Finance for Entrepreneurs: Footgolf Australia Case Study

This article discusses Footgolf Australia case study and covers topics such as whether Leo should hire someone to assist him, ways to increase revenues in FootGolf sport, marginal costs of adding a new golf course, and 12 Month monthly cash flow and 5 year yearly financial statements. The article also includes subject 25733 Finance for Entrepreneurs.

Assignment 2
25733 Finance for Entrepreneurs

TABLE OF CONTENTS
Footgolf Australia............................................................................................................................3
Part 1: Should Leo hire someone to assist him?..........................................................................3
Part 2: Ways to increase revenues in FootGolf sport..................................................................4
Part 3: Marginal costs of adding a new golf course.....................................................................5
Part 4. 12 Month monthly cash flow and 5 year yearly financial statements..............................6
Cash flow statement.................................................................................................................7
Financial statements.................................................................................................................8
References......................................................................................................................................10

FOOTGOLF AUSTRALIA
Part 1: Should Leo hire someone to assist him?
Yes, Leo should hire effective team members having better knowledge regarding sports industry
and club to assist him. It is because; Leo would not be able to do all the things alone, so he
needs the support of team members. In addition, this answer is also supported by the fact that, the
FootGolf is an emerging sport having higher opportunities and challenges in the market, by
considering this aspect, Leo in pursuit of FootGolf might face various challenges, but with the
help of a good team, he would be able to overcome the challenges and capture opportunities in
order to get succeeded (Dickson, Kaiser-Jovy and Breitbarth, 2017). Further, in sports like
FootGolf, a person is liable for every move, and they make their success is based on the same,
but this can come with disappointment if not effectively managed. So, a better combination has
helped in rapidly building self-esteem and assurance, plus can add proficiency and resilience
simultaneously
A better team can have several benefits and can bring more efficiency and productivity in the
business as a whole. The team can help in building responsibility for the overall success, and the
same will be equally shared between all team members, Because of this integration, there would
be less stress on all athletes and involved persons, thereby reducing the pressure and establishing
solid bonds among all. Better engagement and participation of cherishing each member to
provide their maximum contribution; also there is a responsibility of Leo to make optimum
utilization of their team skills and knowledge (Country Club International, 2018). Since Leo
realized that the various opportunities had been brought by the new sport which is FootGulf, as
this sport will be more fun for each and every ages, also this sport is not properly known in
Australia, and by more of partnership with gold clubs, Leo and their team members will be able
to enjoy low costs and higher revenues. For this reason, Leo is required to establish a
hardworking team, and by this step, they will be able to take innovative steps to make the
introduction of new individuals to their provided facilities.
Leo must add people and must pay close attention to the course of the FootGuld in the US as
well as UK clubs, and consider new people and ways to drive the same. Since Leo is confronting

the issue of whether to hire new people or not, in such situation Leo must hire members, as there
are several things which are facilitated by them such as collection of a range of payments. They
can be considered as club’s lifeblood, and by generating new members, the stream can lead to
timely increased revenue (Breitbarth, Kaiser-Jovy and Dickson, 2017). No matter how much a
manager has talent in the sport; they are to rely on their team members. In this manner, team
members generate the good feature of working together. Also by recruiting team members, the
ultimate objective will be achieved, as everyone has delegated their task and are likely to initiate
their assignments in an effective manner.
Moreover, at the time of workload and increased signing of new contracts in regards to the club,
the team members can help in offsetting and managing the work, and most of all it will be
feasible for the manager to run a sports club in an optimum manner (Babiak, Heinze and
Thibault, 2018). It can be said that a single person cannot bear all the responsibilities and is not
able to work on their own, so it is essential to execute the strategy of hiring new individuals for
increasing and developing the sports club.
Thus, this strategy will also help in increasing growth and revenues, ultimately, it can be asserted
that once the sport club sets up the right people at the right time, then it will be beneficial for
them to manage their tasks and work, and provide the individual work in accordance with their
inherent experience and talent. Thus, this strategy will assist Leo in giving attention towards all
tasks, because all the tasks would be diversified and there would be higher chances for Leo to
consider growth internally as well as externally.
Part 2: Ways to increase revenues in FootGolf sport
The latest survey of FootGolf facilities carried out by the American FootGolf League stated that
the new and emerging sport is able to generate millions of dollar and additional revenues. In this
sense, for a new sport to generate quick revenue and rate of return is challenging as well as
encouraging (Golf Support, 2018). Further, the key to earning the majority of revenues out of
every division of the sports club is to serve the best and involve the most reliable and attractive
aspects and considering the best channels on the basis of the data.

