Direct commercial activities are the provision of goods and services in-house on site. This is compared to concessions which are provided by external organisations. The decision to provide goods and services in-house is usually because higher profits can be generated. Examples of direct commercial activities include:
Directly delivering commercial activities is riskier than using concessions, however the rewards are greater. Direct delivery requires sufficient skills and resources in-house to manage and operate the activity. As such there is more to go wrong than contracting the risk out to an external organisation.
It may be worth developing a business plan to establish whether you can profitably deliver the activity yourself. The business plan should consider what revenue and capital costs you will incur, what staffing resource the activity will require, potential demand for the activity and what price people will be willing to pay.
It can be beneficial to compare the proposed activity against organisations who are delivering a similar service. This will help to identify what an acceptable price for the activity is and provide an understanding of the types of business models that are most effective.
In practice parks and open spaces often use a combination of directly delivering commercial activity and using concessions.
Do you have the skills and capacity in-house to deliver the activity?
How much risk are you willing to bear?
Will it be profitable doing it yourself?
What is the minimum level of income you need/want to make it ‘worth it’?
How much will it cost to set up?
How much more profit will it generate compared to a concession?
Potential for high profits.
Can utilise existing skills and capacity in-house.
Retain full control over how the activity is delivered.
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