Calendar year 2009 brought very little positive news regarding the economy and particularly the discretionary income-driven boating market. The fragile economy suffered through one disaster after another — the obliteration of the housing market, the collapse of numerous banks, the tightening of available lending, and more. And with it all went any consumer confidence that may have fought its way through the first year-plus of the Great Recession.
The compounding effect that the general economy’s woes had on the boating market took an enormous toll. All but one of the national floor plan lenders vanished; qualifications for consumer lending made it extremely difficult to put customers in boats; inventories piled up; generating leads and closing the sale became harder than perhaps ever before; and boat builders, their suppliers and dealers alike were forced to adapt their businesses at a breathtaking pace.
It was there, in the trenches of all the economic collapse — where dealers were forced to change or die — that the 2010 Top 100 Dealers rose to the challenge. Indeed, industry estimates suggest that nearly 35 percent of the dealer body itself vanished from the market, while retail sales declined at an equal or greater pace.
Business declined for the Top 100 Dealers, as well, in 2009, on average dropping by 14.5 percent. The group collectively generated more than $879 million in revenue, (and $1.56 billion when our two Hall of Fame companies are included) which makes up about 2.9 and 5.1 percent of the overall boating market, respectively.
The numbers don’t really tell the story here. It’s the “how” behind them that outlines a virtual survival guide for enduring the worst recession the modern boating industry has ever seen. These Top 100 Dealers, like the competitors surrounding them, were barraged with one economic crisis after another, and succeeding in such a climate took monumental efforts. Here is how they did it.
Managing to a budget in 2009, in most cases, became a game of wishful thinking. No one could have forecast the steep rate of decline that the boating market experienced from 2008 to 2009. And as the market declined, it took diligent management to keep up.
A major reason why the Top 100 Dealers could adapt their business plans and budgets is simply because they had such plans in place to begin with. The Top 100 Dealers program has shared insight into the foundations of many of the dealers who have graced the list in past years, and those foundations have been built on detailed budgets and the review and adaptation process that accompanies them.
Seattle Boat Co. (Ranked 9; see Top 10 profile), for example, has built its historical success on one of the most in-depth budgeting and review processes in the marine industry. Its management team meets to create an annual budget detailed down to the department level and then, through a series of monthly, weekly and even daily reports, it manages its business on the most intricate level known among the Top 100 Dealers.
This thorough process has allowed Seattle Boat Co. to survive in one of the states hardest hit by the boat sales downturn. We’ve also shared in past years the incredible foresight used in financial management at The Sportsman, San Benito, Texas (Ranked 27), where the company builds an ideal budget and then backs it with a “Plan B” budget that pre-plans where expenses need to be trimmed and how the company can still achieve an acceptable level of profitability. The plan worked, once again, in 2009 as the company overcame a decrease in revenue to record an impressive net profit.
What we found of particular interest in 2009 was that a number of the Top 100 Dealers looked to solidify their financial management by calling on their peers and other expert resources. Eight of the 2010 Top 100 either joined a 20 Group during 2009 or they began consulting with Parker Business Planning or Spader Business Management to help ensure their financials were being managed properly. In all, 70 dealerships belonged to a total of 77 20 Groups.
Marine Specialties, Sparks, Nev., (Ranked 70), was among the first to start this trend by joining a 20 Group in late 2008. Through the 20 Group, Marine Specialties has developed a strategic profit plan, essentially a one-page spreadsheet that helps the company lay out its entire year and better adjust to changing conditions.
“Joining a 20 Group has really helped us realize how to more effectively evaluate our business and react to changing conditions,” explains Jim Canepa, owner. “Our business outlook has drastically improved since the first 20 Group meeting we attended.”
Another company that found great benefit from joining a 20 Group was Town & Country Marine (Ranked 61) of Lakefield, Ontario. Its time in the group, says Scott Brundle, managing partner, has prompted the company to mine deeper into the business metrics housed in its dealer management software.
“The intricate evaluation of various ratios in a multitude of profit centers and a comparison of these ratios to the industry benchmark has allowed us to make the changes, however minor,” he explains, “to ensure we squeeze every potential dollar out of every transaction while still offering our customers value for their dollar spent.”
