Country Side Golf Course

Location: Norwalk, IA

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Country Side Golf Course is a small, family-owned golf course located in Norwalk, IA.  It consists of 137 acres for the asking price of $2.1 million dollars. This property is close to Des Moines Airport and has 18 holes and a bar and grill. There is also some undeveloped land that could be used for a driving range or other projects. The course has a full sprinkler system that uses recycled water. There is already a steady and strong membership at the course. 

We have attached forecasted pro forma financial statements. Included in the forecasted pro forma financial statements is an income statement and balance sheet, key business ratios, a break-even analysis, a weighted average cost of capital calculation, a free cash flow analysis and an internal rate of return computation. Country Side Golf Course is obviously seasonal. Iowa has about a four to five month winter depending on the year. In the forecasted financial statements, we make the following assumptions:

  • The golf course is open 275 days out of the calendar year (Assumption based off of historical operations)
  • We anticipate an average of 10 customers per hour
  • We anticipate being open 8 hours per day on average
  • Based on those assumptions, we expect 22,000 patrons the first year with that number growing by 1% annually 
  • We expect a starting green fee of $20 and we expect that number to grow by 5% annually
  • That leads us to an estimated gross profit in the first year of $635,800 that includes green fees, food sales, driving range, and cart rentals
  • Straight-line depreciation is used and a tax rate of 30% is assumed
  • We made other assumptions dealing with expenses and yearly growth in certain accounts that are detailed in the forecasted financial statements. 

We will finance the initial acquisition of the golf course with a 7% annual interest rate. All other expenditures will be funded through an additional small business loan with an annual rate of 13.93%. In our opinion, Country Side golf course could be a profitable endeavor.  In looking over our forecast, it shows from computing an IRR of 10.76% and a WACC of 10.75% that the golf course is reasonably priced and will potentially be a profitable business decision. All of this hinges on the ability of the owners to attract a steady clientele.

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