It can be said that this sport can increase revenue, by more contribution, efforts and exploiting
opportunities in the market, by which the sports can gain popularity among the players and
raising the revenues thereof. In addition, the revenues can be increased by providing better
accessibility of the FootGolf courses to the players and people; this will create better customer
relationship and can increase the possibility of the higher audience, thereby increased revenues.
For increasing revenues and making the sport popular, it is essential to consider strategic
planning and decision making from the start to ensure better profitability. One of the best aspects
to increase profitability is to assess and invite sponsorships, as this can result in a direct
increment in their club’s revenue. In addition, the first and foremost factor to increase revenue is
the entertainment value, and also it is the key determinant of the generation of income. At the
topmost level, sports having better entertainment will produce a higher proportion of income
held from; television broadcasting rights, endorsements, audience fees at the arranged events,
commercial sponsors, the transferable charge of professional sports player (Tania, L., 2016).
One of the best ways to ensure that the sport’s club is sustainable is to obtain the same from a
range of sources inclusive of; fundraising, membership charges, commercial activities,
sponsorships and funding by grant, these can ensure effective income generation and higher
revenues, with the reduced operational costs.
The emergence of this new sport was established in the UK, before three years, and now it has
reached new heights. This game has appealed increased revenues in context with more customers
spending on events, golf courses, food and beverages, so the sports club is required to consider
the same to be profitable (Shank and Lyberger, 2014). Since revenues can be increased by selling
more of rounds in the clubs and this can be done through effective marketing strategies and
customer relationship management.
Part 3: Marginal costs of adding a new golf course
Marginal costs are stated as variable costs inclusive of labour as well as material related costs,
along with the predicted percentage of the fixed costs (Nisar, Prabhakar and Patil, 2018). It is
considered as the fluctuation in the opportunity that takes place when the produced quantity is
increased by a single unit; it is the production costs of one more unit of a commodity.

Introduction of a new golf course in the sports club will lead to the addition of the following
additional costs:
 Construction of golf course that includes irrigation, grow-in, implementation of design,
renovation of the current gold course and the framing of construction.
 Maintenance of golf course that comprises upgrade of the cart path, renovation and
remodelling, maintenance, irrigation, drainage, earthworks and Pre-event turf grow in.
It is stated by the USGA that the marginal costs of constructing a course are about $2 million for
five years, and it will be funded through retained earnings and a bank loan. In addition, there will
be the presence of maintenance costs of around $150-200k each year (Programmed, 2018).
Yes, financing will be required for the expansion of the golf course, because a start-up does not
have maximum amounts of funds to expand the golf course on a big level. So the organizer is
required to raise funds from various areas such as memberships, sponsorships etc. (Jared, 2018).
Yes, the financing aspect is relevant in the current scenario, so as to seamlessly and smoothly run
the daily business operation and to satisfy the vital expenditures and payments.
As the business keeps on growing, for this it requires better capacity and new technical aspects in
order to take benefit of lower costs and to have a competitive edge, and for the same, the
business needs an optimum flow of finance for expanding more in the concerned market.
Financing is very important when it comes to developing and marketing new sport or tasks, and
to emerge in the similar market with a handful of opportunities (Foster, O'Reilly and Dávila,
2016). Finance is one of the relevant functions for any business, as it indicates better business
performance and health while these funds help the new business in launching and marinating
itself via a range of events.
Part 4. 12 Month monthly cash flow and 5 year yearly financial statements

Cash flow statement
January Februa
ry March April May June July August Septem
ber
Octobe
r
Novem
ber
Decem
ber
Cash in the beginning $0 $293,4
42
$320,8
83
$348,3
25
$375,7
67
$403,2
08
$430,6
50
$458,0
92
$485,53
3
$512,9
75
$540,41
7
$567,85
8
Cash inflows
Retained earnings $120,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Bank loan $152,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash sales $30,000 $30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0 $30,000 $30,00
0 $30,000 $30,000
Total inflow $302,000 $323,4
42
$350,8
83
$378,3
25
$405,7
67
$433,2
08
$460,6
50
$488,0
92
$515,53
3
$542,9
75
$570,41
7
$597,85
8
Cash outflows
Maintenance cost $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417
Salaries $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417
Insurance $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Permits and licensing for
production $6,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accounting costs $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Fliers ads and coupons $625 $625 $625 $625 $625 $625 $625 $625 $625 $625 $625 $625
Public relation services $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Total cash outflow $8,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558
Cash in the end $293,442 $320,8
83
$348,3
25
$375,7
67
$403,2
08
$430,6
50
$458,0
92
$485,5
33
$512,97
5
$540,4
17
$567,85
8
$595,30
0

