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Tis the (Off) Season
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Author:  Fred Ash [ Tue Jan 13, 2004 1:26 pm ]
Post subject:  Tis the (Off) Season
In addition to a general scarcity of funds flowoing to railrailroad museums, a major financial weakness inherent in the business stems from seasonal cash flows. In theory, this could be the best time of the year. December is the big retail month; year-end tends to elicit tax-induced contributions; and mid-school year is field trip season. History, however, suggests very rough sledding until the return of warm weather. Since we are now in the fallow period, at least for those of us in the snow belt, I would be interested in hearing management tips for seasonally maximizing revenues or minimizing expenses. Obvious items include the reduction of retail inventories, use of seasonal staff, seasonal solicitation of donations and year-end payment of membership dues. It would also be usefull to know the openness of board members and local bankers to the use of working cash loans. Are loans available and what collateral or terms is required?

fred_ash@bankone.com
Author:  Jim Lundquist [ Tue Jan 13, 2004 3:06 pm ]
Post subject:  What "Off" Season?
We have just started our 19th year of operations on the San Diego & Arizona Railway from Campo. That's 1,800+ trips by volunteers! We don't have an off-season, and, this January, our ridership is growing higher each weekend.

Then again, our weather has been in the 70's! Ah, southern California - can't beat the weather.

Pacific Southwest Railway Museum
jim@sdrm.org
Author:  Jack [ Tue Jan 13, 2004 4:03 pm ]
Post subject:  Re: Tis the (Off) Season
> In addition to a general scarcity of funds
> flowoing to railrailroad museums, a major
> financial weakness inherent in the business
> stems from seasonal cash flows. In theory,
> this could be the best time of the year.
> December is the big retail month; year-end
> tends to elicit tax-induced contributions;
> and mid-school year is field trip season.
> History, however, suggests very rough
> sledding until the return of warm weather.
> Since we are now in the fallow period, at
> least for those of us in the snow belt, I
> would be interested in hearing management
> tips for seasonally maximizing revenues or
> minimizing expenses. Obvious items include
> the reduction of retail inventories, use of
> seasonal staff, seasonal solicitation of
> donations and year-end payment of membership
> dues. It would also be usefull to know the
> openness of board members and local bankers
> to the use of working cash loans. Are loans
> available and what collateral or terms is
> required?

Hi, Fred.

Wisconsin being in the snowbelt, such as it were, it is always helpful to take a hint from other seasonal tourism operators like ski resorts, boat rides, water parks, and the like. In other words, don't limit your universe to other railroad museums. Your state department of tourism probably has some pretty good programs to give you advice and technical assistance.

The operative term here is cash management. Unless you started up yesterday, you know pretty much what your annual expenses and income are. If you live within your budget, then you should be OK. Also have a reserve fund for emergencies.

To generate off-season revenue, we take our gift shop on the road, in a manner of speaking, by participating in RR shows and selling merchandise. You can also sell on line and by mail order. We promote our charter business at this time, as many charter operators, including schools, require substantial lead times. Then, deposits are forthcoming and provide some liquidity.

Inventory can be kept lean all year by utilizing a just-in-time system of purchasing, which means you don't have to start buying until the money starts coming in. Merchandise sitting in the storeroom is money you can't use.

The bank where you maintain your museum checking/savings account will usually give you a line of credit. I would recommend staying away from loans and lines of credit except in an emergency, because you might have to pay them back out of scarce resources. It's like getting an advance on your allowance, then having it taken out next time when you want to go to the movies.

Avoid unnecessary purchases of non-expendables. I always ask. "What is it for? Do we really need it? Did you look to see if we already have one?" (Shop smart)

Scutinize the bills. One year ago, in January, when we were closed, I saw a $78 monthly electric charge for a remote vacant storage building on our line which had its own meter. Turned out an electric heater was turned on, probably to warm a worker. (who forgot to turn it off).

Might sound like micromanagement, but it's not how much you make, it's how much you get to keep.

Peace,

Jack


East Troy Electric Railroad
jftrolley@aol.com
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