No effort to maximize profitability during difficult times would be complete without a detailed examination of costs and a conscientious approach to cutting wasteful or non-critical expenses during this period of economic belt tightening.
Bosun’s reduced its operating variable and semi-fixed expenses by reconsidering every planned expense and reducing, delaying of even canceling some of them. The dealership renegotiated rates with its subcontractors and aggressively sought out other bids when its insurance provider tried to raise premiums. Bosun’s added a second floor-plan source, causing it’s first floor-plan provider to offer better rates, and the dealership also refinanced two of its properties, reducing its rental and mortgage expenses by more than $9,000 per month.
Bosun’s says the aggressive cost-cutting measures it has taken will help it reduce projected expenses by more than $37,000 per month during the second half of 2008.
San Diego-based Nautical Enterprises, Inc., achieved similarly impressive results with a thorough examination of its operations and has been able to cut overhead costs by 35 percent as a result.
The Sail & Ski Centers, based in Austin, Texas, have reduced costs by making changes in a number of areas. The dealership has shrunken its non-current inventory to an all-time low with specials and pricing plans, reducing its floor-plan costs as well as the expense of storing and cleaning those boats.
Parks Marine, based in Okoboji, Iowa, also worked to make inventory adjustments, delaying its purchases several months to buy boats that more closely matched the needs of its customers.
Singleton Marine Group decreased its overall inventory level but ordered a more diverse array of colors and options that enabled it to offer a larger overall selection with fewer units at its individual stores.
Of course, reducing costs and ensuring operations are at their most efficient can only be accomplished by constantly monitoring each segment of a businesses’ operations. In general, the most successful companies pay the most attention to how they’re doing.
Seattle Boat Co., uses Daily Health Reports that provide managers with a virtual glance at the company’s performance in such areas as efficiency, productivity, work orders billed, cash received and special parts orders.
Hall Marine Group, based in Lake Wylie, S.C., has its managers hold daily one-on-one meetings with sales staff to make sure their work is keeping pace with the performance goals that have been set for them and the company.
And many companies say ongoing internal communication is essential for any company to operate most efficiently, especially when looking for ways to trim expenses.
Newport Boats, based in Corona, Calif., says one of its rules for surviving tough times is to continually rally its staff. “It is absolutely critical to keep the team rallied,” says Renee Ascencio, vice president. “In fact, 99 percent of the time, it is the team that will be instrumental in coming up with ideas on how to generate profit, cut expenses and make recommendations.”
The company holds staff meetings regularly and believes that when employees are up to date with what’s happening and involved in the process they become part of the solution and are also more understanding and accepting when bad news is delivered or hard decisions have to be made.
Newport Boats says it is in the midst of saving more than $150,000 this year due to its cost-saving measures, and the company’s decision to join a professional employer organization (see “Outsourcing HR”) is probably its most successful of these.
“Our biggest savings are realized in worker’s compensation, health insurance, the human resource department and employee training,” Ascencio explains. “We have implemented many other cost-cutting and profit-generating ideas, however we feel the professional employer’s organization is one worth mentioning and sharing with others.”