Diversification?

Its value depends on the endeavor. Certainly, diversification in marital partners is both legally and societally discouraged. Firearms may even come into play during the discovery process. Both sexes have been known to display marked intolerance for even minor dalliances.

Conversely, when you have succeeded in piling up a little money for your old age, diversification provides a lot of safety. For me, it is the only successful investment strategy, not being able to see into the future very well. I have always admired investors who were so sure of coming events that they could pick exact positions for their money. I’ve never been one of them, and sometimes they get indicted for insider trading, anyway. I prefer to bet the better part of the field.

Fully aware that the subject is somewhat controversial, the endeavor I want to discuss in this article is selecting the major suppliers for your dealership. Much of what I say seems just as sound to me for a distributor or manufacturer, if not quite as critical. I’ve walked those roads (and successfully dodged some ambushes) in past career lives.

There is an ongoing effort by some of our industry’s major players, branded with some accuracy as part of the search for better customer satisfaction, to create one-brand dealers. Dealer contracts from suppliers traveling this road are replete with exceptional incentives. I have yet to see one that guarantees you aid “when the going gets hairy.”

“In sickness and in health” seems reserved for marriage.

Obviously, the single-source relationship can be adverse to the interests of independents not offering quite as full an assortment of nautical products. Is it adverse to the interests of the dealer? It depends on the future. I can’t forecast it with a degree of certainty that satisfies me.

In another business (distribution of mechanical equipment), I enjoyed, and my son still enjoys, a three-generation major supplier relationship – both families – 68 years and counting. It has been great for all parties. In the same business, I had lines that sought other representation with little warning after a decade or more of mutual prosperity. This is all too common in the boat business. Without going into the “fairness” involved, we all need to recognize that business relationships, at their best, are less stable than a marriage. Since that noble institution is hardly batting .500, even with sex on its side, where does that leave us?

If your one-supplier dealership is prosperous, efficient, effective and capable when the axe falls, you can probably get a replacement line in fairly short order. “Short order” probably means a minimum yearlong hole in your bottom line while your reinvent yourself. If you are less stable, it can put you out of business. Ideologically, I defend the right of companies to shift associations and place the burden on both parties to prepare for this in advance. You may differ and believe in a contract more like marriage that says “’til death do us part.” Lots of luck in getting one that really says that.

With these thoughts in mind, I favor fewer eggs in each basket. Further, I notice that the best independent boat builders top the J.D. Power rolls in many cases. The least of the independents may be another story, but smaller builders definitely have the ability to match the big guys. With engine manufacturers, quality seems more uniform and relationships less tenuous, but the best still have availability or quality problems occasionally. More baskets, please! Choosing them well is my responsibility – to my employees, customers and other stakeholders.

Three-year contracts don’t hold the fascination for me that they seem to for many dealers, though they may generate some additional stability. I treasure my supplier relationships and friends among the people I work with at each of the companies we represent. It’s still my responsibility to make sure that a change in their personnel or direction doesn’t leave me flopping about in panic. New sales managers may need to find a way to make a mark.

Corporate “profiles” or brand identities change. We dealers probably change more than we like to admit, and not always for the better. I’m not very excited about working with a supplier who is looking for a way to get rid of me, anyway.
I think that Brunswick, Genmar and any others interested in setting up one-brand dealers can achieve some really good results for the consumer that way. They will likely reward dealers very well for their loyalty (and additional risk, as I see it). Fortunately for us all, they still seem interested in doing business with independent multiple-line dealers. I’m happy to continue doing business with them. I’m just not so comfortable with handing over the captaincy of my fate. I view the variety of product lines available at my dealership as a plus for the consumer and a step up from my auto industry counterparts. Further, sleeping soundly has always be a biggie for me.