The largest and by far the most secure piece of the sports facility puzzle is the real estate and building itself. As an initiator and principle of the project, you want to do everything you can to make sure you are an owner in this piece. In addition, if this is a building you are building from scratch make sure you build it as such so that it can be easily converted to another use outside a sports facility. A distribution warehouse structure is the most common alternate use. This may sound like I am asking you to plan to fail, but you must have a plan for every possibility.

The second piece is the business itself. This carries the most risk. It takes a great deal of start up capital and there is usually little to show for it if things don’t work out. The tangible assets you are left with are not very liquid assets. Things like sport court flooring, artificial turf, rink dasher boards, and basketball hoops are not easy to sell off, and usually have to be just about given away. However, this is the meat of the business. This is what generates the cash, I would require any partner to anti up and become part of the operations. This is where you can see great financial gain or really get your nose bloodied. It also helps to have other people involved when there is a need for cash infusion, whether it be personal money or collateral for a bank loan.

I have seen many different structures and you can split it up in countless ways. However, you can get in trouble if you have too many people involved. One such facility had 13 owners just in the business operations itself. Needless to say it was a nightmare trying to get something done, and when it came time put more money in it was very difficult to get an agreement. In situations like that the only ones making the money are the attorneys. My suggestion would to keep the business operations ownership to between 2 to 4 people. Three would be best because there would be no tie votes. If you have to go beyond 4 people make sure the additional owners are silent partners where they have no say in the day to day operations.

So be cautious as to what you offer people to join you. Make sure you understand the value and the risk/reward of what you are offering and above all else, use an attorney and get things down on paper with a solid business plan. That’s where we can help, there is no need to reinvent the wheel in writing a business plan. The Rink Smart Sports Facility Business Plan Manual will save you time and possibly a lot of money. It’s simple to use, just replace the sample data with your information and you can complete your plan in a short period of time.

Our manual includes a full sample plan and all the files necessary to edit it and make it your own. Click Here to learn more about about what this plan has to offer.

The first is the most traditional, and that is through the commercial banking system. This approach will require a high level of documentation and planning. You can expect to be required to disclose an in depth history of your financial history and past business experiences. Banks have protocols and regulations to follow, and remember the person you are dealing with is probably a disinterested third party. They will also probably require a substantial guarantee to back up any money they give. Banks tend to be a better option once you have opened your doors and have some history behind you, but convincing them up front before the foundation is poured can be a daunting task.

Finding a private investor is your second option. Finding someone who has a passion for what your are trying to accomplish is the key. Someone who can see what your vision is and has the money to do it is who you are looking for. The planning and numbers will still have to make sense but when you have someone on your side and emotionally invested in what you are doing, they are more likely to overlook some minor details that banks would never let go. This is not to say you are hiding information or blowing smoke, but that you have someone who believes in what you are doing and has a strong interest in seeing it succeed. Banks do not have the luxury of such an approach.

There is no getting around this part though, choosing to go the private financing rout requires a lot of door knocking and rejection. Concentrate on people who have strong connections to whatever sports you are offering. Current or former professional players, current or former professional coaches, or parents with kids who participate and have the means. These are all excellent candidates. You may even need to recruit two or three people to raise what you need to get going.

The third way to go is through a real estate partnership with a building owner or developer. Your biggest financial hurdle is securing a facility. I have been involved with businesses where an owner made a deal with a developer to finance and build the building to suit and the owner only needed to come up with the capital to buy the equipment and and fund the operations. That’s a big help in getting a facility open, although you do not retain control over the facility.

You can use a combination of these three methods as well, in fact many people do just that. Whatever method you use, you first need a solid plan to show prospective investors. That’s where it all starts, banks demand it and private investors need to know you are a competent business person. We can help make this most important part of the process easy to accomplish with our Sports Facility Business Plan Manual.

Rink Smart’s Sports Facility Business Plan Manual includes a complete sample plan, a professional facility layout, plus all the documents you need to create your own plan.

Site Acquisition

I’ll start with the one you will have to consider first and that is site acquisition. This is the make or break decision for your business, just about every failed facility I know of went under because of how they chose to acquire the facility. Your number one best option is to buy a facility of some kind that you can convert to your use, or if you have the funds and ability you can buy some land and build to suit. This gives you instant equity in the business and allows you have a tangible asset in hand in case your business does not work out. It also gives you the ability to sell the operations and keep the facility as an income generator. I have seen many sports facility where the only people who make money are those who own the building. So, the bottom line, find a way to own the facility you want to do business in.

