Do you have a BHAG? If you don’t, maybe you should. “BHAG” stands for Big Hairy Audacious Goal; it’s an idea popularized in the business bestseller Built to Last by James Collins and Jerry Porras. According to the authors, a BHAG (the acronym is pronounced Bee Hag) is a long-term goal that changes the very nature of a business’ existence. Mowing all greens before 8 a.m. does not qualify as a BHAG; achieving the club’s first top 100 course ranking most certainly does.
Here’s the story of a small club with a mighty BHAG. Over the last half century, Westward Ho Country Club in Sioux Falls, S.D., earned a reputation for family fun and friendship. But not long ago, the club found itself struggling as it tried to retain members and service $2.4 million of debt. Westward Ho was in trouble. Its BHAG? Staying in business. The decisions board members at “The Ho” and their manager made are a case study for an inspiring turnaround. They made five very smart decisions.
Hire Right, Dream Big
First, they recruited and hired an exceptional manager in Tim Walton. A PGA member and trusted deputy at Bonita Bay Group, Walton saw opportunity where others saw only problems. A “go bold or go home” kind of guy, Walton is not afraid of BHAG’s – in fact, he relished the challenge he was presented.
In his first year at the club, Walton improved EBITDA to $750,000 by changing the scope of operations, which resulted in reduced labor costs, improved costs of sales and enhanced productivity by the management staff.
“We changed the overall way we conducted business,” he says. That included an attitude change: no more devaluing the product. “No more deals,” he announced as he eliminated the club’s $199 membership. He then went to work improving quality and service, which allowed the club to reduce the part of its budget normally set aside for giveaways to appease disgruntled members.
Eliminating Debt Opens New Options
Second, the club improved its operational performance, which allowed it to reduce debt. This paved the way to planning a sorely needed clubhouse. Then, the club introduced a $1,000 increase in joining fees with every eight memberships sold. In a rapidly expanding local economy, which was driven by banking services and health-care companies, CCSF kept building momentum. Soon, the club was able to secure new debt at a lower repayment rate. Plans for the new clubhouse call for a 24-hour fitness center, comfortable lounge, new swimming pool with a children’s splash-park and stylish banquet facilities.
Branding Decision Proves Divisive
Next, “The Ho” needed a new identity. But the idea of a new name and visual identity was met with resistance. But Walton felt it was the right move and persisted. After a “no” vote in June 2014, Walton and club leaders (based on a branding study) were successful in introducing a new name (the Country Club of Sioux Falls), along with a new logo, which was later credited with a 60 percent increase in merchandise sales.
A fourth key decision involved membership categories, which were reduced from 15 to four. With such positive momentum, CCSF produced a net growth of 90 full memberships over the past 18 months. Executive and social memberships are sold out and on a wait-list, which requires members-in-waiting to join with restricted access rights. Obviously, improved service quality and new facilities make a difference to existing and prospective members.
Increase Non-Member Revenue
Incremental, non-member revenue was the fifth element of the comeback plan. CCSF now averages 13 to 15 wedding receptions annually. The new facilities have generated 28 new bookings for the coming 12 months. The new and attractive clubhouse amenities continue to extend the growing reputation of the club.
Looking Ahead to a Bright Future
Today the club enjoys EBITDA in excess of $1 million annually, which is projected to increase to $1.25 million by the end of fiscal year 2017. Maybe the best part of the story: no assessment to the membership
The Country Club of Sioux Falls is an example of what can happen when strong leadership commits to a vision for excellence and has the courage to turn a big, hairy, audacious goal into reality.