Tips From The Pros
COVERMASTER® Welcomes Bob Quigley
A Word from Bob
Hello everyone! I would like to thank COVERMASTER® for giving me this opportunity to be with you and write this blog. As you can see, I have spent a great deal of my life working inside a multipurpose athletic facility. I hope I can provide you with some insightful information you can use in the management of your facility that will also make your organization more successful.
So, let me ask you as a manager, are you recovering your costs, making, or losing money? When you negotiated your pool usage with the swim club, did you cover your costs? You may not know because a lot of managers do not know how much one lane per hour costs in their pool or how much one hour of ice time costs.
To help with this, a percentage allocation analysis should be completed on each revenue center. This includes direct costs like pool chemicals for the pool or ice paint for the ice. The more challenging aspect to costing is creating a percentage allocation analysis breakdown for things like power, water, heating fuel for each revenue center, assuming you do not have separate meters. So, to complete this exercise and make it usable for years to come, you will need to make two spreadsheets.
The first one is called a percentage allocation analysis, as discussed above. Revenue centers across the top and expenses down the side like salaries, power, maintenance costs etc. Allocate the percentage needed to each revenue center and at the end of the row it will equal 100%.
The second spreadsheet will have the total revenue on the top and make formulas to match your percentage allocation. At the bottom, each revenue column will be the total allocated cost for each revenue center subtracted from the revenue. You will have to make some judgement calls on this. Input your numbers and you will have your allocated costs to each revenue center. Subtract from your allocated revenue, and you have it completed.
As with most spreadsheets, you will get better at using it. Try not to change the percentage allocations unless necessary as it will not show accurate year over year comparisons.
Now, the power of your hard work will pay off!!!!! When you go to negotiate ice time, gym time, pool time to rental groups you will know how much net revenue you are making, or you are subsidizing the user group right down to the hour and dollar. I know this may seem complicated, but I have just given you a very powerful tool to use in negotiating or explaining your need for subsidization from a governing body. Knowing your specific profit margin, on each product you sell, can give you a lot of power in making good management decisions.
Posted December 14, 2022