Victoria Short, a well-known local businesswoman, called today requesting exclusive access to your facility every Wednesday evening from 3:00 pm for the remainder of the season (July 15th to October 1st). She intends to entertain her staff and business partners at your facility, an affluent crowd of business types. If you accept this deal, it would mean that you would have to close your facilities to both members and the general public on Wednesdays after 3:00 pm. You currently host a weekly event for Men every Wednesday evening. The "Men's Night" includes nine holes of golf followed by a meal and prizes. It has become very popular, and now attracts an average of 140 golfers every Wednesday. That said, they are predominately members. As a result, incremental revenues are limited. Originally used as a lost leader, food cost is high for the meal portion (50% cost of goods sold), resulting in a low contribution margin. Many members look forward to this event every week, forming relationships with other members. If you strike a deal with Victoria Short, compensation for her events would be as follows:

Green fees (including cart rentals) would be $40.00 per participant, including carts (maximum of 144 participants).

Pro Shop purchases would be paid at the point of sale by the guests.

A $25.00 Food and Beverage credit would be applied to each participant, and you have to produce a meal based on that budget that is different every week. The menu needs to be provided a week in advance and approved by her assistant.

All purchases would be billed directly to Ms. Short. Her assistant indicated that she pays her bills in 90 days, on the same schedule that she pays her other vendors. This proposed payment plan differs greatly from your current receivable structure where most guests and members either pre-pay or pay for products at the point of purchase. It's important to note that Ms. Short has a reputation for analyzing every invoice and short-paying when she feels she did not receive what she perceives as value. When analyzing the financial viability of the opportunity with Ms. Short, you identified that that average revenue would cover all your fixed costs for that period when allocated on an hourly basis. The number of attendees for the Wednesday events would be confirmed one week in advance. If it rains or they fail to attract a minimum of 50 players, the game would be canceled for that week. In this case, you would not realize any revenue. You anticipate that this could happen 15% of the time. Ms. Short is the most successful businesswoman in the community. She is responsible for many new ventures, conferences, and events every year. Future deals are available, and her executive assistant hinted that a "reward" for offering your services could be garnered, but no promises. Her assistant also indicated that they approached your course because they decided to part ways with the club that was currently servicing their business. When probed, she would not provide any further detail. Rumour has it that her guests were a lively/rowdy group, partying and carrying on. The group apparently caused significant damage to the other courses' facilities. Accepting this opportunity will most likely cause disruption and unrest for both members and general participants, more specifically, Men's Night participants. Members will be especially upset if they can't golf on these designated days after already paying their fees. On the other hand, she could open up many doors for you and help grow your membership and conference business during the off-season.

Question #1

What impact would holding receivables for 90 days have on the daily operations of the business? A lower accounts receivables turnover makes a business appear less credible when applying for financing. Purchases may require additional financing with a limited cash supply, which increases expenses unnecessarily.

Question #2

Do members hold the priority for the use of the facilities when compared to walk-in customers? As a general manager, its your responsibility to maximize the use of the facility and manage a profitable business. What strategies would your team take to balance the needs of all guests and the business?

-Members typically pay for additional benefits as opposed to walk-in clientele. If priority use of the facilities was outlined in the original contract they signed then it must be enforced.

-Careful research should be completed to determine what is most important to different groups of clientele. This information can be used to redirect funding/operations and reduce redundancies, therefore also helping the financial health of the business.

-When the needs of guests cannot be met, additional information should be provided to explain the situation and compensation provided.