Pain = gain?

Liz WalzMy four-year-old son broke his arm playing in the yard last week. While he was incredibly brave in the hours and days that followed, it has changed him. As the pain has receded, he's begun thinking out loud about how he'll avoid breaking something else, as have his father and I. We want him to go back to having fun like he used to, but none of us wants to go back to the hospital anytime soon. The boating industry is in a similar situation. While I'm not sure the pain is receding yet, we know it will, at least to some degree. And we've all been thinking, whether to ourselves or out loud, about how we and our businesses will change as the industry rebounds.

If we've laid people off, how many and which ones will we rehire? If we've cut budgets, how will our spending change in the future? The criteria we use to make many decisions have changed over the past few years. To what extent are those or should those changes be permanent? What lessons have we learned?

In addition, we must consider to what degree the external changes that have taken place in our market will "rebound." Will consumers' behavior go back to "normal"? Will our core market change?

In a blog written in late March, Chris-Craft addressed how it may adapt to industry changes going forward.

"Several large finance companies have left the marine industry for good, making it impossible for dealers to stock inventory at past levels," the company wrote. "After the current dealer inventory is gone, buyers may find Chris-Crafts only at a few boat shows, private invitation-only events or at the local dealership. Factory tours will be available and buyers may need to travel to see different models. Our dealers and factory representatives always work together to match the right boat in inventory with the customer's wish list. In the future, though, most customers will need to order their boat and it will be built especially for them."

Certainly, the inventory challenges the boating industry is facing, especially in light of the tightening of marine wholesale financing, give us all pause. And it will bring about change. The change I'm anticipating is better inventory management by both dealers and boat builders, which will require closer relationships than ever before. Over time, I expect demand for financing will attract more wholesale lenders to the marine industry, albeit with strict criteria that may drive some dealers elsewhere (to local banks, for instance) or out of the industry altogether.

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This will probably mean dealers will carry less inventory on average, but we can't afford for that to occur at the expense of the consumer's experience. Most consumers want to touch, feel and test drive a boat before they buy it without traveling across the state or the country. And they don't want to wait weeks and even months for a boat builder to make and send the boat they ordered. When we make the boat buying process less convenient and less pleasurable for our customers, we turn our backs on our goal to grow the industry.

As for my son, we may not be going on any more wheelbarrow rides for a while. And my husband and I certainly won't be encouraging any other behavior likely to result in broken bones. But before we lock him in the house, sell his bike and take down his swing set, we'll think about the big picture. What changes make the most sense given the long-term goals we have for him and he has for himself?

We'd like to hear from you. What changes do you expect to make in your business as the industry rebounds? What changes have you already made in the past few years that you expect will be permanent?

One comment

  1. I was learning to snow ski back in the 1970's. Falling down was just a matter of course in the learning process. Even today my right knee suffers from those efforts.
    My buddy said, “If you ain’t falling down you ain’t learning”. It was his Texas way of saying you learn from your mistakes.

    A lot of us learn that way if we admit it or not. We got in a terrible mess the early 90’s. Cost a lot of money.

    We cleaned up our act and did a lot of what we are doing today. But boating started a slow downward spiral since then and has not stopped. I think the academics call it a mature industry. We went for a top
    5 recreational sport to higher the 15 now (I think).

    You will need to use Spader’s concepts of backing up. Spader will tell you that is harder then expanding.

    Inventories will be lower and managed better until we forget why we are here today. We will reduce staff and do more with less until we get lazy again.

    Lending will return to a less controlled environment in the future when competition for returns return.

    What has my experience has done for me. It told me to keep a nest egg! Be prepared to reinvest. Try not to quit watching for the critical signs. Develop systems and numbers to see the changes in your trends.
    Diversify within the industry with a marina’s or dry storage and focus on service and parts as a profit center.

    Develop a balance sheet to be proud of and share your business thoughts with local bankers. The national lenders have a limited amount of loyalty to you.

    Limit the number of managers and keep a wider span of control to keep your finger on the pulse of the business. If you have family in the business make them earn their way do not pay their way.

    Key to it all is “(profitable) Service is number 1.”I had a VP of Sales in the #1 boat company once tell me he sold fiberglass and service could be resolved. God was he wrong.

    Boating is a business. If boating is a passion get out.
    You can love your work but your love cannot be your work.

    Sorry for the ramble but I hope this helped.

    Chuck

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