Business Planning
A capital budget is used for large-value items such as equipment and fixtures. (T / F)
T
A cash budget records cash and credit transactions. (T / F)
T
According to the Business Planning Model, a business plan should build on and refine the operational plan. (T / F)
T
An important feature of a cash budget is cash flow patterns for the past 12 months are clearly indicated. (T / F)
T
Assumptions are necessary for forecasting numbers. (T / F)
T
Changing the budget when the facility is falling short of budget projections is both unacceptable and unproductive. (T / F)
T
Customer demographics is an internal factor. (T / F)
T
Financial forecasts should be based on historical data derived from a linear trend analysis. (T / F)
T
Helping establish a starting point for goals, objectives, and related strategies is an appropriate use of the SWOT analysis. (T / F)
T
Opening a new driving range 5 miles away would be a relevant factor for making assumptions about the number of rounds likely to be played in the coming year. (T / F)
T
Raising or lowering green fees is a reasonable response to an underperforming budget. (T / F)
T
Staff evaluations are a relevant data source for a SWOT analysis. (T / F)
T
The process for developing a business plan starts before you establish the goals you would like to achieve for the shop's coming year. (T / F)
T
The utility of a business plan for managing day-to-day operations depends on the accuracy of your assumptions. (T / F)
T
The utility of your business plan for managing day-to-day operations in a golf shop depends on your ability to manage internal factors. (T / F)
T
Your finalized operating budget will show whether or not you have the money to pay. (T / F)
T
What information would be most useful to the planning team interested in measuring the facility's past or current success?
Both quantitative and qualitative data.
Who should provide direction for creating the business plan at a golf operation?
PGA Professionals
Linear trend analysis and base year analysis are examples of vertical analyses. (T / F)
F: These are horizontal analyses. Vertical analysis involves comparisons among values in the same column of a forecast or budget for a given fiscal year, such as cost of goods sold compared to total sales.
The total annual sales for a golf shop for the past five years are listed below: Year / Total Annual Sales: 1 - $98,000 2 - $100,000 3 - $123,000 4 - $121,000 5 - $133,00 Based on a simple trend projection, what is the most reasonable expectation for the coming year? What is the average percent change?
$144,083 8.33%
What is the definition of the "cost of goods sold?"
Cost of Goods Sold represents the value (at cost) of all merchandise that is sold to customers, stolen, lost, damaged, or destroyed during a particular period. The major component is the amount paid to vendors to acquire the goods, but may also include the costs for shipping, ticketing, and handling.
The SWOT analysis would treat opportunities and threats as factors that usually can be controlled by the facility. (T / F)
F: They generally cannot be controlled by the facility.
What is one of the techniques used to validate assumptions
1. Scenarios and Sensitivity Analysis 2. Historical Review 3. Expert Review
Golf shop sales of $100,000 yield a gross margin of $30,000. What is the percentage of the cost of goods?
70%
If the gross target margin for your golf shop were 40 percent, what would be the target percentage for your cost of goods sold?
?
Your employer is contemplating an increase in weekend green fees. She would like to know how this increase might affect the number of rounds played. What would provide her with the best estimate?
A Linear Trend Analysis?
What examples would be considered internal data sources for planning purposes?
Any information that can be generated onsite. E.g. number of rounds, revenue per round, total revenue from each operational area, cost of goods sold, cost of labor as a percentage of total expenses, etc.
Gross profit is what remains after calculating the difference between revenue and cost of goods. (T / F)
F: This is called Gross Margin
In his first year at a golf club, the Head Professional has made some assumptions about how improvements in customer services will increase the coming year's sales volume. What technique could be used to best test these assumptions?
Expert Review: run ideas by more experienced professionals for feedback.
Long-range planning should initially assume an adversarial relationship between neighboring facilities that directly compete with each other. (T / F).
F
A facility profile defines the overall culture of the business. (T / F)
F: A facility profile is based on a set of descriptive data about the facility type, geographic locale, customers, competitors, golf trends, economic conditions, play value, and related amenities.
A sound mission statement defines the long-term vision and core values of a facility. (T / F)
F: A mission statement is a brief statement of a facility's purpose. It is a "why we exist" statement. It defines the business's purpose, not the business's vision or underlying financial model.
Mission statements should include a definition of the facility's underlying financial model. (T / F)
F: A mission statement is a brief statement of a facility's purpose. It is a "why we exist" statement. It defines the business's purpose, not the business's vision or underlying financial model.
A vision defines the short-term objectives that must be accomplished in the upcoming year. (T / F)
F: A vision is a goal of the highest order and helps define what a business will ultimately accomplish. It helps keep the business focused and moving forward.
