A Texas dealer’s advice: Hang in there

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Rod Malone says you can cut costs and push the boating lifestyle to ride out this rough recession

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What began as an avocation has turned into a career for Rod Malone, owner of Austin, Texas-based Sail & Ski, which has three locations and a mobile service depot and storage location.

Malone opened his business in 1976 — originally dealing only in sailboats. He later moved into ski boats before evolving into a full-line dealership. His major line is Sea Ray, but he also sells Boston Whaler, Nautiques by Correct Craft, Crest, Sea Pro and Kawasaki personal watercraft.

While conceding times are tough, Malone says he’s taking an aggressive approach to dealing with the economy, reducing expenses as much as possible. He’s also putting a heavy emphasis on marketing boating as a lifestyle.

The economy in the Austin area remains relatively stable, he says, but he’s concerned that gloomy accounts of what’s happening elsewhere are scaring people.

It’s the perception
“We do see that people are becoming less confident, and they’re beginning to lose momentum from a purchasing standpoint, just because of what they perceive,” Malone says. Sales began to reflect the economic worry in the middle of August, he says, and since Nov. 1, they have nosedived.

“I found out the world really is flat,” he jokes.

Inventory levels are higher than normal — in part because of manufacturer commitments made before the decline in sales. Malone is adjusting projections for the coming quarters, but says he isn’t letting the recession dictate his business.

Sell the timing
“We have become extremely aggressive in some marketing programs in conjunction with some of our manufacturers,” he says. “We’re marketing the fact that right now is a great opportunity to buy a boat.
“Economic conditions in other parts of the country have [reduced] the manufacturer’s ability to sell boats, and so being in Texas, which is still a strong economy, creates an opportunity for us,” Malone says. “You shouldn’t put your life on hold; you need to move forward with your life.”

Malone uses an analogy to explain why it’s important to not put off buying a boat:

Little Johnny, 12, and his father come into the dealership to look at ski boats. Johnny’s dad used to love going out with his father, and he wants to share that experience with his son. Johnny is excited, too — he can’t wait to get out on the boat with his dad. But even though the price is right, Johnny’s dad is worried about the economy and ultimately decides to wait a year.

The salesman says, “OK, but how do we keep Johnny interested for the next year?”

“If someone owns a boat and has at least five pleasant experiences with that boat in a season, it will justify ownership,” Malone says. “Our job is to make sure they have lifestyle opportunities to use the boat.”

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The dealership puts out monthly newsletters for its Sea Ray, Boston Whaler and Nautiques owners’ clubs, and also hosts more than 50 events a year, including seminars and parties.

Go to the shows
Sail & Ski also has increased its boat-show space for the coming year. Malone says the dealership carefully tracks contacts made at shows. A substantial portion of business comes from those show activities, including marketing in the weeks before and after the show, he says.

“Boat shows have not drawn the crowds they may have in the past, but they’re still drawing buyers,” Malone says.

Shows are a big expense, Malone acknowledges, but he advises dealers to look beyond sales actually made on the show floor when deciding how much money and time to invest. Dealers, he says, need to factor in the number of contacts made and how many of those people will come into the showroom to buy a boat six months or a year down the road.

And to make sure it’s his dealership they come to, Malone keeps his Web site fresh and up to date.

“It’s like any other form of selling — you only have one chance to make a first impression,” he says.

“Odds are, the first impression these days is going to be your Web site.”

Look at everything
Malone has some other words of wisdom for dealers. Make a plan and a contingency plan and conserve cash and reduce expenses as dramatically as possible. Look at everything — from personnel to the type of toilet paper you buy — and see where costs can be cut.

For the first time in his 35 years in business, Malone says, he has had to lay off employees, cutting some 10 people from his total work force of 105.

“If it didn’t sell something or it didn’t fix something, we needed to get rid of it,” he says.

Like so many others in the industry, Malone counsels dealers to hang in there, because the economy will improve and people will once again buy boats.

“It’s been my experience that people do go on with their lives, and I think that’s what’s going to happen here once there’s a little bit of stability,” he says. “We will have a latent demand.

“It will come back, and it will come back strong,” Malone added. “It’s just nobody knows when.”

This article originally appeared in the February 2009 issue.

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