It’s that quest for maximizing profitability that has driven these companies, along with others like Texas Marine, Beaumont, Texas (Ranked 66), to take advantage of these peer-to-peer consulting opportunities. Still others, who have been long-time 20 Group members, have switched from one 20 Group to another in an effort to gain new perspectives, draw on knowledge from new peers and find additional resources for the answers they seek.
Other companies have begun financial consulting with two of the industry’s 20 Group moderators. For example, Hayes Marine, Appling, Ga. (Ranked 29), enrolled in a Spader Business Management program to help it look closer at its budgeting process, in hopes of improving its margins and inventory turns and also analyzing which business segments were successful and which needed improvement.
Crowe Marine, Eatonton, Ga. (Ranked 60), already belonged to a 20 Group, but it also signed up to use Parker Business Management’s budgeting system in 2009. After 50 years of business, and through the transition of a succession plan, the younger generation, Brian and Beth Crowe, have begun to lean more heavily on technology that can aid them in running the business.
In contrast, there are other companies, such as Sail & Ski Centers, Austin, Texas (Ranked 2, See Top 10 profile), and Prince William Marine Sales, Woodbridge, Va. (Ranked 1, See Top 10 profile), with financial systems and processes in place that were able to adjust their businesses by the books. Prince William’s budgeting process can be described as a system of rolling forecasts, using key performance indicators that drive strategic decision making.
“With the downslide in the economy it is very challenging to predict the future of our industry,” explains Carlton Phillips, CEO. “Therefore we tackle our budget by comparing historical data, day-to-day and month-to-month operations.”
Throughout each year, the company conducts two major in-house budget reviews, an external tax audit and attends three Sea Ray Performance Group sessions, which are used to analyze its budget and performance. In fact, Prince William tracks its performance in comparison to its fellow 20 Group members as one of its key performance metrics, and in calendar year 2009, the company performed among the top two in its group in 20 of the key line categories.
Similarly, Sail & Ski Centers uses four total 20 Groups to help manage its business. Its Austin and San Antonio locations are members of separate Sea Ray Performance Groups, and the company also attends Boston Whaler regional dealer group meetings, which function effectively as a Performance Group, in addition to a Leisure Trends Group, a 20 Group for water and snow sports retailers.
The company’s stringent monitoring of its financial performance allowed it to react swiftly and decisively to market conditions. Its actions in 2009 were dictated by the dramatic changes that have taken place in the market over the last 12 to 18 months. And its performance metrics were outlined in a formal document referenced as “Sail & Ski Expense Control Plan FY 2009.” When, like most boat dealers in 2009, sales revenues declined at a faster rate than was forecast, Sail & Ski found itself fortunate to have begun the expense control in enough time to adjust its reaction.
AN EXERCISE IN DIVERSIFICATION
If there was one thing that could positively affect the financial posture of the Top 100 Dealers, it was their efforts to generate revenues by diversifying. Those companies that expanded their businesses to generate revenues from segments other than new boat sales seemed to perform the best.
Both Singleton Marine Group, Dadeville, Ala. (Ranked 12), and Irwin Marine, Laconia, N.H. (Ranked 73), fought hard for that very goal.
“Overall, we recognized the need to focus on our core business in service, storage and parts as the foundation for our business plan,” says John Irwin, vice president/director of Irwin Marine. “We restructured our business plan to generate an annual profit with a minimal contribution from the unit sales profit center.”
Singleton followed a similar philosophy with a much more aggressive path, choosing to focus not just on the traditional revenue sources such as service and parts, but also expanding into more nontraditional opportunities. Its goal, ultimately, is to have 100 percent of its expenses covered by everything but new unit sales.
The company analyzed every aspect of the business, ensuring that each stood profitably on its own as a business within a business. And through weekly departmental meetings, the company generated a series of ideas that would help the business further solidify itself in the current economy.
