Posted: February 07, 2011
Colorado success stories: GolfTEC
A company close to the edge rebounds with a vengeanceBy David P. Mead
Editor's note: This is the second in a series of Colorado company success stories as told by CEOs and business owners.
Recently I sat down with Joe Assell, co-founder and CEO of GolfTEC to review the strategies and approaches that the company has taken to reach its current level of success.
Mead: How did you decide to get into the business?
Assell: I was a golf pro and in 1994-95, co-founders Mike Clinton, Clayton Cole and I could see new technologies emerging (PC's, the internet, etc.). Golf lessons essentially had been conducted the same way by golf professionals for years. We decided to find a better way to give a golf lesson, utilizing technology. In 1995 we opened our first location - as an experiment. It booked quickly and we added a second location.
Mead: What is your differentiation?
Assell: We have capitalized on a "first to market" advantage. We offer proprietary software platforms: g- SWING where we match your swing to our database which includes the motions of 150 top tour players. So the lesson is based on facts and data about your swing, rather than opinion; CaddyMaster (our ERP system) provides business intelligence about customers, location performance, on-line scheduling. It allows us to run golf instruction as a sophisticated business.
Mead: Has the growth path always been smooth?
Assell: In 1997-98 technology was "hot" and we were talking to venture capitalists. To please them, we foolishly started trying to become a tech company and developed technology to deliver lessons over the internet and added expensive, experienced management. When the tech bubble burst, we could not get investors, and had to reverse direction and retool back to our original profitable model - but not until we had burned through $3 Million in capital. We were very close to the edge - within 1-2 months of folding. We were able to secure a bridge loan which saved us.
Mead: Weren't there some good things that came from this expensive lesson?
Assell: Yes, we had the technology which has become a key to our success. Also, three things happened, starting in 2001.Gart Capital Partners invested in GolfTEC. They had a fabulous history of success in sports retail and helped us stabilize the business. We also started partnering with GolfSmith (we are now co-located in 56 of their stores). Third, we started franchising. Over the next five years, we had steady consistent growth - from 18 locations to 140 locations.
Mead: Joe, how did the current recession impact your business?
Assell: We are in the retail and recreation business and we could see that retail was taking a big hit, especially specialty and luxury retail. Some retailers were reporting 35 percent to 50 percent reductions in sales. We put a strategic plan in place to respond to these dynamics. Our team did a terrific job. We were fortunate that even in our worst period (Sept '08 through August '09), our sales were down only 7.7 percent.
Mead: What are some of the actions and new programs you took to sustain growth?
Assell: First, we adjusted our strategy to focus on equipment sales. Our IT team developed proprietary club-fitting software and we partnered with Golf Magazine and Golf.com. Second, we started offering monthly payment plans that spread the annual cost of lessons and helped our customers manage their cash flow. It was amazing that 18 percent of our customers adopted these plans. Third, we rewarded our loyal customers by offering discounts for renewals. We offered two different months during the year when renewing customers could sign on for another year at discounted rates. Not only did this build great goodwill, but these two months have become GolfTEC's two largest cash sales months. Our results have continued to steadily improve. In 2010, our business was up 15 percent over 2009.
Mead: What are the keys to continued growth over the next 5-10 years?
Assell: There is significant opportunity for growth, both in same location sales as well as new locations. The "TEC" in GolfTEC stands for Technique, Equipment, Conditioning. In technique (golf lessons), we are number one in the world. In equipment, we started focusing more attention. Our equipment sales were up 70 percent in 2010 and there is plenty of room for growth. Conditioning is a great opportunity and one that we really haven't touched yet. As far as the market is concerned, we see the global market as having capacity for 750 GolfTEC locations and we are currently at 145 so we are only at about 20 percent penetration. We still have a long way to grow!
David Mead is President of The Mead Consulting Group, a consulting and advisory services firm, based in Englewood, that has been helping Colorado companies grow since 1981. The firm's 40+ senior consultants with operating backgrounds assist Colorado-headquartered companies with strategic growth and execution, improving profitability and cash flow and maximizing value at exit. Dave is the past Chairman of ACG Denver and a long-time Board member and is on the Board of Young Americans Bank. Contact Dave at: meaddp@MeadConsultingGroup.com or (303) 660-8135.