Set aside your ego
When Nautical Enterprises looks ahead, the boat dealership and marina operator hopes for the best, but plans for the worst.
CEO Michael Berk says the recently completed 2009 budget forecasts a likely scenario, a best-case scenario and a worst-case scenario. The company will try to build its overhead on the worst-case scenario.
Berk says his budget-driven company has been able to make it through tough times by closely analyzing overhead and making the adjustments necessary to right size the business relative to the economic times at hand, whether that means cutting back on staff or orders with manufacturers.
It’s a strategy, he says, that is true now, was true in ’01 and was true shortly after the company began, when the luxury tax on boats was imposed.
Managing overhead is the first of three things Berk believes you need to do to run a business in tough times. The second is managing your inventory, and the third is managing and motivating your people.
To do those things effectively, Berk says you have to take the ego out of your business. If you aren’t turning your inventory at least three times a year, for example, you have to order less. If you are spending too much on rent for your slips, you have to give some up.
“A lot of people don’t want to do that,” he explains. “They say, ‘Well, I might need it.’ Well, you might not be in business.”
According to Berk, it’s best to put ego aside, give it up now, and if you need it later, you can go back and grovel for it.
When it comes to your staff and your lenders, you have to be open and honest about your fiscal situation, Berk says. That’s one reason the company monitors its cashflow every single day and takes a close look at the budget on at least a monthly basis.
Crucially, he says, you also have to be honest with yourself:
“You’ve just got to be honest, realistic and hard on yourself to make these decisions without trying to fool yourself that it will get better next week or next month. Burying your head in the sand is absolutely the worst thing you can do.”