Singleton took over operation of one of the largest marinas on Lake Lanier outside of Atlanta and another marina at the Cliff ’s in Travelers Rest, S.C. It entered into an agreement with a national lender to remarket repossessed boats in addition to another with Manheim Specialty Auctions to inspect and service all boats that go through that company’s auctions. It launched a series of events, put a greater focus on its F&I business, added customer service initiatives to its service department efforts, opened a used boat location, and launched a concierge service it calls its Boat Mate program. And it also opened a regional “floating showroom” where it will showcase Carver and Marquis yachts for other dealers to send their customers for water trials. Meanwhile, the company acquired one of its competitors and moved into a new location.
Port Harbor Marine, South Portland, Maine (Ranked 6; See Top 10 profile), became more aggressive with its diversification strategy, which it has been focusing on for the last two-plus years. Having launched the Port Harbor Marine Boat Club in 2008, the company more than tripled the number of members in the club (from six to 20) over the course of 2009. It accomplished that by using better marketing and targeting a completely different customer. The company also offers boat rentals and its own private label insurance products. It even entered into a joint venture with Custom Floats to build concrete docks for a Rhode Island-based marina in an effort to generate income at every turn.
With more of a traditional approach to diversification, Parks Marina, Okoboji, Iowa (Ranked 7; See Top 10 profile), has created what has become, perhaps, the ultimate boating destination location a dealer could create. Business at its Barefoot Bar has increased every year since it opened in 2002, providing customer traffic that its stores never would have had otherwise, and translating into growth in boat sales, service, parts and accessories, and in marina services.
“We are unique in the industry because of how all of our profit centers work together to produce a consistent earnings stream,” explains Butch Parks, president and owner. “Selling boats is the bread and butter of our business; however, capitalizing in the areas of service, storage, accessories, clothing, food, drink, boat rentals, excursion boats, slip rentals, gas, consignment sales and more, make us successful.”
Similar diversification strategies have long been in place for companies like Gordy’s Lakefront Marine (Ranked 3; See Top 10 profile) and Gage Marine (Ranked 45), which are based on the same lake in southern Wisconsin.
In addition to the boat dealership, Gordy’s also offers a marina, lakeside and off-site storage facility, a pro shop, valet service, full-service gas pumps, charter boat services, rental boats, a ski school, a sandwich shop, a bar and restaurant, an off-site service and storage facility, and a lawn care service.
“Two-thousand-nine was challenging, and our young, energetic leadership team and visionary leader used all their strengths to plan, manage and monitor the business to a successful year,” explains Thomas Whowell, president. “The key was to keep families boating, even in tough economic times. Gordy’s doesn’t just sell boats; we make people boaters for life.”
At the same time, Gage Marine may be one of the most diversified dealers in the marine industry. It features charter boat and historical boat tour operations, builds its own brand of custom mahogany boats, and offers a valet in-and-out service, a boat club, ongoing training for local boaters, wakeboard and wake surfing lessons, and a pier service division. In 2009, it acquired one of the area’s competitors before launching into a series of improvements, adding storage capacity for more than 300 boats and a new sales and service center with more than 10,000 sq. ft. of indoor showroom.
If there was a common place to which dealers turned in 2009 to help offset the downturn in new unit sales, it was the service department, where dealers looked to service those customers who chose to keep their current boat. Oftentimes, as Legendary Marine, Destin, Fla. (Ranked 38; see Editor Pick), and Kelly’s Port, Osage, Mo. (Ranked 22), learned, there was opportunity in picking up incremental service business from those dealerships that had gone out of business.
When a local dealer went out of business near Legendary’s location, the company launched a direct mail campaign to capture its service business. The effort, in addition to gaining more service business from existing customers, allowed Legendary’s service and parts department to have its best year ever.
A similar scenario played out at Kelly’s Port in the Lake of the Ozarks, where one of the larger marinas in the area went out of business. A long-standing relationship with that dealer allowed Kelly’s Port to capture its customer database in trade for services, and the dealership picked up more than 2,500 customers in the process. The former owner sent his customers a letter explaining the transition, giving Kelly’s Port a strong recommendation. Kelly’s Port also sent a letter from its owner and called each of the customers in an effort to earn their business.