Capital Equipment

The second monetary consideration is how to obtain the capital equipment needed to fill the facility. No matter what sport you plan to offer, there is some kind of equipment to buy. Rinks, fields, turf, courts, all cost money, and this is the second area I see many people get in trouble with. In the beginning you have to be as frugal as possible without sacrificing too much on quality. Purchase only what you absolutely need, the super high end stuff is not necessary. You must ask yourself with every purchase; “Will the added dollars spent contribute more income?” If the answer is “no”, which in most cases it is, then you don’t need it. Don’t get carried away by the bright shiny objects and flashy details, there will be plenty of time to upgrade later, besides you need that cash for the next “money” item.

Operating Cash

When you open your doors, you should have enough cash to keep them open even if nobody shows up to play for about six months. That may seem conservative but in my experience it is needed in this business. Remember, unlike other types of business, the sports facility business usually generates income more or less on a quarterly basis. Which means that when you open your doors and do not get the anticipated sign ups the first season you will have to wait another 2 or three months before the next season starts and gives you that next infusion of cash. There are other activities for sure during that time, but league or team revenue generally makes up about 80% of your revenue. You can burn through a lot of cash the first year if your sign-ups are not what you planned.

Don’t Reinvent the Wheel

The key to all this is putting a solid plan together from the start. Consider using our sports facility Business Plan Manual. It’s very affordable and includes everything you need to build a solid plan.

Rink Smart’s Sports Facility Business Plan Manual includes a complete sample plan, a professional facility layout, plus all the documents you need to create your own plan.

1. Site Location and Market Demographic Study

The first step is to choose a general site location then study and develop a report on the area’s demographics. You do not have to have an exact location picked out, but you at least need the neighborhood location. From that point draw a radius out to include about 25 miles or no more that a 45 minute drive from that location. I have found that within those guidelines you will find 90% of your customer base.

The demographics you need to include are current and expected population broken down by age, current and expected income levels by household, and discretionary spending levels. There are many other items to look at but those are the big three. Look at current levels and what is expected over the next five, ten, and fifteen years. Once you have that information, put it aside, you are not ready to make any decisions yet.

2. Competitive Market Study

The second step is to look at the competition in your market area. Look at every possible competing activity within the radius you created. You must include not only similar activities that want to do, but all other possible competing activities as well. For example if you want to run an arena soccer facility, you still need to research activities such as baseball, football, and lacrosse.

The reason is that many people participate in multiple activities and it will also give you a better understanding of what people are spending on recreational activities. That will come in handy in the third step.

Include information in your study such as pricing, number of participants, length of activity or season, etc. After compiling the data, create a list of your findings and sort them with the businesses closest to your proposed location first. You will want to give more weight to those businesses closest to you.

3. Three Year Financial Plan

The final step is to create your financial plan. Here is where you take the information you learned from the first two steps and use it to see if your plan makes financial sense. Using your judgment on pricing and participation numbers you can estimate the revenue from your core activities. You should also add secondary activities such as retail, food concessions, parties, special events, etc. Estimating your costs should include labor, rent or lease, utilities, supplies, etc. There are a whole host of items to consider here.

Break the financials up into three separate years; you may want to do five years if you are pitching this idea to investors. There will also need to be a separate section that deals strictly with development costs. That includes the costs involved in buying / developing the building site, equipment purchases for the facility, and professional fees. Basically this added section includes everything needed just to get the doors open. The 3 -5 year financial plan then covers the operations from that point forward.

There is a lot that goes into such a plan, but it is needed because there is a lot of money at stake. You might find yourself having to start over if the numbers don’t work.

You can greatly reduce the time and effort needed to complete such a plan by using Rink Smart’s Business Plan Manual Template. This template includes a complete sample plan and the files you can easily edit to include your own data.

You will recieve an actual completed sample plan along with all the individual files needed to complete your own plan. These files are in PDF, MS Excel, and MS Word format. You only need to replace the sample data with your own data. Your package is delivered by an email which will contain a link for the download.

We offer a 100% satisfaction guarantee. If you do not think the package you recieve is not worth what you paid, please contact us within 30 days for a full refund.

Rink Smart Busines Plan Manual Package Contents