It probably does not come as surprise to know that even prior to the disruption of COVID-19, the registered club industry was already shrinking. In a period when our population as a nation grew by 11 million people from 14 million to 25 million, the number of clubs in our community had reduced by more than 500. There are many reasons for this, but the decline in club numbers is not new and, prior to COVID, we had forecast that another 400 clubs would close in the next 5 to 10 years.
As directors and managers in the industry you will be involved with having to decide the future of your club.
For those clubs struggling prior to COVID-19, now more than ever, you will need to closely monitor trading and member spending habits and adjust expenditure as necessary. You will also need to look at new revenue sources to keep your business current and ahead of the competition. For many clubs, the aim in the near term may be to achieve, at the very least, a cash neutral trading position.
If solvency is an issue for your club, Directors should prepare a restructuring plan for the future of the Club that is reasonable and that sees its liabilities remitted in the ordinary course of business. We also recommend that you prepare a rolling cashflow forecast projected for at least 52 weeks. This forecast should be considered as a dynamic tool and be constantly developed and updated.
If your Club is not able to achieve a plan that is viable and demonstrates a sustainable business, then it may be necessary to explore alternative courses of action such as amalgamation, restructure or property development.
Greg Russell of this office is a registered liquidator and is a member of the Australian Restructuring Insolvency and Turnaround Association (ARITA) and so is qualified to assist your Club with devising and pursuing your options. We can also provide assistance with the preparation of your cashflow forecast.
Contact deanne.furlong@russellcorporate.com.au or greg.russell@russellcorporate.com.au for more details