Editors Pick: Oak Hill Marina

If your dealership has survived the downturn, it’s because you’ve made changes to adjust to the new market conditions. There are, however, two types of changes: temporary and permanent. For most companies, both have been necessary. But the changes that will make a real difference in the future of marine businesses and the marine industry at large are those that stick.

Take Oak Hill Marina, for example. By the end of 2009, sales at the Arnolds Park, Iowa-based business were down 32.18 percent over 2008. But this dealership wasn’t one to duck its head and wait for times to get better. During a year the company says was its toughest yet, it was able to reduce expenses, increase its gross margin and improve its business.

“Two-thousand-nine became a year of constant number watching, thoroughly thought out business decisions and just plain taking care of business,” says owner Phil Miklo.
The path to improvement started with changes that allowed the company to cut costs. For example, Oak Hill Marina embraced a new “green” approach to billing and newsletters, e-mailing them to customers, thus saving money on postage, paper and labor expenses. As a result, customers also started paying for services sooner, allowing for a smaller accounts receivable balance and better cash flow.

In addition, Oak Hill Marina replaced all of its lighting with energy saving Lumen light fixtures that delivered over 95-percent efficiency, saving both energy and money. The company’s June 2009 electric bill was $2,012, while the June 2010 electric bill was $1,633, despite the fact that it was a hotter summer in 2010.

Through these and other changes, the dealership’s expenses were cut by 8.16 percent.
Miklo credits the increase of the company’s gross margin in part to a new program that rewards salespeople for focusing on margins. Salespeople were paid a percentage of profit vs. the sales dollars, “which made the salesmen pay more attention to and ‘ask’ for that extra margin,” according to Miklo.

A similar bonus program was also set up for the parts and accessories department based on the average margin during each month. In addition, the warranty clerk was presented with a bonus program that would be paid out at the end of the year if all warranty claims were paid in full and any outstanding claims were less than 30 days old.

“This program worked because warranty claims were submitted the day the work was finished and followed up closely to make sure they were paid,” Miklo explains. “At the end of the year, we would have had a zero balance had one of our builders not been going through reconstruction and being sold. This would have been our first time ever at a zero balance, and we did not have to write off any warranty shortages.”

In addition, the dealership added two new boat brands in 2009: Formula Boats and Azure Boats. Formula was added so Oak Hill Marina could offer its customers a high-end boat that would help it win sales it had been losing to its competitors. And Azure allowed the dealership to pick the models it wanted and market them as a “deal” for all involved. In 2009, the company sold two Formulas at an average margin of 18.87 percent and 13 Azure units at an average margin of 27.52 percent.

Through these and other changes, the dealership’s gross margin increased by 7.6 percent.
Improvements like these – which will likely benefit the dealership for years to come – demonstrate why Oak Hill Marina is an industry leader.

“Bad habits are formed in good times, and it takes bad times for you to correct those bad habits,” says Miklo. “You find yourself asking the question, ‘How much more profit would I have had if I had just paid closer attention in the good years?’”

If Oak Hill Marina continues on the path it created in 2009, that’s a question it shouldn’t have to ask again.

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