Thursday, August 30, 2012

Finance and Sponsorship for a Sports Facility

By Evelyn Tate

Whether you want to set up a small gym just for your team, a large indoor sports area for various programs, or a fully fitted facility for 10,000 private members, you’ll need some help getting started. Commonly, those who establish a sports facility, gym or indoor training area find that, while they have plenty of expertise regarding their sport, they are less equipped to deal with the financial and business end of things. This article will remedy that by looking at the most pressing and troublesomee areas of financing your new venture, with special attention given to sponsorship, legal regulations and budgeting.

Where Does the Money Come From?
The size of your venture will directly affect the size of your budget. If you are able to achieve everything you want with your own private funds then that’s great. For most of us, however, it is likely we’ll need outside help to reach the desired level of operation. This does not have to mean maxing out a bunch of credit cards or applying for a bank loan. There are other ways to get outside investment in your facility though they will require time, effort and, crucially, sound planning.

Fundraising relies upon the generosity of businesses and people in your local area and their willingness to see your venture come to fruition. Any fundraising event should be organised by a fundraising committee, made up of club members with an agreed mandate for what you wish to achieve. Be business-like about the entire venture, even if everyone on the committee is volunteering. Work out how much you need, when you need it by and what exact purpose each cent you raise will be serving and do all of this before you decide what shape your event should take.

How Do We Get Sponsorship?
While fundraising relies on people’s generosity, sponsorship is a strictly business relationship. You get either resources or capital from the sponsor. The sponsor gets exposure or good PR from you. Be sure you can actually provide the latter before you seek the former.

So think – what is the commercial advantage from the sponsor’s point of view for getting on board with your facility? Generally you should be able to offer at least two of the following to any private company who you would like to invest in your facility:
-          Improved Sales
-          Advantage Over Competitor
-          Change in Image
-          Improved Levels of Customer Awareness
-          Exclusivity (i.e. guaranteeing that a target market will only use their products)

If you can offer a sponsor none of these it is going to be impossible to get that kind of investment. You’ll either need to look further down the trough or to fundraising as your source of capital.  Before you begin to contact your sponsors it is highly advisable to work out a sponsorship policy within your own organisation. Consider who is responsible for the relationship with a sponsor, what your own objectives for the relationship are and what can and cannot be promised.

How Do We Keep A Sponsor Happy? The first thing to remember is that this is a relationship and all relationships require communication. Keep your sponsor informed. If they sink money into your facility and hear nothing back for two months they will start to think the worst. Designate someone in your organization who is in charge of keeping the lines of communication open and active at all times.
Furthermore, don’t forget about your sponsor as your facility grows in stature. Promote your sponsor and their products at every available opportunity. If you are being interviewed for the local paper, drop in the name of your sponsor. Invite representatives from your sponsor to any events you run at the facility.  Get to know everyone you can who works at the sponsor, to strengthen the ties they have to your club.  The more you do to keep the sponsor happy the longer they will continue to commit money to your operation.

How Do I Budget?
Budgeting is inestimably crucial to the process of running any organization. Shoddy or lazy budgeting at the outset will translate into financial chaos and bankruptcy later on. Designate someone to take care of the financial management of the facility from day one and make sure they are sure of their responsibilities. These should include managing profit and loss, business insurance and company credit and debit cards, as well as making the budget.

There are certain key considerations which any sports facility must take under consideration when they are setting up a budget. Even those who have drawn up budgets in other industries might not be aware of these points:
-          A great deal of your income will be based around membership dues. Consider the fact that, should these be set for payment on a certain month, there is likely to be a number of people who do not meet the payment on time. Always plan this into your budget.
-          Sponsorship might come monthly or annually or perhaps even just in a single, one off lump sum. Which suits the running of your business best?
-          How is the dollar doing? Are your expenses going to rise from year to year due to inflation? Keep an eye out for economic changes that may wreak havoc with your calculations.
-          Also, how are your expenses related to the number of groups or individuals you have using the facility? Work this out as an accurate percentage, not just a rough estimate.
-          Decide upon a minimum bank balance to deal with emergencies. Once it has been decided – stick to it!

Setting up a volleyball facility can be incredibly rewarding, financially, physically and personally. Yet doing it successfully is only possible with hard work, sound planning and, crucially, smart budgeting. Before you dive into the day to day running of the club, take plenty of time to understand the financial requirements and responsibilities which you will face. It will help guarantee the facility survives and thrives long into the future.

About the Author

Evelyn Tate is a freelance writer working with all kinds of businesses including a financial product comparison service.

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