Reduce Your Risk: 6 Great Ways to Diversify Your Sports Business
Cash flow problems are almost always at fault when sports facilities fail.
Unfortunately, most sports facility owners and managers don’t know that they’re putting their cash flow at risk by relying on too few sources for most of their income.
Let’s say you run a softball academy, and softball lessons bring in 70% of your annual revenue. Not only will you struggle to make ends meet during the slow season for softball, but a serious competitor moving into your area could easily force you to shut your doors.
Offering a variety of services that are helpful at different times and to different groups helps you minimize those risks.
You can’t offer everything to everyone, of course. But there are simple, smart ways to diversify your business and still stay within your original mission.
Here are some common options that many sports facilities have used to diversify successfully.
1. Sell retail
One of my clients’ pro-shops has been so successful that it accounts for about half of the business’ total revenue.
But you don’t need to open a full pro-shop to take advantage of retail benefits. If you have good relationships with suppliers, you may be able to make orders on your clients’ behalf – giving them discounts and making a commission on each sale. These relationships can take time to develop, but once they’re in place, the bonuses roll in easily.
After all, your clients are already ordering uniforms and equipment, and you have intimate knowledge of their needs. They might as well order conveniently and through someone they trust: you.
A sidenote: One of the biggest obstacles to retail sales in sports facilities is often the high manufacturer minimum orders. My eSoft Planner clients can also order bats, gloves and other equipment from selected brands in small quantities – even just one single piece of equipment – right from their eSoft Planner dashboard.
2. Sell concessions
Depending on your business model, a concession stand or smoothie stand can be a very profitable option. But again, you can make money from concessions without adding a full kitchen; my own facility (DNA Sports Center) offers a variety of energy bars and bottled drinks. I also decided to sell both Advocare and Powerstrips – two products that my clients can use all year long, regardless of their sport or fitness goals.
3. Offer sports-specific fitness training
Today’s athletes need more than sports-specific training. They also need general strength, speed and fitness training throughout the rest of the year. Such sports performance training programs have many benefits, both to athletes and to your business, which is why DNA Sports Center is home to a Parisi Speed School franchise. If you don’t offer these complementary services, you’re missing out on a big business opportunity.
4. Offer related services
You already have a large group of happy clients who love your primary services. So, what else can you offer them?
Most sports facilities have a lot of success hosting birthday parties. If you manage them right and optimize them for revenue, they can be very profitable.
Another great example of a complementary service to sports training is college recruiting.
The parents of high school athletes are often willing to pay for personal guidance through the process of selecting and getting noticed by college teams. If your staff is familiar with the world of college recruiting, you may be able to offer the service professionally. (Contact me if you have experience with this. I’d love to write about it in more detail, since I know that there are rules and regulations involved.)
5. Diversify sports offered
This is an easy one: Offer training for more sports — preferably ones that have the opposite seasons of your own facility’s most popular sports.
This might mean recruiting new instructors or developing relationships with other programs that specialize in those sports, but the extra revenue and security can be well worth it.
6. Offer services to new client groups
If you’re like many sports facilities, most of your clients are school-aged athletes. If so, it’s time to target a wider variety of ages and interests.
You could create dodgeball leagues for young adults, fitness training for adults trying to lose weight, or sports fundamentals classes for pre-schoolers. It will take some work to get the word out to your new groups, but as long as you plan ahead and use best practices for promoting your camps and classes, you’ll do well.
Any other suggestions on diversification? Please leave a comment below.