The top three problems of poor financial management for leisure and sports organisations
With a sector believed to be worth £7 billion, Britain’s consumer sports industry alone is huge.
From gyms to pitches, there are lots of options – and once the range of other leisure facilities, such as clubs and recreation sites, is included, the figure gets bigger and bigger. But while these facilities continue to be popular, it’s apparent that there are still some significant hurdles and pain points, which financial leaders in this space have to face.
1) Unpaid fees
Pretty much all of the sports and leisure industry in the United Kingdom operates on a subscription basis, and customers pay for a defined time interval. As a provider, that means unpaid fee chasing is an inevitable time drag – and one that can be forgotten about if financial management is poor. Automated invoicing software that monitors for unpaid fees and chases them up can be a godsend when it comes to saving team resource time.
2) Fluctuating numbers
People come and go from clubs for a variety of reasons, like a drop in disposable income or a house move – meaning that long-term contracts are often alienating to the consumer. For a leisure and sports business, this means that large cash reserves are essential. In an economic downturn, clubs may quickly find that a significant chunk of their customers desert them either temporarily or permanently – and in order to pay the bills, access either to ready cash or to manageable credit is important.
Financial modelling is also helpful here if management is poor – by letting sophisticated software packages crunch the membership numbers, clubs can see at a glance what their financial situation may be about to look like.
3) Shared assets
The leisure & sports sector has another, more unusual pain point, which can rear its head in certain situations, too. It’s not unheard of for institutions and organisations in this sector to be member-owned – a workers’ club, for example, might issue a few shares to each new member and give them voting rights at an annual general meeting, or they may open up as a co-operative.
In some ways, this is a great idea for democratising access to leisure facilities. But it also means that people can develop skewed incentives, and this can cause real problems for the organisation in the long term. It may mean that no one individual feels responsible enough for strategic planning, so it’s important to ensure that a financial controller or data-backed software package is brought in to create accurate models of future financial situations.
Britain’s sports and leisure industry shows no signs of slowing down. But that doesn’t mean financial leaders in this industry can rest on their laurels – in fact, problems like unpaid fees and shared assets mean that it’s more important than ever to find sustainable solutions.