Publishing Editor

This report is a step by step guide, or working brief, for anyone thinking of building a driving range. For many this is the most feasible and economic entry into the golf industry.

This workbook is a prerequisite. Avoid wasting time and money – create authoritative facts and figures for your own individual set of circumstances.

The workbook will:-

•  This workbook takes you step by step through every part of creating a business plan for a new driving range. This plan will be good enough to show to an investor or bank.
•  The book takes someone on the outside of the range business and puts them on the inside. It gives the insiders secrets on how the business works.
•  15% of ranges make good money, 85% don’t. This business plan will help you be one of the 15% that make money.
•  Ranges can be an amazing business. We have clients who have recovered all their development cost within the first year of operation. Year after year the range then delivered 100% return on investment. Not everyone does this but find the right location and – who knows.
•  The workbook provides a complete example of a business plan created for the Sacramento market in the US. Every stage of putting this plan together is shown.
•  A detailed spreadsheet is provided with the workbook enabling the step by step development of the business model from construction estimates to ten year business projections all the way to rate of return estimates and what if modelling. Plug in the key numbers and the software model does most of the hard work for you.

Introduction

This workbook enables one to develop a complete business plan for a driving range. This plan will let you see if your range will make money and what the expected rate of return will be. The plan will be good enough to present to an investor or bank.
This business plan will be complete with market analysis, construction budget, a ten year profit and loss projection, analysis of return on investment and a what if analysis examining differing operating assumptions.

We get a great many inquiries from people all over the world thinking of building a driving range. A range is an attractive way into the golf business. Ranges are much faster to build and less expensive to build than a golf course.

Most people asking us about building ranges are experienced business people, they know about business but not the range business. It’s hard to get the inside knowledge of the range business as existing operators are secretive about how it works. This workbook sets out to remove the veil of mystery from developing a range – it gives the inside knowledge.

The contents of this workbook are the distillation of 20 years of experience talking with range developers and operators and advising people in the range business. Some of this distillation comes out as simple maxims such as: 80% of your customers live within 15 minutes drive of the range your range balls won’t get stolen if they are all picked up at night lights increase your business by 40% – think carefully before building without lights

These simple maxims are worth a fortune. It’s taken others years, and many mistakes to learn them.
A great advantage of ranges is they are a low expectation business. The customers don’t expect much – if the range balls and mats are in good condition they are happy. A golf course is a high expectation business. Customers expect perfection and complain a lot. Running a driving range is a lot more relaxing than running a golf course.

The location of the range is the thing to watch. Our research shows that 85% or ranges in North America make poor returns, 15% of ranges make great returns. The difference is the location. This workbook will help you be one of the 15% that make money – it shows you how to know a good location.

Working very very hard to find the right location is the secret to many years of good profit from a range. Getting the location is hard work and frustrating work. It’s a lot of driving the streets. It’s a lot of disappointment when deals fall through. In the range business the location is everything. It’s worth sweating to get that good location.

Defining the Market

The first priority is to get a clear idea of the market area for the range. The golden rule is that 80% of the range customers will come from within 15 minutes drive time of the range.

Finding The 15 Minute Market Catchment

Call ESRI on 1 800 292 2224. Ask for the 15 minute and 25 minute drive time areas around the location that you have selected to develop the range. ESRI will need the zip code and the street address to properly locate your site. Ask for the “Demographic and Income Forecast” report for the 15 minute drive time area.

When talking with ESRI make sure you ask for the 15 minute and 25 minute drive times to be included on the map that is sent to you. An example of one of these maps from ESRI is shown on the next page.

The map, along with some simple demographics, should cost around $100. ESRI take credit cards and they should fax, or email, the map and demographic report within a couple of hours.

The larger 25 minute drive time is used later in the analysis. It is important to look at all the range competition within 25 minutes of the proposed new range.

Before making the call to ESRI read the next section on demographics so that you get the right demographic numbers and don’t get oversold.

Sensitivity Analysis

This table summarises the results of the “what if” analysis. The base assumptions deliver a 13.7% rate of return (ROI). Should construction costs rise 10% the ROI drops to 13.1%; if construction costs fall 10% ROI rises to 14.4%

It is very clear from the table below that the return from the future business is not that sensitive to changes in construction budget or construction period or even the period to mature operation. The business is however very sensitive to reduction in ball sales. A 10% reduction in ball sales takes the return from 13.7% to 9.9%. If ball sales come in 20% below the estimate the business is only making 6% return. While staff costs are the biggest single cost item, even a 15% rise in staff costs only drops the investment return by 2.3%

Since the mid 1980’s the golf range business has evolved into a multi-million dollar industry.

This in-depth survey studies in detail demographic changes, development, the facilities, construction and operating costs, equipment market shares, pro-shops and teaching and training.

There are a total of 30.730 courses in 119 countries and 57 million golfers. This report gives a complete picture of global golf. For each country it gives the number of courses, number of new courses built, number of golfers, value of golf equipment imported and value of golf equipment exported.