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Critical Issues In order for Rotary Cove Beach (The Cove) to become profitable and continue to operate, they must consider: o Viable financial options that also unite with the YMCA’s mission statement o Reducing financial and non-financial risks to all current and future stakeholders

Analysis Due to the lack of revenue streams for Rotary Cove Beach (The Cove), Anne-Marie Thomson, branch manager of the YMCA Goderich-Huron in charge of The Cove’s operations, is considering several options to turn The Cove into a profitable venture. As per the Statement of Earnings for Rotary Cove Beach, this segment has been realizing losses for three years (2007, 2008, & 2009) even with the $20,000 funding from the town council. Since The Cove has not been profitable for several years, the Council is considering cutting the funding that covers the costs of training, lifeguards, and supplies. Financially, this would negatively impact the YMCA Goderich-Huron branch, as they are responsible for The Cove’s operations and would then need to cover those costs. In the long run, the YMCA could end up discontinuing operations of The Cove and the community could lose this safe and family-friendly beach that they love. Anne-Marie also needs to consider that Goderich is a small, tight-knit community who enjoy that The Cove is governed by the YMCA and what it stands for. YMCA’s in Canada are committed to achieving and upholding a shared vision. This vision includes “building stronger kids, families and communities and making our communities better places for everyone to live 1”. As outlined in the SWOT analysis2, The Cove is enjoyed by tourists and residents but lacks the necessary revenues to continue operating. There is competition for The Cove as there are several other public and private beaches to enjoy as well as other tourist activities like heritage tours, and several museums and art galleries3 Keeping this vision in mind, Anne-Marie must make a decision about The Cove’s operations that aligns the financial strategy with the vision of the YMCA of building healthy communities

Decision Criteria o Earn enough revenues to cover losses for the year o Unite the YMCA’s mission statement and core company values with the financial strategy for Rotary Cove Beach

1 2

http://www.ymca.ca/en/who-we-are/our-purpose.aspx Exhibit 1. SWOT 3 http://www.goderich.ca/en/visitors/attractions.asp

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Options Please refer to Exhibit 2 for financial analysis of all options and Exhibit 3 for a combined analysis.

Student-­‐Run Model This option would see the $20,000 donation from the Council handed to an entrepreneur student each year, which would increase revenue to over $7,000. This option also unites with the YMCA’s mission, allowing for a student to grow within the community. However, there are significant risks with this option that include: o Turnover every year leading to retraining every summer o Lack of experience o Possible misallocation of funds o Does not allow for long-term planning, o High risk if Anne-Marie expects to not monitor the student over the course of the summer

Outsourcing Operations Outsourcing may free up time for Anne-Marie to focus on other branch issues. This option would also see revenues of approximately $7,000 but it does not align with core values of YMCA, which focuses on building strong communities. The YMCA would be giving up control on how the beach is operated. The outsourcing firm my not appreciate the sense of community in Goderich and not adhere to community expectations for The Cove. One advantage of outsourcing is that is usually a cost-savings technique. However, in this scenario the cost to outsource is actually the second highest cost of all options analyzed. The cost to outsource is $22,600 and only the option to charge admission has a higher cost of $29,000.

Charge Admission Financially, this is the largest revenue generator with revenues of $69,000. This seems like the obvious choice but there are significant risks involved with this option. Other beaches don’t charge fees so charging an admission fee may actually reduce attendance. There are 2 public beaches, Port Blake Park (45 minutes south of Goderich) and Station Beach in Kincardine (1 hour north of Goderich) that both have similar amenities to The Cove. Port Blake Park does not charge admission, however they do charge for parking, unlike The Cove4. Station Beach5 also is free to use and free to park, like The Cove, so there is a risk of driving patrons, and particularly tourists, away from The Cove. This option also does not align with YMCA’s mission and values. The YMCA provides financial assistance to make sure they are accessible to all6 so charging to use a public beach hardly fits the YMCA’s core values.

4 5

http://tourism.southhuron.ca/public-beaches http://www.sunsets.com/page.php?page=beacheskincardine 6 http://www.ymca.ca/en/who-we-are.aspx

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Install Volleyball Courts The option of running several volleyball camps over three one-week period could realize revenues ranging from $18,000-$34,000 but also comes with risks to implement. Risks include: o Reducing large portion of beach o Unpredictable weather leads to possible court destruction, needs to be maintained every year at approx. $1,600 o Must hire additional staff. However, these risks are minimal and this option fits the mission and values of the YMCA.

Status Quo This option is fully dependant on the $20,000 to turn a profit of only $1,800. The risk here is that funding is likely to be cut completely or cut by $5,000 by Council in the upcoming election and expenses are increasing for the 2010 budget. There is nothing about the status quo that embraces the YMCA’s mission. This option is not a viable option to continue with.

Recommendation and Action Plan Based on the analysis outlined above, the best option that aligns the YMCA’s financial strategy with their core values is to install the volleyball courts at Rotary Cove Beach. The first thing Ann-Marie should do is to hire and excavator to start prepping the beach for the court installation as summer is soon approaching. As outlined in Exhibit 2, even with the low enrolment of 30 campers, this option would cover beach operations expenses and still be profitable with a net income of $18,592 and could realize a net income of $34,000 should the camp see full enrolment of 50 campers. This option could become more profitable as it becomes more established. YMCA volunteers could be hired to run the camps instead of having to hire 2-4 additional staff and camps could increase from the proposed three one-week periods and be run more often, thus reducing costs and increasing revenues simultaneously.

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Exhibits Exhibit 1. SWOT Analysis: The Cove Internal Strengths - low cost vacation - family-friendly beach - employs best & most experienced lifeguards External (sense of safety for patrons) - free and ample parking - guarded & governed by highly reputable YMCA - Anne-Marie Thompson is highly experienced Opportunities - Goderich tourism: major economic driver for summer Exploit - volleyball camp runs for 3 one-week periods: good timeline for visiting tourists, generates revenue, meets YMCA’s values Contend Weaknesses -unprofitable for years - no direct revenue stream - no budget allocation for advertising – all word of mouth

Develop

Threats - facing possible financial budget cuts from upcoming Council Election - leads to fewer lifeguards (incr. risk) - Council loss of $370,000 - competition from the 2 other public beaches and other private beach resorts - lawsuit

Address/Avoid - charging admission doesn’t align with YMCA’s values - Status Quo won’t make The Cove profitable

Note: The volleyball camp is the most optimal choice as it generates revenues, is low risk, aligns with the YMCA’s mission and values, and has the opportunity to grow in future years.

The Rotary Cove Beach 6 Exhibit 2. Financial Analysis of Options

This table shows that all options listed are profitable for The Cove, however, these options do not consider other aspects such as risk and value alignment with the YMCA

Exhibit 3. Options Analysis (Financial Combined with Non-Financial)

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Bibliography (n.d.). Lake Huron Shoreline Tourism Partners . (2014). sunsets.com. Retrieved July 9, 2014 from Kincardine Beaches: http://www.sunsets.com/page.php?page=beacheskincardine Municipality of South Huron. (2012). Public Beaches. Retrieved July 9, 2014 from South Huron: http://tourism.southhuron.ca/public-beaches Town of Goderich. (n.d.). Goderich. Retrieved July 9, 2014 from Rotary Cove Beach: http://www.goderich.ca/en/visitors/resources/dl-BlueFlagBrochure.pdf YMCA Canada. (2014). Our Purpose. Retrieved July 9, 2014 from YMCA: http://www.ymca.ca/en/who-we-are/our-purpose.aspx