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It’s group therapy with a profit motive

If not for his participation in a 20 Group, Oak Hill Marina owner Phil Miklo says he would not be in business today.

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Miklo, whose Iowa dealership sells a variety of lines including Chaparral, Bayliner, Maxum and MasterCraft, says he joined a Spader 20 Group to survive in the boat business. The knowledge he’s gained has been invaluable, he says.

“It’s amazing [how] some of the most simple things can make us more efficient, make us more sales, make us better people and help our people be better for the customer,” he says. “You can’t stop learning, because business is evolving yearly. There’s always a new challenge around the corner.”

John Spader of South Dakota-based Spader Business Management says his company has been running 20 Groups for more than 30 years. These groups began in other industries, such as RV and auto, and expanded to marine in the late 1970s.

Spader, who believes his company introduced the concept to the marine industry, says 20 Groups are teams of non-competing dealers who gather a few times a year to discuss their businesses, find solutions to problems, and share ideas for improving and becoming more efficient.

“You get an outside board of directors,” says Spader. “You get some accountability. You don’t have to reinvent the wheel. Rarely are you going to run into a problem one of the other dealers has not already had.

“You get a lot and you give a lot,” he says.

Rapid results
David Parker of Florida-based Parker Business Planning used to lead Spader 20 Groups until he set out on his own in 1999.

His first 20 Group met nearly 10 years ago. At the time, the dealerships had an average $5.6 million in annual sales. New- and used-boat margins averaged 15.9 percent and net profit averaged $207,684, or 3 percent of sales.

Two years later, average sales had increased to $7.2 million, gross margins were up to 21 percent and net profit had increased to $471,911, or 5.2 percent of sales.

“Members of a 20 Group have higher highs and higher lows than dealers who are not in a 20 Group,” Parker says. “If two heads are better than one, how about 20?”

Scooter Rambo of Alabama-based Rambo Marine was a founding member of a Cobalt 20 Group run through Parker’s company. He admits to being nervous at first about opening his books to other dealers, but says he soon found the benefits were well worth it.

“I would equate it to walking into a room of people and everybody having to take their clothes off,” he said. “I was very nervous about it initially, but I got over it after the first meeting. We’ve improved most of our processes at the dealership. I could talk forever about all the things we’ve done.”

Rambo, who is also part of a MasterCraft 20 Group, likes being with a group of non-competing dealers who all sell the same boat lines.

“For example, the MasterCraft group, that’s a real specific market niche and the marketing conversations that come up are really specific to that brand,” he says. “I think by being brand-specific you have a lot of similar interests.”

Benefits of diversity
Miklo, however, enjoys being in a group of geographically diverse dealers who all sell different lines.

“I like the opportunity to learn what other manufacturers are offering or how this company’s really good to work with, they’re not in my area, maybe I should contact them,” he said. “It’s much more diverse if you’re not all with the same product.”

Spader says many dealers push their direct competitors to get into 20 Groups, as well.

“We’re all going to have competitors,” he says. “Having good competitors is better than having bad competitors. Having a competitor who knows they should have labor rates in the $90 to $100 range is way better than having a competitor that doesn’t know what he’s doing and has a $50 labor rate.

“People that are running bad businesses, that don’t know the margins, that don’t know the costs of doing business, are not good for anybody,” says Spader. “They lose money, the customer ends up not being served and that makes it hard for dealers that know what it takes to run a good business.”

Worth the money
There is a cost associated with being a part of a 20 Group, but it’s money well spent, say those involved.
“If you can’t cover the costs of being a member … you’re not taking away anything from the meeting,” says Rambo. “The cost is nominal … as long as you’re willing to put the effort in to make the changes.”

Parker charges a one-time setup fee of $750, and members pay $425 a month (in quarterly installments), plus travel costs. He also pays the travel costs for the groups’ facilitators. Spader charges a $675 setup fee, along with a monthly fee of $375 paid quarterly, plus expenses. He, too, pays the costs of the facilitator.

“It’s helped improve my margins on boat sales, because we’re not looking at a dollar amount, we’re looking at a margin,” says Miklo. “When I got into the business, I was only worried if I could make X amount of dollars per boat. I thought I could survive on that, and the No. 1 thing that comes from the Spader side is the dollar concept. It’s implemented at every meeting, in some way.”

You only have so much of one dollar to spend, he says. It doesn’t matter if it’s $1 or $10 million, the percentages are the same.

“I don’t care who you are or how good you are,” says Rambo. “You can learn something from the smallest dealer in the room.”

This article originally appeared in the March 2009 issue.

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