getting Started

Here’s how you can get started. Pick a few merchants (no more than three) whose merchandise you particularly like and that have sold well in the past.

I’d suggest you start with a couple of apparel manufacturers. Then, make sure you have an arrangement with each merchant so that you can purchase individual items (versus bulk buying) from their online catalogs on behalf of your members. The merchant would then ship the item either to you or to the member.

This is different from your standard arrangement with merchants. Normally, you would purchase multiple items in advance and the merchants would ship the items to your golf shop.

You can now direct your member to the appropriate merchant’s website. The member can identify the merchandise he/she wants and then email you the item number from the online catalog.

You would then place the order on behalf of the member. You buy it wholesale with your credit card and then charge the member via his/her club account.

Your arrangement with the merchant should allow you to offer a lower price to your members than they would get at “retail”. That will give your members an incentive to order through you rather than directly from the merchant.

With today’s sophisticated logistics, the item should arrive in less than a week.

A Personal Experience

In planning for my upcoming golfing trip to Oregon, I wanted to get the right apparel for windy cool weather. I asked the golf pro at my club what he would recommend. He suggested a sleeveless windbreaker and an underliner.

My golf pro did not have these items in the golf shop. But he ordered them for me and I received them within a week.

This was a win-win all around. I got exactly what I wanted in a reasonable amount of time. My pro made money without having to carry any inventory.

There is another advantage to this approach. My pro positioned himself as an expert giving me his advice on what to order. I will definitely seek his advice on future purchases.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.