Running a business is hard work, no matter what industry you’re in. From the get-go, you need to come up with business plan, establish where you want your business to be located, conduct space planning, hire staff, order equipment, and market based on your target audience. There’s so much to consider, plus how you’ll become profitable! That is, of course, the most important thing when it comes to the long-term success of any business. Increasing the profit margins of your mini golf course will keep your business in business for the long haul.
What is a Profit Margin?
First things first, what is a profit margin? A profit margin is the amount of money that a business makes on top of all the costs of sold goods and operating expenses. A true profit margin must have deducted employment, inventory, tax utility, rent, and licensure costs as well as any other business expenditures. It’s important to note that profit margins are not the same as profits. This is especially useful information when calculating profitability as a percentage.
How to Calculate Profit Margins?
To calculate your profit margins, you must:
- Total all your expenses and your business’ revenue (direct and indirect)
- Take your total income and deduct all expenses to determine the profits
- Divide the total profits by total revenue
- Multiply this amount by 100 to derive with a percentage of your profit margins
Increasing Profit Margins
Profit margins differ by industry. Typically, however, businesses that require low-cost equipment reap slightly higher profit margins when compared to those with expensive running costs, which tend to have slighter lower profit margins. This makes mini golf the perfect industry for high profit margins, as equipment costs are low across the board.
Figuring Out Your Operating Expenses and Cost of Goods Sold
It is imperative that you know your operating costs and COGS (cost of goods sold) for your miniature golf course business. The cost of goods sold consists of all direct costs including labor and materials. Operating expenses refer to all other indirect costs such as utilities, marketing, business insurance, rent/mortgage, licensing, and other prime costs.
Effective Pricing
The best way to maximize your mini golf profit margin is to ensure you have effective pricing. The cost for one round of miniature golf can range from $6- $15 depending on your location and customer base. It is imperative that you research the cost of other miniature golf courses and attractions in your area and comparable locations before determining what you will charge at your mini golf course. While you obviously don’t want to risk loosing customers by over charging, it is just as important not to under charge.
Reviewing Discounts and Promotions
Customers love discounts and promotions. There are many ways to strategically offer promotions that will increase your profits. Offering discount coupons to attendees of parties or group events is a great way to encourage those people to come back to your course and bring new customers along. Additionally, hosting discount days such as “Kids gold free on Tuesday” or “Half price golf for Moms on mothers day” is another way to offer a discount to some members of a group which will also require full price customers.
When you choose Harris Miniature Golf to build your course, you will also receive a Marketing Manual which combines the most effective marketing techniques used by miniature golf course owners to ensure your course is able to reach the highest profit margins possible.
