The changing — and challenging — marina climate
By David Gee
Start a marina by following these nine steps.
1) Plan your business. 2) Determine your costs. 3) Figure out your ongoing expenses. 4) Figure out your target market. 5) Figure out all the different ways to make money. 6) Figure out how much to charge. 7) Figure what your profit might be. 8) Figure out how you might make it even more profitable. 9) Figure out the name of your business and how to build your brand. 10) Figure out how to spend all that money you will no doubt be making.
That’s a whole lot of figuring, right? Though I added Number 10 to that list with tongue firmly in cheek, 1 – 9 was taken straight from an article I found on the Internet; How To Start A Marina.
If it were only that easy. They just left out constant workforce challenges, cumbersome federal, state, county and local regulatory requirements, fickle – and increasingly severe – weather, changing demographics, employee health insurance, rising equipment costs, new technology investments, and on and on.
As a life-long inland boater who trailers, my exposure to marinas and boatyards has been fairly limited, save for one year of living at one (see At The Helm, Marina Memories).
But after talking to marina owners and industry professionals who are in marinas on a daily basis, I have a new appreciation for those who work in this challenging – and constantly changing – part of the recreational boating industry.
I’m not going to try and tackle all of the issues facing the marina and boatyard business. Instead I will focus on two main areas; customer service and safety. We’ll also get a glimpse of what it’s like to own and run a marina these days through the eyes of someone who has done it for over 40 years.
Costs of doing business
“I got into the business at the age of 16,” says Brian Conner, the owner of Rhode River Marina in Edgewater, Md., about 30 miles east of Washington, D.C. “I quit school and started a boat repair business in my dad’s garage, and then moved into a small shop of my own. From there I found a little marina to be involved in, and then at the age of 20, had a chance to lease Rhode River Marina. Shortly thereafter I purchased it outright from the founding family.”
When he started out there weren’t computers of course. The business was pretty simple and it was primarily a cash business.
“Back in the day we would send out a bill, or give it to the customer at the counter, and they would pay us, and we would pocket all of that money,” said Conner. “Today it’s all credit and debit cards. The average person probably doesn’t realize what the cost of doing business is by credit card for a small business owner. It costs us between $50,000 and $75,000 annually in credit card processing fees. And that money comes right out of our profits. That’s impactful.”
Also impactful is the increasing sophistication of boats today. It may make boating easier for the owners, but it hasn’t made it easier on the service side for a marina business who offers a full service and warranty department.
“We have gone from repairing carburetors and replacing spark plugs to working with sophisticated engine management systems and diagnostic tools,” Conner said. “Fixing a boat today has become a much more technical enterprise than it was years ago and it likely involves a computer as much as it does a conventional tool.
“It is extremely challenging finding people who want to work in the industry. You can make a living from it, a good living, but it is cyclical, and the success of your business and your career is dependent on some outside forces beyond your control such as weather and the economy.”
Conner’s business made it through the economic downturn of a decade ago, but not unscathed. He said he “gave back” over two-and-a-half million dollars during the downturn. While his operation recovered, he feels the industry as a whole never did.
He said the boating business was essentially cut in half from where it was at its height in 2008, and that some of that skilled labor force found work in other industries and didn’t return.
“The biggest determinant of success for us is always going to be people,” Conner stated matter-of-factly.
Insuring those people is obviously one of Rhode River Marina’s biggest operating costs. Conner said for a period his health insurance costs were going up year after year, but that “seems to have leveled off a bit.”
One thing that has helped level off revenue ups and downs over the year for Conner is diversification.
Rhode River Marina has 140 boat racks, 60 wet slips, 42 lift slips, secure in and out dry dock storage, and they sell and service seven different boat lines.
“Last year was our biggest year in 41 years in the marina business, so I can’t complain,” said Conner, though he did complain a bit about increasingly onerous and cumbersome federal, state, county and local regulations.
“Most marinas around the country have been around for a long time, and communities have grown up and become more crowded around them. People move in next door, and then complain about us. To do any expansion, or growth, or make any changes at a marina seemingly requires an act of Congress today. You have to hire a lobbyist or a lawyer and spend thousands of dollars, or even hundreds of thousands of dollars, to get an approval.”
Increasing complexity
“Easier regulations could definitely help make the life of marina owners and operators easier,” says Iaian Archibald, co-founder and CEO of Halifax, Nova Scotia-based, Swell Advantage Ltd. His company develops marina, boat club and waterfront enterprise management software.
“In many areas the United States leads the world, but not necessarily when it comes to the regulatory environment for marinas,” said Archibald. “The Army Corp of Engineers for starters places such heavy restrictions on marinas. Getting the regulatory approval to change or grow your facility to match today’s new boats is a giant challenge.”
Getting marinas to change and keep pace with mobile phone, data and technology advances is also a challenge.
“Marinas are customer service-focused operations,” Archibald said. “Today those customer service expectations have reached way beyond a smiling face at the front desk or fuel dock. Customers expect to be able to pay their bills and schedule service online and for a marina to communicate with them in their preferred method whether that’s with a call, email or text. If someone of any age, but particularly a younger person, doesn’t get the customer experience they expect, whether that be online, at the dealership, or at the marina, they’ll find other things to do.”