A yield analysis is used to compile a facility's historical data on the number of rounds played. (T / F)
F: A yield analysis helps professionals look BEYOND the number of rounds played to find out exactly who is playing and when they are playing. It identifies the most frequent customers, the customers that generate the most revenue, and markets of new potential customers.
The new manager of a ten-year-old private course, currently doing an average of 5,000 tournament rounds per year, proposes to increase tournament rounds by 50% by the end of next year. This proposal meets the criteria for an effective business objective as presented in the Business Planning Course Manual. (T / F)
F: I would say this objective is not realistic. A 50% increase in tournament rounds is a large increase. This objective meets all of the other SMART criteria.
"Develop and promote group lesson programs aimed at women and juniors" is an example of an effective business objective. (T / F)
F: It is not time oriented.
Consider the following statement as part of a business plan: "Improve range profits and customer satisfaction." According to the Business Planning course, this statement is an example of an objective. (T / F)
F: Objectives are short-term outcomes that are linked to achieving a long-term goal. They should be SMART: Specific, Meaningful, Achievable, Realistic, and Time-oriented. This example lacks the "S" and "T."
Cost of goods sold is an example of qualitative data. (T / F).
F: Quantitative, it can be quantified.
The results of a SWOT analysis could be sufficient justification for the abandonment of a core business function. (T / F)
F: SWOT Analysis are used to identify areas that need to be preserved and supported, areas that need improvement, and external factors that need to be addressed. Not necessarily to abandon a core business function.
The divisor in the linear trend formula-average percentage is the number of years of change being measured. (T / F)
F: The divisor is the Number of Calculations
Depreciation allowances must be accounted for in a cash flow budget. (T / F).
F: These are accounted for in a CAPITAL BUDGET.
What best describes sensitivity analysis?
Generating scenarios by entering different values for the assumptions. Generating several different scenarios, both optimistic and pessimistic, helps determine which assumptions and projections make the most sense for the business. Helps identify possible best and worst-case scenarios and how they affect performance.
What does a performance metric provide?
Gives the professional an idea of the financial health of the operation.
What is the correct budget category for labor forecasts?
Golf Expenses
What is the usual business destination for long-range planning?
Growth?
A golf professional is purchasing a golf course. The business plan he presented to his banker included his history of successfully operating similar facilities, budget projections for the first five years under his management, and objectives and strategies for reaching his goals. The banker rejected his loan application because of missing information. What important element is missing from the business plan?
He is missing his definition of the business (e.g. core values, vision, and mission). He is also missing an assessment of the current state of the business (e.g. SWOT analysis - strengths, weakness, opportunities, and threats).
What should govern the decision to pursue an opportunity?
In depth analysis and planning.
What is an example of a financial strategy?
Increasing or decreasing fees in a department, borrowing money for investment purposes, retiring debt to increase profits, reducing operating expenses without changing operational procedures, etc.
What is the most significant benefit of a point-of-sale system to a manager?
It can easily track revenues, inventory, service, tee sheet reservations, course usage, labor hours, and possibly even customer demographics. It can also automatically calculate the amount above or below plan the actual numbers are at the end of every day, week, and month.
What type of information is typically provided by qualitative data?
It informs the planning team about the quality of the business offerings, such as condition of the course, enjoyment or satisfaction of customers, or flavor of the food. It informs the planning team "how" and "why" things are happening.
What is the most significant benefit of strategic business planning?
It provides a long-term vision and destination, and does not just focus on the current state of the business.
You are concerned about a decline in business growth. What method would be most effective in portraying your overall financial history?
Linear Trend Analysis
What events would cause a change in the forecast for golf shop expenses?
Major events (e.g. pandemic, natural disaster), the economy (e.g. golf shop expenses may increase if suddenly have to bring in more golf shirts because the shop is selling through current inventory).
What would be the most appropriate initial response to facility income not meeting projections?
May need a change in the way the plan is being implemented rather than an adjustment in the budget for subsequent periods.
A cash flow budget is primarily concerned with what measure?
Money, inventory
You are in the process of completing a business plan for the golf shop. Initial forecasts of sales, expenses, and profit have been made. Past data has been analyzed and important inside and outside factors have been identified. What is the next step to be taken towards completing the plan?
Monitor Performance: Monitoring and adjusting operations based on actual performance. Is the facility performing according to plan?
Next year you will be replacing a long-time golf shop employee with a new assistant who has considerable sales experience and selling skills. You will be paying this new staff member a higher salary. What is a reasonable assumption for you to make?
Productivity will increase, golf shop sales will increase, member experience will increase, offsetting the higher salary.
What is the formula for Merchandise Net Operating Income?
Revenue - (Cost of Goods Sold + Operating Expenses)
How might revenues be affected at a nearby daily fee course if the local tire plant has major layoffs?
Revenue could decrease as the public now has less disposable income to spend on leisure due to the layoffs.
