Did you know that cash flow issues are the biggest cause of businesses failing? According to this article, “more than 80% of business failures are due to a lack of cash, 20% of small businesses fail within a year, and half fail within five years.” In this article, learn how to get funding for your sports facility and improve cash flow.
New Sports Facility Funding
There are two main ways to fund a new sports facility: cash for equity and debit via a loan. There are positives and negatives for both.
1. Cash For Equity
This option allows people to invest their money in exchange for a percent ownership of the business. Here, you don’t need to pay it back. Owners will benefit from the success of the business. You can also get investors with a specific skill set (marketing, etc.) that can complement the owner. To learn more about how to choose partners, read this article.
2. Debit Via A Loan
With this option, you can get a loan from the bank. Due to this, the owner can keep all the equity themselves. You can also build a credit history, for future expansion. However, you do have to pay back the money to the bank eventually.
Improve Cash Flow
There are a number of ways that you can improve the cash flow for your sports facility. By offering multiple avenues to pay for services, you can focus on improving cash flow. My software, eSoft Planner, manages these services automatically for you.
- Prepayment for services – Clients can pay ahead of time for any lessons, rentals, and camps/classes.
- Stick firmly to a refund policy – no-shows and late cancellations hurt a business, so be careful with your refund policy
- Sell packages – for example, get a discount for purchasing 10 lessons, and you get the money upfront instead of per lesson
- Sell memberships – it creates recurring revenue streams and is reliable to get cash flow improving
What Did I Do for Sports Facility Funding?
With my sports facility, DNA Sports Center, I used two avenues: investor cash for equity, and sweat equity. The investors were people I knew who wanted to help my business. They each contributed cash into my startup for 10% ownership. They also brought along business skills to add to our business. With sweat equity, I had two managers who agreed to a reduced salary to gain 5% ownership in the company.
For More Information
To learn more about how to improve your cash flow or fund your sports facility business, book a consultation with our experts.