Small-town dealer makes 2009 most profitable year

When you imagine what one of the leading dealers in North America looks like, it’s easy to picture walls of glistening steel and glass through which to gaze at the latest in on-water luxury. But that’s not always the case, at least not in rural Vermont.

Woodard Marine is a third-generation, family-owned, small-boat dealership operating in small-town America. And the warmth of its ship’s store’s well-traveled hardwood floors and the nautical antiques of its showroom embody a character and history that visitors and locals alike come to this region of the country for.

Ultimately, what makes this dealership one of the leaders in the marine business can’t be seen from the outside. It comes from the $3-million business’ ability to reinvent itself in good times and bad. Woodard Marine is one of the few dealerships that embody the concept of continuous improvement each and every day, allowing the business to set, pursue and ultimately accomplish its goals regardless of the obstacles encountered along the way. A lot of other companies say they embrace this philosophy, but few demonstrate it to the extent of this one-location boat retailer.

The key to Woodard Marine’s adaptability is its young management team. While Robert and Barbara Woodard still help out in the dealership, he’s no longer on payroll and she is part-time and cutting back. Running the business today is their 31-year-old daughter, General Manager Lauren Woodard-Splatt, and her husband Eric Splatt, 30, who is the company’s sales manager.

But don’t mistake young for inexperienced. Lauren grew up in the business, and the pair started working as full-time managers at the age of 21.

“I think it happens with all dealerships when someone young starts to take over,” said Lauren, referencing the spirit of innovation at Woodard Marine. “My father and my mom had the same energy when they were my age. Things went on idle when they had a family. Then, we came in and stirred up the pot a little.”

What perhaps is not so common is the freedom Lauren and Eric have been given to pursue their ideas, a freedom that resulted in the dealership’s most profitable year in 2009. Here are some of the strategies they’ve adopted to be successful while navigating the downturn.

Hiring, not firing

When the downturn hit, Woodard Marine knew that cost-cutting would be an important strategy, but the one category it didn’t want to touch was personnel.

“Our goal was to make it through the year without a permanent layoff situation,” said Lauren. “The thought process behind this is we felt that when the economy did turn for the good, we wanted to have our staff be on top of their game.”

Of course, the downturn lasted more than just the year, but Woodard has stuck to this strategy throughout. In fact, the company has added to its personnel expense this year, hiring seven new employees, some part-time, some full-time, as it executes on its plan for Lauren’s parents to retire by year-end.

The team approach

With a strategy to retain all of its employees, Woodard Marine saw an opportunity to strengthen its team and its business. In 2008 and 2009, it began holding monthly and sometimes even weekly brainstorming and problem-solving meetings with all of its staff members. During the meetings, the group looked at how each department could save money while being more efficient. In addition, each employee was asked to make a suggestion as to how their job could be improved and how they could improve other employees’ jobs.

On a quarterly basis, Woodard began printing and distributing its profit and loss statement to all employees, which showed year-to-date financials in comparison to the previous year and the forecasted budget. As a group, the entire team would go through the statement to ensure the company was on track or ahead of forecasts.

“If we were behind in an area, we would dig further and put together promotions and money saving events as a team,” said Lauren. This strategy showed employees that “Woodard Marine has nothing to hide,” “that we’re here for the long haul,” and that “their ideas and thoughts will make a difference to the future of their company.”

Many of the ideas that came out of those meetings were simple, such as turning off the lights in the parts room when it’s not in use. However, when added together, they made a significant difference.

Cutting where it doesn’t hurt

Woodard Marine saw the downturn as an opportunity to step back and re-evaluate certain areas of its business in an effort to make money during the recession. This meant cutting in creative ways to avoid negatively impacting the dealership’s commitment to customer service or its profitability.

One way this was done was to cut credit card processing fees. While Woodard Marine had previously offered online bill pay on its website, that was costing the dealership $30,000 a year. Instead, it began sending out customers’ statements via e-mail and asking that they pay by cash or check.

A second area where the dealership cut was its health insurance program. The company previously paid 100 percent of employee health insurance for individual coverage. But after doing its homework, Woodard Marine switched plans, offering employees either a new plan with better coverage, but a $2,500 annual deductible, or the ability to pass on the plan and get paid an additional percentage in each paycheck. This also saved the dealership $30,000.

The third area targeted was personnel expense. While the company was fully committed to keeping all staff members, it looked for opportunities to increase efficiency without spending additional money. For example, the dealership used to staff its rental department with two employees, one to complete rental transactions and a second to review boat operation, rules and regulations. But by purchasing a $90 FM receiver and pre-recording the safety information, this department can now be staffed with only one person. When customers board their rental craft, the radio station is tuned to 106.7, and they are asked to listen to a three-minute loop containing those messages. This procedure allows that second employee to now produce revenue for another department.