THE NEW WORLD OF MARKETING
It truly took unique marketing efforts like those mentioned immediately above to help generate leads. And, more than other years prior, the Top 100 Dealers revolutionized how they marketed their products and services.
While we’ll cover these dealers’ cost-cutting efforts later on, suffice to say that marketing budgets were slashed as dealers looked for the most cost-effective marketing streams around. And it didn’t take long for them to find a free marketing avenue: social networking.
Up and down the list of the Top 100 Dealers you can find monumental efforts to maximize online efforts through Facebook and Twitter, and as Dry Dock Marine Center can attest, primarily the former. Dry Dock, Angola, Ind. (Ranked 44), has both a Facebook page and a Twitter account, but its customer base, according to Cory Archbold, general manager, seems to be more connected with Facebook.
“This has been a great way to let customers know what is going on in our business and at the local lakes,” he says. “It seems to be growing more and more each day.”
There’s no question about the growth potential, as for the most part, boat dealers just began getting into the world of social networking in 2009. Some of those dealers have already built large followings through the sites and are using the connections to build and strengthen relationships in addition to marketing products and services to a wide array of people at the push of a button. The efforts, while helping to drive interest in these dealerships, also went a long way toward helping them cope with the downturn in revenue.
Mitch O’Hara, Jr., vice president of Candlewood East Marina, Brookfield, Conn. (Ranked 85), points out that his dealership cancelled all premium marketing expenditures and increased its “guerilla marketing” efforts.
“As a direct result of the industry downturn we have had to scale back on the traditional forms of advertising and have focused more on a grassroots approach,” he explains. “Direct mail pieces, e-mail blasts, and customer events have provided us with the best results and have continued to fuel our best source of advertising, which has been word of mouth.”
Boaters Exchange, Rockledge, Fla. (Ranked 42), actually hired a full-time marketing and social networking specialist to help the company establish a presence on Facebook and Twitter, in addition to helping it improve its website rankings and helping it coordinate events.
While expenses have been trimmed in their marketing efforts, the Top 100 Dealers seem to be more focused than ever before on monitoring where their dollars are being allocated and how well they are working. Companies like Dry Dock Marine Center and Saratoga Boat Works, Saratoga Springs, N.Y. (Ranked 54), among others, for example, have used registration and market share data from Statistical Surveys to help them make better marketing decisions.
Saratoga consults the Stat Surveys info, relative to its own market share, for forecasting the upcoming year. The company looks at how many total boats sold in its market and the five or six counties surrounding the dealership. It then looks at its own market share, and after comparing it to the total boats sold, it gives the company an indication of how it should forecast its sales and plan its marketing going forward.
Many dealers, such as Rambo Marine, Hazel Green, Ala. (Ranked 49), Parks Marina and Baert Marine, Middleton, Mass. (Ranked 92), have also put greater emphasis on using e-mail newsletters to connect with customers. This marketing avenue has proven to be highly measurable when it comes to figuring out what works and what does not.
It’s also interesting to point out that numerous dealers went through redesigns of their websites, adding functionality, maximizing exposure and finally putting detailed emphasis on their home pages, which are being treated like the additional locations they have become.
Midwest MasterCraft, Crystal, Minn., (Ranked 59) has always done an incredible job with its website, securing the highly sought after www.waterskis.com domain to promote its boating and watersports company. General Manager Andy Larson has gone to great lengths to fine-tune this website, and in 2009 took it to another level.
Over the past few years, its online business has become a primary source of revenue and sales growth. So, in 2009, the company opened a mobile version of its store, launched a second site — www.wakeboardwarehouse.com — and has set up a larger shipping department and pallet racks in its warehouse to handle the extra water sports inventory, which has risen to feed as many as 70 online orders a day.
After spending a year (and between $1,500 to $6,000 a month on pay-per-click advertising on Google), Midwest MasterCraft found that it could not raise its conversion ratio, so it cut the effort to nearly nothing. During the same time period, the company also spent considerable effort on search engine optimization and has seen its web traffic and sales increase.