Scribble Software is trying to give marina operators and owners more things to do in the cloud via their MARINAGO Office Suite marina management solution.
A Boating Industry Top Products award winner in 2018, the software features advanced marina management, multiple marina/property support, AI-enhanced reservation assignments and Google Maps integration, task management, visual map designer and QuickBooks accounting.
A recent addition is the point-of-sale module (see photo) with a touchscreen user interface, offering bar code scanner support, and the ability to process payments and print receipts from any device with Star CloudPRNT (no drivers required).
Consolidation may be at least partly contributing to an increase in technology adoption and professionalization, as mom and pops sell to multi-unit operators.
“There are somewhere between 12,000 and 16,000 marinas and boatyards in North America, and the vast majority are still privately owned,” stated Archibald. “However, the more we get IGY, and Safe Harbor, and Suntex and companies like those to invest in new technology and raise the bar on modernizing customer service, they can sort of pull the entire marina industry along. That’s good for everyone.”
Safety concerns
What’s not good for anyone is accidents and injuries.
Every fall the U.S. Department of Labor and the Occupational Safety and Health Administration publish the Top 10 most cited OSHA violations for the previous year. Generally these are the result of an actual workplace injury that prompts an OSHA investigation of a facility.
“When you look at that OSHA Top 10 list, you will find every single one of those categories exists in nearly every marina or boatyard,” stated Robert Smith, executive director of Fisher Phillips Safety Solutions, a workplace safety and health consulting company dealing with risk management, safety, health, environmental, and regulatory solutions.
Smith says OSHA keeps a close eye on those injury rates of course, and when they see rates go up for any particular industry, that will bring a sharper focus to it.
And that is what happened in the marina business with an increasing number of forced compliance inspections.
“I hear from marina clients all the time who say they have been in business 25 years, or even longer, and had never seen an OSHA inspector before,” said Smith. “That is changing. OSHA is showing up more at marinas on surprise visits because of the renewed emphasis they are placing on the industry. High injury rates are driving that emphasis.”
OSHA enforces their regulations primarily through compliance safety and health officers conducting inspections in workplaces, mostly without advance notice, by industrial hygienist professionals.
Because there are more than seven million workplaces in OSHA’s jurisdiction, it is impossible for them to inspect every single one. Because of this, OSHA tries to focus their inspections on the most hazardous workplaces, and has outlined these priorities:
- Imminent danger situations
- Severe injuries and illnesses
- Worker complaints
- Referrals
- Targeted inspections
- Follow-up inspections
There are three main components of an OSHA inspection. An opening conference, during which the OSHA inspector will explain the purpose of the inspection. A worksite “walkaround” is the actual inspection. And then there is a closing conference.
OSHA is broken up into 10 different regions, but Region 5, in the Great Lakes, is the area that really began the focus on marinas and boatyards.
“It’s just a fact that employees at marinas, docks, and boatyards are going to be constantly exposed to potentially dangerous work situations,” stated Smith.
To use just one example, OSHA calls for fall protection to be provided at elevations of four feet in general industry workplaces. Think of today’s center console boats and wake surf boats and other popular types. Many of them have very tall gunwales. So even when employees are inside cleaning or detailing them and climbing in and out of boats on the trailer or in the yard they might be quite high off the ground.
“Powered industrial trucks also perennially make the Top 10 list,” Smith states. “Guess what is at a marina? Forklifts. They’re everywhere, and they can be very dangerous.
“What about the air these workers are breathing at the boatyard as they scrape, sand, grind and paint?” Smith continues. “Have they been fitted for respirators? Trained how to use them? Are they even available? Do they have facial hair that compromises the integrity of the respirator even if they are using it? We run into all of those things.”
Smith notes that the typical marina owner, or general manager, is wearing 10 or 12 different hats, from customer service, to accounts payable, accounts receivable, HR, safety, and so on.
“Often that safety hat is the last hat they put on, and they simply run out of hours in the day during the season to pay much attention to the subject,” Smith stated. “So the appropriate systems and procedures just aren’t in place. And that isn’t just the case at mom and pop operations. I see it in the larger marina management companies as well.
“What we lose sight of though, is OSHA is a minimum safety standard,” said Smith. “I know lots of marina owners who base their safety programs on OSHA requirements and think of it as kind of the gold standard. It’s not. It’s the absolute minimum for worker safety.”
Workforce development is if course a huge challenge across the board in nearly every business vertical these days, but Smith acknowledges what everyone knows, and that it is especially acute in the marine business.
“We basically have two buckets of employees at a marina,” he said. “One is the high school, college-aged seasonal worker who comes in and works at the fuel dock, and does some light maintenance. The second group is the skilled mechanic and experienced service guy, but that group is aging out.”
Because of seniority, and just the way things work at most places, what often happens is the youngest and least experienced employees end up working in some of the marina’s most dangerous spots, and on holidays and weekends and some of the busiest days.
“They’re pumping gasoline and diesel fuel into boats all day long and they don’t really have the education and the training and the experience to know what the hazards are,” Smith said. “We as an industry need to ensure the policies – and practices – are in place to protect every employee.”
Still want to start – or own – a marina? Just nine easy steps, right? See you at the slip.