Similarly, Woodard purchased a flat screen TV that it placed behind its service counter to display special offers. This television not only acts as a “salesperson” for the service department, it saves the service writer time he might have spent preparing quotes on such work.

In addition, the company began outsourcing its advertising to RH Power and Associates, freeing up its in-house advertising person to produce more income in the sales department. The company tightly managed this budget by signing an agreement with the company that stipulated Woodard Marine would not pay the provider more than a fixed amount. RH Power made money through its negotiating skills with the media outlets.

Finally, Woodard sought to rein in the cost of its employees’ beverage consumption. The dealership used to buy pods for the staff coffee machine, but found some employees would drink only half a cup before throwing it away. The solution? All employees are now asked to pay 50 cents per cup, which helps eliminate that waste.

In addition, Woodard used to offer the soda in its soda machine to employees for free. But after realizing that this policy was costing the dealership $6,000 a year in soda, the company began requiring employees to put money in the machine. Now, it actually makes money on these purchases.

Finding new profits

Before the recession, Woodard Marine was considering starting its own insurance company. However, when Global Marine Insurance came knocking at its door in the winter of 2008, the company realized such a partnership was an opportunity for the dealership to generate additional profits without more overhead. Once Lauren became certified with the state as an insurance representative, the company was on its way to selling insurance to its new boat owners, storage and dockage customers, and making a profit on every policy sold or renewed by the dealership.

To help improve its boat margins, Woodard Marine purchased non-current inventory from its manufacturers and used those boats to price average. For example, if it purchased a boat for $5,000 and had a similar model in inventory priced at $10,000, it sold both boats at $7,500 each, thereby turning the boats faster while making higher margins.

Woodard Marine launched an eBay store during the recession to liquidate obsolete pre-owned inventory and parts. This produced over $150,000 in revenue during its slow fall and winter months.

Another strategy Woodard Marine embraced was to add two new product lines: Moomba ski boats and Yamaha WaveRunners. Not only has this started to have an impact on new unit sales, it also has boosted its watersports pro shop sales and service business. In addition, it launched a Boaters Advantage online ship’s store on its website to allow customers to buy accessories online with a credit card and have them shipped to their homes. Through the arrangement, Woodard Marine receives as much profit on each item purchased as it would if bought right off the dealership’s shelves.

Finally, Woodard began a menu-selling strategy on manufacturers’ pre-owned extended protection packages to increase their profits. If the customer is financing their boat package, it is quoted right into their monthly payments.

A different kind of co-op

Woodard Marine produces and participates in more than 50 events per year, but, during the recession, it began to feel the pressure of increased event expenses and decreased manufacturer support.

“Our events are very popular in our lakes region, and we felt that if we skimped on them then we would not be giving customers and potential customers the Woodard Marine advantage,” said Lauren. “On the flip side, these events we’re costing Woodard Marine more money each year and taking more of our working manpower away from the dealership.”

By adopting a new strategy, the dealership has been able to continue to offer its busy events schedule. That strategy is to ask manufacturers and other partners and supporters to donate manpower. In its first year, the Woodard University professors were Coast Guard Auxiliary members, the Women on the Water course was taught by a Regal Boats sales rep, the fishing courses were taught by a Lund Boats pro fisherman and the wakeboard clinics were taught by one of Moomba’s pro wakeboarders.

Taking partnership to a new level

For many years, Woodard Marine has worked with the local real estate community, hosting luncheons for realtors and offering complimentary boat rides to realtors and their prospects to view homes for sale from the water. In exchange, the realtors hand out Woodard’s welcome flyer to new property owners, boosting their exposure.

Now, the dealership is taking that concept a step further. Due to the relocation of its canvas operation, Woodard currently has an 1,100-square-foot area available for rent in one of its buildings, which it plans to market to real estate agents in the area, along with use of a boat. Not only will renting the space to a realtor generate additional rental income for the dealership, it helps both businesses better market to each other’s customers.

By combining all of these strategies, Woodard Marine has created a new, more profitable future for itself, one that has the dealership reconsidering its plans for growth. While the management team still expects to begin building a new super store in the next few years, they’re at a crossroads when it comes to size. Do they build it to fulfill their original goal of hitting $6 million in revenue or do they redesign it to fit a new goal?

“The recession made us realize that you can be a $6-million dealer, but that doesn’t mean you’re making more money,” sums up Woodard-Splatt. “I think we can stay the same size we are and make a better net profit.”