I live in a gated, golf course community outside Tampa, FL. There are 1,160 homes in the community and the community was developed in the early 1990s. In 2019, the HOA purchased the golf course and clubhouse from the original developer after years of neglect. Since then, the HOA Board has been managing both the course and the community itself, although they are managed separately with individual P&Ls. It is worthing noting that the HOA took out a $5 million loan to purchase and make some initial improvements to the course. Not necessarily small dollars. All of that is useful background.
Over the last several months, the community members have been torn about whether to invest in building pickleball courts, how many courts to build, and where to put them. Personally, I’ve never played the sport and don’t have much interest in changing that. But, that’s not the moral of this story. I think what we can learn from this story is useful in the business world.
The first lesson is that we need to be careful about overreacting to flashes in the pan, especially when the changes made are hard to reverse. Pickleball may be the fastest growing sport in the country, but is it here to stay? That’s impossible to tell. It would be a shame to pave over the community’s only grass field for a sport that no one plays five years from now.
The second lesson though is the focus of this article. That lesson is communicate, communicate, communicate. If you don’t communicate effectively, rumors get started, confidence in leadership is eroded, and frustration among employees builds.
Back in January, the community held an open-door meeting to discuss pickleball, among other topics of the day. The meeting was scheduled for 6:30pm on a Tuesday night. The entire week leading up to the meeting, all anyone wanted to talk about was pickleball, whether it was around the community walking our dogs, getting beers at the clubhouse, and especially on the community’s Facebook page. Facebook is a topic for another day.
The problem was that not a single person knew what the HOA Board was planning to do. Here are some of the courses of action I heard during that week:
- “The HOA Board is planning to spend $400,000 on building four pickleball courts and they are going to charge a special assessment to fund it.”
- “The HOA will use its reserves to fund the construction.”
- “The golf course will use its reserves to fund the construction.”
- “They will charge $30 per month memberships to use the courts.”
- “The six courts will be built on the grassy space next to the kid’s playground. That’s the only grassy area in the community! Where are the kids going to play?! Where will we hold the Fall Festival?!”
- “The two courts will replace one of the existing tennis courts.”
- “I don’t want the courts within 500 yards of my home. Do you know how loud pickleball is?”
- “If the HOA doesn’t build the courts, my family and I are selling our home and moving to a neighboring community that has courts.”
- “If the HOA builds the courts, my family and I are selling our home and moving to a neighboring community.”
Tensions rose throughout the week and the conversations devolved, especially on Facebook (shocker). That Tuesday, I left work early to be home in time for the meeting. I was excited, expecting that the HOA Board would answer all the community’s questions and nip the rumors in the bud. Unfortunately, I left utterly disappointed; not in the ultimate result of the meeting (which BTW was to table the discussion for later) but in how the process was mismanaged, to say it politely.
I expected the meeting to start with a slide show presentation or at a bare minimum the HOA Board President clearly articulating the plan, including (i) the number of courts to be built, (ii) the location of the courts, (iii) the cost of the courts, (iv) the plan to fund them, and (iv) the timeline. Instead, the meeting started with an hour of various residents simply regurgitating the rumors they had heard prior to the meeting. No comments from the Board whether the residents were correct or wrong. The meeting ended shortly afterwards, with no one feeling good about the plan, or lack thereof. More importantly, questions were raised by members of the audience about the HOA’s ability to manage the recently acquired golf course. If the HOA cannot make an informed decision about pickleball courts, are they capable of running a course on which the community has a $5 million loan?
The Board meeting the following month was less well attended. With a few seconds of discussion between themselves, the Board approved two courts to be built adjacent to the tennis courts at a projected cost of
$65,000. When this was announced at the Annual Meeting last week, the General Manager of the Golf Club was asked how the $65,000 would be repaid. His answer was that there would be membership plans available but was not yet sure what the details of those memberships would be. In the meantime, the money would come from the reserves.
Afterward, I wrote to members of the Finance Committee:
“[ ] said at the Annual Meeting that they aren’t sure yet how the memberships will be structured for pickleball and yet they’ve approved the project. That answer only adds fuel to the fire. Maybe a better answer would have been, “Stand-alone pickleball only membership will cost $50 per month and can be added to a golf membership for $30. Based on that, the courts will break even by June 2024 and we’ll have the added benefit of attracting new full members which we have not factored into our model.” Whether that ultimately is how the memberships will work, who knows? It’s a projection at the end of the day and subject to change. What it does do is inspire confidence and rally the troops.”
The point of the story is that messaging matters. You might own your business outright and the decisions about the company’s future might be yours alone to make, but it’s important to consider how the story will be framed to your managers and employees. They might not be the owner, but they have a lot on the line including the time they’re investing in your company and their families’ futures.
They need to be motivated
and confident in the direction you’re leading them. At the end of the day, when yo ell your company,
if you don’t have a strong team, you don’t have much to sell.
Graham Gilbert
M&A Done to a Standard
813-668-7855
