what is a reasonable profit margin for a golf course

by Jolie Shanahan Published 3 years ago Updated 2 years ago 3 min read

In the last years, many golf courses are selling based on multiples of revenue (<1) because there aren’t any profits to calculate any type of return on investment. A 10% return might seem reasonable for buying a golf course, but the reality is that the return of many of these courses at the time of sale might be -10%.

Profitable golf courses are generally selling for six to eight times EBITDA, while courses that aren't profitable tend to sell at 0.8 to 1.4 times revenue.Dec 21, 2021

Full Answer

What is the profit margin for a golf shop?

Answer (1 of 4): You better sell a lot of beer and range balls. After that, golf courses are barely profitable. As one of the guys said earlier, maintenance costs are huge, IF you want a nice course. You need a few leagues, especially a good men's group, …

How profitable are golf courses these days?

Answer (1 of 7): I have not been in the business for a many years but during the boom times I worked at a mid tier public course in the mid Atlantic region that did offered memberships as well. We were pumping out 35000 to 40000 rounds a year taking comps and various guests into consideration thi...

What is a good gross profit margin for a small business?

Jun 29, 2014 · Average net profit margins for privately owned golf courses and country clubs (NAICS 713910) have been negative for several years. Over the last 12 months, for example, golf courses and country ...

What happens to profits when you mark down golf items?

Jul 01, 2020 · Hawaii is, on average, the most expensive state in which to maintain a course, at $1.44 million a year. That’s followed by tracks in the …

What is the average revenue for a golf course?

According to the National Golf Foundation's 2010 Operating & Financial Performance Profiles of 18-hole golf facilities in the U.S., private 18-hole golf clubs had average total revenue of $3,277,000 in 2009, but with total expenses of $3,204,500.Aug 16, 2018

Can owning a golf course be profitable?

Buying a golf course is often a passion play. But with the right business savvy, it can also be a profitable enterprise.Aug 4, 2021

How do you value a golf course business?

As with most property types, golf courses can be valued via the income approach, sales approach, or cost approach. Each method has its limitations. Given the specialized nature of golf course properties, the application of the comparable sales approach is preferred.

Is golf course property a good investment?

Golf course properties typically have great resale value, selling at two to three times that of an average home – which is a magnet for investors.

What makes a golf course profitable?

Green fee play, memberships, food & beverage, and pro shop sales are the four main levers that can lead to an increase in revenue at a golf course. Of course, within each revenue stream, many specific opportunities exist for golf courses to produce more revenue.

How many acres are needed for a golf course?

“This means an 18-hole course of all short par 3s could be built on as little as 30 acres, while an intermediate length or executive course of 18 holes of par 3s and 4s would require 75-100 acres, and a full size par 72 course would need 120-200 acres.

Is it worth living on a golf course?

In addition to having your next round of golf right outside your door, living on a golf course often affords views of sprawling green vistas. Even if golf isn't your game, the benefits of living in a golfing community may be something worth considering.Oct 3, 2018

Is it desirable to live on a golf course?

There are so many wonderful advantages to living on a golf course or in a golf course community – from the high property values and quality school districts that usually are nearby, to the other community amenities and golf at your fingertips, living on a golf course is living the dream.Aug 1, 2017

Is it bad to live next to a golf course?

One of the biggest concerns you may have living next to a golf course is a golf ball landing on your property. While small, golf balls can cause big damage. You can up your home insurance coverage, but that will lead to a higher monthly premium.

7.1 Break-even Analysis

Using averaged monthly total expenses and an estimated variable cost, the monthly break-even point in sales revenue is calculated and shown below.

7.2 Projected Profit and Loss

The following table and charts show the projected profit and loss for three years. Monthly figures for the first year are shown in the appendix.

7.3 Projected Cash Flow

The following table and chart show the projected cash flow for three years. Monthly figures for the first year are shown in the appendix.

7.4 Projected Balance Sheet

The following table presents the projected balance sheet for three years. Monthly figures for the first year are shown in the appendix.

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7997, Membership Sports and Recreation, are shown for comparison.

7.1 Important Assumptions

100% of sales are on credit, with collection days for Receivables at 60.

7.2 Break-even Analysis

RA Concepts’ break-even analysis is based on the average of the first-year figures for total sales, costs, and operating expenses. Our variable cost here consists of inventory (raw materials). We expect to surpass the break-even point by July.

7.3 Projected Profit and Loss

As the profit and loss table shows, RA Concepts forecasts steady growth in profitability over the next three years of operations.

7.4 Projected Cash Flow

The table presents our projected cash flow balances. The critical first year reflects positive cash flow. Monthly cash balances are positive, which indicates adequate financial reserves and correct planning for the required working capital.

7.5 Projected Balance Sheet

Our projected Balance Sheet shows a steadily increasing net worth, as we pay off loans and increase production over the first three years. Even with these conservative estimates, our balances are good.

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification for the Sporting Goods Manufacturing industry (SIC code 3069).

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Is gross margin better than net margin?

When it comes to measuring profitability, a gross profit margin is fine for determining the profitability of a particular item, but net profit margin s are a better measure of overall profitability.

What is net profit margin?

The net profit margin is key as it measures total sales, less any business expenses, and then divides that number by total revenue. The best net profit margin for your business is dependent on what industry you're business is in; comparing your margins to a company in a completely different industry is useless.