What is usually broken down into categories based on product lines or shop activities?
Revenues (sales)
What information should form the basis of a golf shop's 12-month operating budget?
Revenues (sales), Cost of Goods Sold, Gross Margin, Labor, Rent, Utilities, Marketing and Promotions, Insurance, Education and Travel, Golf Car Leases, Payments, and Expenses, Other Operating Expenses, Depreciation, Interest, and Taxes.
According to the Business Planning Course Manual, what is usually the largest contributor to the bottom-line profit of the facility?
Rounds
What metric should be part of every forecast regardless of the type of facility?
Rounds
What is one example of a performance metric?
Rounds, Yield Management (accounts for potential number of rounds available in a give period), Revenues per Round, Cost of Goods Sold as a Percentage of Sales, Gross Margin as a Percentage of Sales, Inventory Turnover Rate, etc...
Which characteristic of goals and objectives is described as capable of being observed, recorded, and measured?
Specific
What important characteristic is missing in the business objective: "Increase pro shop sales next year?"
Specific; This objective does not specifically state how much the business would like to increase pro shop sales by. They could increase sales by $1 and technically achieve their objective.
The following agenda was part of a golf range business plan: "Purchase 175 dozen new range balls and rotate usage three times a year. Who: Head Professional. When: End of First Quarter. Cost: $1500." According to the Business Planning course, describe the business plan component represented by this statement?
Step 3: Develop Business Goals, Objectives, and Related Strategies
It is appropriate to address the role of the employee in the mission statement. (T / F)
T: A successful mission statement identifies key elements of the business such as image, the quality of customer service, and the critical ROLE OF EMPLOYEES and their relationships to customers and the business, as well as factors that ultimately determine the facility's success and prosperity.
Trends in local consumer spending would be most useful for evaluating a core business function (T / F)
T: Although an external factor, trends in local consumer spending can be a useful for evaluating a core business function. Is it the most useful? Probably not.
In a cash budget, transactions are only recognized at the time they occur. (T / F)
T: Cash flow budgets reflect actual dollars in and out of the bank at the end of every month or week.
The projected customer base of certain golf facilities located in the United States could assume members drawn from international markets. (T / F)
T: I suppose, it depends on the facility.
Revising forecasts and budgets is one way to keep a business solvent in the event of unforeseen external changes. (T / F)
T: In periods of extreme economic decline, many business may scale back plans for growth and revise their revenue projections in order to simply keep the business solvent.
A facility's financial objectives could be achieved through operational strategies alone. (T / F)
T: Strategies usually fall into one of three categories; Financial, Operational, or Promotional.
Conducting a base year analysis is a good choice for a facility that has just completed a project that added nine new holes to the original 9-hole course. (T / F)
T: The base year is usually a year where a major change occurred at a facility.
The interpretation of quantitative data is less susceptible to differences of opinion than qualitative data. (T / F)
T: This is because it is usually based on numerical measures that are well accepted in a particular business sector.
Lack of a mission statement is an example of a weakness that a SWOT analysis might disclose? (T / F)
T: This would be considered a weakness for the business.
Calculating yield involves knowing the relationship between the amount utilized and the amount available. (T / F)
T? Yield equals the number of rounds played in a period divided by potential rounds in a period.
For the purpose of developing a business plan, what is the best description of trend analysis?
The percentage change up or down from year to year. Gives a good understanding of past performance.
What is the baseline reason for analyzing variances?
There is no point in investing time to analyze the business, prepare objectives and forecasts, and create budgets if business leaders do not monitor the plan and compare actual results against projected figures. It is critical to track variance between actual results and budgeted numbers, investigate any significant differences, and quickly take steps to mitigate potential problems.
What method do managers use to increase their knowledge of financial performance and controls?
They choose a few key performance metrics to track through regular budget reports.
What is the functionally significant difference between goals and objectives?
Timeline. Goals are typically more complex and take several years or multiple business cycles to achieve. They are more likely to evolve or be revisited as the facility's current market position or financial success changes. Objective should be achieved within a fiscal year or less; they are linked to specific changes in strategies or tactics that can be implemented quickly.
What is the process called when the manager reviews total rounds to determine who is playing and when?
Yield Analysis
Consider the following table. Based on trend analysis, what forecast would be made on the number of weekend rounds that will be played in year five? Year / Weekend Rounds: 1 - 16,000 2 - 14,500 3 - 16,800 4 - 17,400 5 - ?
later year - previous year / previous year = % change 14,500 - 16,000 / 16,000 = -9.375 16,800 - 14,500 / 14,500 = 15.86 17,400 - 16,800 / 16,800 = 3.57 -9.375 + 15.86 + 3.57 = 10.055 / 3 = 3.35 / 100 = 0.0335 17,400 x 1.0335 = 17,982