Currently 80 percent of the visitors to its website are referred via a search engine, for free, and its data shows that it gets the equivalent to $34,946 in pay-per-click traffic from its top 20 organic (free) keywords from Google per month.
FOCUS ON COST-CUTTING
This focus on diversification, marketing ROI and the overall financial management of these leading companies underscores the tumultuous economy faced in 2009. But by far the largest focus for them in 2009 was an exercise in cost-cutting. The way they went about this practice, however, was far from consistent, and the variety of methods could serve as a how-to guide for any dealership to adopt in any economic downturn.
The most successful of the expense-cutting initiatives were those that involved employees in the decision-making process. When worked through as a team, those methods seemed to compel the entire team to take ownership in the process and the results.
Take Port Harbor Marine, for example. The five-location dealer evaluated every employee and assigned each of them an “end of work” date and a “return to work” date to help the company reduce costs over the winter months. The plan worked better than the company expected, as its crewmembers responded well, with some even offering to end earlier and come back later than was proposed. A very important part of why the process was successful was due to a Spader Business Management exercise the company conducted with every crewmember.
After the announcement regarding the end of and return to work dates, the crewmembers were broken into teams, with each team becoming “its own dealership.” After the team was given the opportunity to “name” their dealership, they were each given a bag full of change that totaled $1, and they were then asked to allocate how much of their dollar, which signified gross profit, they could spend on each of six categories: personnel, semi-fixed, fixed, depreciation, insurance and profit. Toward the end of the exercise, management posted each team’s percentages on a board for all to see and compare.
“The eye-opening moment happened when we posted what our actual Port Harbor Marine anticipated year-end percentages would look like,” explains Rob Soucy, president. “Every crewmember’s fictional company was going to make more money than Port Harbor — and a lot more. We then shared with the crew what the Spader key ratios were and discussed what we needed to do as a company to affect the year-end numbers.”
At Parker Boat Co., Orlando, Fla. (Ranked 28), all the employees shared in the opportunity to help the company improve. Management held a companywide meeting and asked its employees to make suggestions for reducing costs, creating new opportunities and making the company more efficient overall. The initiative yielded 29 ideas, most of which the company implemented immediately.
Those ideas ranged from replacing the satellite music service with a CD player and amp to making trips in between its two stores more efficient and to ensuring that every service ticket has recommendations for other work to be completed.
At Buckeye Marine, Bobcaygeon, Ontario (Ranked 4; See Top 10 profile), the company executed a series of strategic moves to help secure its financial stability, empowering its employees to help in generating expense-lowering ideas (and results) and ultimately positioning itself to come out of 2009 feeling stronger than ever.
In fact, the moves were so successful that, despite a 28-percent decline in boat sales, the company was able to increase its profitability by 3.2 percent.
Owners Chris and Gary Poole attribute the success to making smart decisions, holding and in some cases increasing margins, cutting expenses and investing in the business.
“Even though we may sell fewer boats,” they explain, “that doesn’t mean that we can’t be a profitable business. It is important in the downturn to invest in ourselves.”
A significant portion of the investment that Buckeye’s management alludes to can be found in its inventory management strategy. Like most dealers out there, Buckeye Marine made a conscious effort to reduce inventory in 2009, lowering its inventory by $1 million without sacrificing margins, and by year’s end, the dealership owned 95 percent of its inventory. More than ever before, the focus on inventory management became a must-win game for boat dealers in 2009. With new unit sales down some 30-plus percent industry-wide, there were as many strategies for lowering inventory as there were dealers. Inventory turns, on average, were down in 2009. The Top 100 Dealers averaged 1.94 turns in 2009, but even more imperative than years prior was the need to balance the sheer reduction of inventory without compromising margins.
“While we focus on inventory turns, we know that we must also focus on maintaining or improving our gross margins,” explains Butch Parks of Parks Marina. “Focusing on inventory turns alone can be very misleading and fiscally irresponsible if they come at the expense of profit margins.”