Financial statements
Income statement
Year 1 year 2 year 3 year 4 year 5
Income from members $360,000 $395,000 $433,500 $475,850 $522,435
Cost of operations -$150,000 -$164,000 -$179,400 -$196,340 -$214,974
Gross profit $210,000 $231,000 $254,100 $279,510 $307,461
Other expenses
Maintenance cost -$5,000 -$5,000 -$5,000 -$5,000 -$5,000
Salaries -$5,000 -$5,000 -$5,000 -$5,000 -$5,000
Insurance -$6,000 -$6,000 -$6,000 -$6,000 -$6,000
Accounting costs -$1,200 -$1,200 -$1,200 -$1,200 -$1,200
Fliers ads and coupons -$7,500 -$7,500 -$7,500 -$7,500 -$7,500
Public relation services -$6,000 -$6,000 -$6,000 -$6,000 -$6,000
Interest cost on loan -$7,500 -$5,838 -$4,077 -$2,316 -$554
Sundry expenses -$3,500 -$3,500 -$3,500 -$3,500 -$3,500
Profit before tax $168,300 $190,961 $215,822 $242,993 $272,706
Tax charges 30% -$50,490 -$57,288 -$64,746 -$72,898 -$81,811
Profit after tax $117,810 $133,672 $151,075 $170,095 $190,894
Position statement
Year 1 year 2 year 3 year 4 year 5
Assets
Land $250,000 $250,000 $250,000 $250,000 $250,000
Sport equipment $139,810 $155,672 $173,075 $192,095 $212,894

Total assets $389,810 $405,672 $423,075 $442,095 $462,894
Liabilities
Bank loan $152,000 $152,000 $152,000 $152,000 $152,000
Capital and retained earnings $237,810 $253,672 $271,075 $290,095 $310,894
Total liabilities and capital $389,810 $405,672 $423,075 $442,095 $462,894

REFERENCES
Babiak, K., Heinze, K. and Thibault, L., 2018. Management concepts and practice in sport
organizations. Contemporary Sport Management 6th Edition, p.71.
Breitbarth, T., Kaiser-Jovy, S. and Dickson, G. eds., 2017. Golf Business and Management: A
Global Introduction. Routledge.
Country Club International, 2018. FOOTGOLF: THE NEW SPORT YOU NEED FOR YOUR
GOLF COURSE (Online). Available from
<http://www.countryclub.com.au/Blog/FootGolf__the_new_sport_you_need_for_your_golf_cou
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Dickson, G., Kaiser-Jovy, S. and Breitbarth, T., 2017. Global golf business and management:
Market issues and career prospects. In Golf Business and Management (pp. 2-19). Routledge.
Foster, G., O'Reilly, N. and Dávila, A., 2016. Sports business management: Decision making
around the globe. Routledge.
Golf Support, 2018. Could Foot-Golf be the Answer to Golf Club Memberships in the UK?
(Online). Available from <https://golfsupport.com/blog/foot-golf-answer-golf-membership-in-
uk/>. [Accessed on 4 October 2018].
Jared, H., 2018. Financing for Business Expansion: The 4 Best Steps (Online). Available from <
https://www.inc.com/bill-murphy-jr/toys-r-us-is-back-from-dead-how-it-suddenly-happened-
what-to-expect-now-why-we-should-all-be-happy.html>. [Accessed on 4 October 2018].
Nisar, T.M., Prabhakar, G. and Patil, P.P., 2018. Sports clubs’ use of social media to increase
spectator interest. International Journal of Information Management, 43, pp.188-195.
Programmed, 2018. GOLF COURSES (Online). Available from
<https://programmed.com.au/our-business/property-services/golf-courses/>. [Accessed on 5
October 2018].
Shank, M.D. and Lyberger, M.R., 2014. Sports marketing: A strategic perspective. Routledge.

Tania, L., 2016. Footgolf meant our turnover grew by 30%(Online). Available from
<http://www.thegolfbusiness.co.uk/2016/11/footgolf-meant-our-turnover-grew-by-30/>.
[Accessed on 4 October 2018].