There's no 'new normal,' says consultant - change is constant, and businesses must keep pace
Jim Bronstien borrows the lyrics of singer/songwriter Bob Dylan and gives them a spin to hammer home the realities of doing business not just in tough times, but anytime:
"If your businesses to you are worth savin',
Then you better start swimmin'
Or they'll sink like a stone
For the times they are a changin'."
Bronstien, a business consultant and former owner of the Rybovich Spencer yard in West Palm Beach, Fla., says the times are always a changin'. Speculation about what the "new normal" will be in the post-recession era misses an important understanding about how to survive in business today.
"It never was normal," Bronstien said at a boatyard economics seminar at the International BoatBuilders' Exhibition and Conference in Miami Beach last fall. "The world changes. The world will keep changing."
So what has changed in the last two years? Americans have less money than they thought they had, he says. Demand for products and services of all kinds is down. Consumers are more sensitive to price. It's harder for everyone to borrow money. There are fewer boat buyers. There is a surfeit of unemployed workers.
What hasn't changed? The need for highly skilled staff remains critical. Customers are demanding and hard to satisfy. Boats are increasingly complex and expensive. Marine businesses are capital-intensive. They have to navigate through a lot of regulations. They are high-cost, low margin. Buying and selling boats brings a lot of passion to the table - more than buying and selling widgets. Customers' egos are always a factor. Boating will remain a hobby for many, though no one really has to own a boat. Businesses must anticipate and adapt.
Bronstien says we also must adjust our attitudes. "Is it that bad?" he asks. "The world economy has taken a huge breather," he says, but it's not the end of the world. "Perception is reality. It gets better when everyone believes it's better."
He says studies prove it. So look at the glass being half full instead of half empty. People still want to go boating. "Change your expectations," he says. Business is down - as much as 50 percent. Some businesses won't survive. Those that do will have to figure out how to get by on 70 percent of what they sold prerecession.
"Revisit your priorities," Bronstien says. It will be a long, long time before we're back to 2005-06 sales levels. Business owners must re-evaluate themselves.
Is your business model still viable? Do you have a strategic plan? Does it still make sense? What's happening in your market segment and your region? What's happened to your customers - are they back on track financially? Have their investments stabilized? Are they still struggling with debt? Are they going to keep their boats? Are they going to downsize - or upsize? Do they have a plan to survive the downturn and come out whole?
Bronstien says businesses also must try to keep good employees and help them cope with job insecurities.
Planning for tomorrow requires businesses to readjust their operations to fewer sales for the foreseeable future. They have to accept that the business is worth less today than it was three years ago. They have to try to operate on a cash basis and not rely on debt, focus on "have-to" expenditures and put off "want-tos," get a good chief financial officer who is brutally honest with the boss, update the budget - track the budget, look for ways to cut costs, move into new markets (marine and non-marine, government, remote services) - increase communication with customers, provide more personalized services, adopt more flexible customer policies, accept cash only and no credit.
"There's no reason to issue credit," Bronstien says. "That's not what boatyards are for. That's what banks are for."
Trim staff - "do more with less" - communicate more with them and watch out for "freelancing," he says. Employees working shorter hours may take company jobs for themselves and work them on the side. Bronstien says special sales are OK, but he discourages discounting as a strategy because if a business sells a product or service for less, it has to sell a lot more to make up for lower prices.
He advises companies to keep marketing and diversify their arsenals - use the Web, optimize search engines to lead consumers to their sites, plant ads on other Web sites, and use social networking, newsletters, promotional events, industry ads, boat shows and local media to market products and services.
Bronstien says boatyards are positioned better than most in the industry to come back early and strong because there are a lot of boat owners out there and a lot of deferred service that needs attention. Find those boaters and sell them, he says.
Finally, Bronstien recommends, keep an eye on what other yards are doing to drum up business.
"Competition is back," he says.
This article originally appeared in the February 2010 issue.