As new unit sales declines accelerated in the second half of the decade, inventories piled up around the country, and it really wasn’t until late 2008 and into 2009 that boat manufacturers and dealers went to drastic measures to stop the increasing glut of boats in the pipeline. Dealers like Parks faced difficult decisions at varying times throughout the last few years, cutting back on boat orders.
Parks, in fact, used that strategy through 2008 and into 2009, buying only the hottest models on the market and using other dealers to help fill in special need boats. As a result, the company lowered the number of units it had in inventory to historically low levels, while at the same time increasing its margins on new boats. Candlewood East Marina, for example, stopped stocking boats that turn less than two times. “The days of stocking one of everything are gone,” says Mitch O’Hara, Jr.
South Austin Marine, Austin, Texas (Ranked 40), and Boaters Exchange took a similar approach. Boaters Exchange scaled back its new boat inventory purchases, offering a wide array of models, but not quite as many in-stock color choices. Aside from a few high-turning models, the company does not stock duplicate models. While the company acknowledges that its strategy may cause it to lose a sale on occasion, it says it has helped it improve the bottom line.
South Austin has been pushing through to reduce its new unit inventory by 25 to 30 percent in an effort to lower its risk exposure in a market like we know today.
“We still plan on keeping adequate inventory levels,” explains Wayne Black, president, “but not as deep or as many models. We want to concentrate on the models that sell the best to maximize our inventory turns.”
Many dealers talked about using creative means to share inventory among other dealers. In fact, Joe Hoffmaster, president of Hoffmaster’s Marina, Woodbridge, Va. (Ranked 74), has an inventory sharing plan, for which he outlined a minimum of three steps, the most important of which is trust among the dealers who are sharing the inventory.
At Buckeye Marine in Ontario, the company formed strong partnerships with other same-brand boat dealers in its province and began sharing inventory. The move allowed each dealer to cut back on the number of custom-ordered boats, and Buckeye made more dealer-to-dealer trades in 2009 than any other year prior.
Through what it calls an “incredible focus on inventory management,” Boats, Inc., Niantic, Conn. (Ranked 31), brought in additional boats from other dealers, as well. The company developed a program to assist other dealers in relieving their heavy inventories, meanwhile reducing its own carrying costs to nearly nothing. Management at Boats, Inc. also created an incentive program for its sales staff to find inventory in the field, and it also received assistance from some of its manufacturer partners in the form of additional discounts.
One area that proved to be a strength for those dealers who could take advantage of it was in the area of distressed inventory. M&P Mercury Sales Ltd., Burnaby, British Columbia (Ranked 8); Russo Marine, Medford, Mass. (Ranked 5; See Top 10 profile); Legendary Marine; and Singleton Marine Group were among those that did.
M&P sought out exceptional deals and wound up purchasing more than $6 million worth of repossessed and bargain product, and as a result was able to offer its customers the exceptional values they were looking for in this economy.
Russo Marine engineered an exclusive remarketing relationship with a national lender to assist with the resale of repo’d consumer boats, while Singleton did the same in its region. Both dealers were authorized to inspect, survey and take possession of the boats, and then allowed to service, market and sell the boats once they possessed them.
In the days ahead, there will be less and less talk of distressed inventory and the focus on lowering inventories will wane. Turns will rise, and margins will stabilize, if not grow from where they currently sit.
MAKING THE SALE – AT ACCEPTABLE MARGINS
For all the efforts to cut back, or right-size as they may have called it, the real challenge that dealers faced in 2009 was making the sale … and doing so at acceptable margins.
“There was a large focus in the boating industry to ‘get rid of ’ boats,” Parks suggests. “We never speak in these terms, whether the overall market is strong or not. We have continued to maintain that selling boats without any margin just to ‘get rid of ’ your inventory is only a very short-term cash fix, and once you start doing this you are headed down the path of a slow death.
“We have been unwavering in our pursuit to maintain margins at the set levels by brand. We continue to keep the focus of our sales process on selling the lifestyle and everything our marina has to offer, not just the boat. Every unprofitable sale takes away the opportunity at a profitable one.”
