Tomorrow’s dealers will do more with less

ORLANDO, Fla. — Dealership principal-turned industry consultant Noel Osborne led off the Sales and Marketing track of this year’s Marine Dealer Conference and Expo with a broad look at topics scheduled for more in-depth discussion in later conference sessions.

His presentation, titled “The Dealership of Tomorrow,” included information on service department efficiency, inventory management, the state of lending and more.

Osborne began by saying marine dealers need to get used to doing more with less and that older marine industry models will no longer work. Osborne foresees low sales levels and small margins for the next several years, meaning a business plan based solely on selling a lot of boats isn’t likely to succeed.

However, he emphasized that the marine industry’s woes didn’t appear overnight. Osborne thinks net profits (around 2 percent, he said) have been too low for years, while at the same time inventory levels have been unacceptably high.

He said consumer demographic information has changed, with many buyers who used to be able to afford a boat now unable to.

The dealers who will be around tomorrow, he said, need to develop a solid business plan that takes into account today’s realities.

“I’ve been preaching business plans to dealers for 10 years,” Osborne said. “Some listened, some didn’t. By the way, most of those that listened are still around.”

Going forward, he said dealers need to move from 85 percent sales, 5 percent service, 5 percent parts & accessories and 5 percent F&I to a model that allocates 20 percent to service with 70 percent gross profit in that division.

To do that, he suggested dealers take a hard look at service department efficiency, saying that even a 20 percent improvement in efficiency can translate into $150,000 in extra revenue in a shop with three technicians.

He also called for greater efficiency through increased inventory turns, pointing out that a dealership with a 1:1 turn ratio is losing significant revenue annually to interest. In fact, he called inventory control the key issue for a return to profitability and said dealerships must return to 2:1 turn ratios with 3:1 as their ultimate goal.

Echoing themes from the conference’s opening night keynote from the Disney Institute, Osborne said that at marine dealerships, as at Disney World, the strongest component of a dealer’s brand is its employees. He said dealers should take the time to explain how their business works to employees, so employees understand how their contribution fits into the big picture. Doing that, he said, will increase both productivity and efficiency.

To make the best of the downturn, Osborne said dealers should concentrate on improving their market share and keeping an eye out for quality brands and employees that become available.

Osborne ended his presentation by calling for improved cooperation and communication between dealers and manufacturers and suggesting that the two groups need to hold a summit to discuss the future of the industry.

Osborne began his career in the aerospace and defense industry before he opened his first boat store, Osborne Boat Sales, in 1971. His company grew to a total of five locations and he developed dealer management programs that are still in existence today. In 1998, he sold Naples Boat Mart and started Osborne and Associates, which provides consulting services to the recreational industry.

The Sales & Marketing Track at MDCE is being held concurrently with a Service Department Track focused on department efficiency, profitability and best practices. In addition, a Commercial and Retail Financing Track will also be offered Wednesday.

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