Of course, that was easier said than done in 2009, but it helps to have your competition pursuing the same strategy, as opposed to cutting prices just to move boats. Across the lake from Parks, at Oak Hill Marina, Arnold’s Park, Iowa (Ranked 80; see Editors Pick), owner Phil Miklo changed the company’s sales commission program to pay out a percentage of the profit vs. a percentage of the total sales dollars. The simple change made the salesmen pay more attention and ask for the extra margin. The end result was that, even with sales down some 30 percent compared to the year prior, the company’s gross margins increased by nearly 8 percent, while total expenses dropped by nearly the same amount.
BMC Boats, Longwood, Fla., (Ranked 25; see Editor Pick) used several strategies to maximize its margins in 2009 and into 2010. First, the company has been able to secure steep discounts for distressed inventory it can find through a relationship with GE; second, the company has aggressively sought to purchase used versions of the same models it has in its new unit inventory; and third, BMC has taken advantage of closeout deals from all of its boat manufacturer partners, with discounts up to 50 percent off of original invoice.
These efforts have allowed the company a series of opportunities. First, BMC takes the discounted or distressed inventory units and can “blend” its pricing with the new units it has in stock in an effort to keep strong margins. In other words, it raises the prices of the distressed inventory and decreases the price of the new units it has in stock, price averaging the two to maximize its margins. The second step comes in to play when a customer doesn’t want to spend the money on the new unit — the used boat purchases then allow the sales staff to switch a customer into a used product, which carries a larger margin.
Woodard Marine, Hydeville, Vt. (Ranked 14), used a similar cost averaging strategy, purchasing non-current inventory at large discounts and price averaging all of their boats. For example, if it bought a boat valued at $10,000 for only $5,000 after the discount, and it had a similar boat, bought for the full price of $10,000, in inventory, it would set the price at $7,500 for each, making higher margins and turning product faster.
WINNING THE SURVIVAL GAME
There’s no doubt that the year 2009 was a year of adaptation, moreso than any other year in the history of the Top 100 and perhaps the history of the modern boating era. Dealers were forced to rethink every sector of their business and right-size accordingly.
That right-sizing became the buzzword of 2009, and it seeped into every crack and cranny of these dealers’ operations. It meant, in many cases, downsizing their personnel expenses and inventory levels. It meant adapting to a clearer focus on cash flow and it meant that somehow, someway, correcting revenue expectations to meet the needs of an economy with less available capital. Perhaps most importantly, it required being creative when it came to finding a way to survive.
Just a few short years ago, few if any of these dealers would have considered needing a survival plan, but many created them in 2009. Boaters Exchange was one of them. It created and executed a corporate survival plan, as an addendum to the business plan it already had in place, and it outlined within five categories, 25 specific steps for survival.
The very first item explains it all: “All employees need to act like the survival of our company depends on everybody being urgent, alert, careful, attentive and intentional.”
Similarly, M&P Mercury Sales approached the downturn proactively. Aided in part by the foresight of having its U.S.-based colleagues experience the effects of the downturn before it did, the company was able to pull together its staff to discuss the need to be extremely proactive and not complacent in any way. Every process was reviewed and overhauled to support the new economic environment.
What followed was an initiative the company referred to as “The Score.” The company created scorecards that it could share with every employee in the company that gave them up-to-date feedback on the progress of their department and the entire company as a whole. The program, explains Robert Pappajohn, president, increased the company’s ability to change, adapt and adjust in a quicker manner as is necessary in a volatile economic world.
“Two-thousand-nine was a year that our company, as individuals and collectively, needed to perform not marginally better,” he explains, “but significantly better to meet the demands and changes of the economic downturn.”
At Port Harbor, the company and its management knew that 2009 would be the most challenging in the history of the company, and it reacted accordingly.
“Our business model and approach to doing business changed completely,” explains Rob Soucy, president, “but our mission and values did not. Our management team met, and we laid out a game plan to not just survive, but to continue to be successful and use this time as an opportunity to get stronger, leaner and to improve processes and capture more market share.” Spoken like a true Top 100 Dealer.