Position yourself for the turnaround - Trade Only Today

Position yourself for the turnaround

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More than 400 people, representing about 225 dealerships across the country, came to Las Vegas for the Marine Dealer Conference & Expo in November to learn how to survive the recession and still be standing once things start to turn around.

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Through programs and panel discussions, they heard from experts on topics ranging from service department best practices to financing to value-based selling. Many say they found the presentations helpful and had learned some things they could use in their dealerships.

The conference, produced by the Marine Retailers Association of America and Boating Industry magazine, attracted a higher turnout this year than in 2007, despite tough economic times, organizers say.

“I think that probably people decided that they needed to come to see if they could pick up any tips on what other dealers were doing out there … to stay alive in this type of environment,” says Phil Keeter, president of the MRAA.

Keeter says dealer feedback on the discussions was positive. Also, he notes, the industry giants panel continues to be a hit with dealers, many of whom come just for the chance to hear from the biggest names in boat and engine manufacturing.

‘A lot to take back’
“It’s been very beneficial, there’s a lot of great information to take back,” says Lynn LaFata, from Sea Ray of Cincinnati. Though there was some repetition of ideas she had heard at previous conferences, the reinforcement can be positive. “To hear it again is definitely helpful,” she says. “You can’t implement everything, so you have to take one or two things and use them.”

LaFata’s dealership was honored as a Top 100 dealer by Boating Industry magazine. Many dealers say the Top 100 awards were a large part of why they came to Las Vegas.

Mitchel O’Hara, a 25-year industry veteran from Connecticut’s Candlewood East Marina, also was honored as a top dealer at a gala on the last night of the three-day convention.

“Basically I think it’s very good; the speakers have been very good,” he says, although he, too, felt there was some repetition. He would have liked to have heard more on the economy, adding, “Probably no one really has the answers yet.”

O’Hara, who sells Cobalt, Malibu and Correct Craft lines, says he, unlike many dealers, has only a couple 2008 models left in stock, and is selling mostly 2009s at this point. He says he is somewhat concerned there will be little interest in his 2009 models at the upcoming New York National Boat Show because of the discounts competitors will be offering on their 2008 models.

For Georgia’s Bill Sommerfield, the conference was his last as a member of the MRAA board of directors. Because of the economy and persisting low-water levels at Lake Lanier, Sommerfield lost his management job at Lazy Days Marina last June.

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Though he’d like to get back into marina management, Sommerfield has since started his own boat transportation and consulting business called AWS Services.

He says he was encouraged to hear many talking at the conference about furloughing employees (with the intent of recalling them as quickly as possible), rather than laying them off (which could be permanent). That, he says, should be publicized more so people will know the boating business is not going away.

All in all, Sommerfield was pleased with the conference and the number of attendees.

“The board did a great job getting sponsors, we are tickled to death with the turnout,” he says. “I’m very pleased with the speakers. We cut right to the chase; there’s no fluff.”

Few bright spots
Several of the discussions were dedicated solely to finances and the economic climate.

Steven Ramel of GE Capital Solutions, admitted there isn’t much positive news on the economic front. The sharp decline of gasoline prices from their summer peaks, and reductions in the prime lending rate were two bright spots in an otherwise bleak report.

The real estate market, a key driver of the overall economy, has to stabilize before any significant improvement can be seen, he says, adding he doesn’t expect prices to even out before the third quarter of 2009.

Compounding the problem, he points out, is the fact that many of the areas hardest hit by the housing slump are also some of the largest boating centers, such as California and Florida.

In his presentation, Ramel advised his audience to manage debt wisely and understand the terms of their loans. If you are using a small local bank, understand it may not be there in three months, he cautioned. Know the target market for the product you are selling, manage cash wisely and manage receivables closely, he advised.

‘Eye of the storm’
Edward Aaron, an analyst with RBC Capital Markets, points out that the downturn, which he says really started about three years ago, is “unprecedented,” and boating is in the “eye of the storm.” He pointed to difficulties in getting consumer loans, high gasoline prices last summer, a drop in consumer confidence and a decline in discretionary income.

Aaron discussed a survey his company recently did in which 250 dealers were interviewed about their opinions on the industry.

A small number reported growth. And 80 percent say they were not extremely concerned about inventory and were doing a good job of managing that aspect of business. However, aging inventory was a significant concern.

Very few dealers, Aaron notes, say they plan to quit the business.

Financing
The final session of the conference was a panel discussion on financing, both for consumers and dealers.
Bruce Van Wagoner of GE Capital Solutions assured attendees GE was staying in the boating industry with no plans to abandon floorplan lending.

“I fully expect we will be funding business well into the future,” he says. “GE will remain committed to this business.” GE is not cutting back on credit lines, he said, but working to “ensure proper credit lines.”

On the consumer financing end, panelists say getting approvals is tougher, but there is money available.
Scott Anderson of Merrick Bank says that, for too long, banks were giving out loans with too few background checks. Loans with zero down and without a diligent credit check and proof of income are a thing of the past, he says.

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“I think it was way too easy for too long,” he says.

Peggy Bodenreider of the National Marine Bankers Association says dealers need to adjust their expectations to meet the new reality.

“Common sense needs to come back into practice,” she says.

Best practices
Much of the conference centered around best practices for selling, marketing and generally running a business. Many speakers stressed the importance of coming up with a well thought-out plan, complete with goals and dates for achieving those goals. The plan, they say, should be written down and constantly updated.

Also, everyone in a dealership should know what is expected of them and what goals need to be met. Everyone should feel a part of the process.

John Spader, president of Spader Business Management, discussed the importance of effective leadership and communicating a vision. Talk to employees about top priorities, he says, and share the truth of the tough times, but in a “positive way.”

A leader, he says, must inspire others to willingly give extra in tough times and do little things to celebrate the victories.

Spader gave an example of two ways people can look at the same job – filling sandbags in the face of a flood. The first group fills sandbags and is depressed about their job, late to work, has high turnover and doesn’t see value in what they do.

The second group views the job differently; they don’t see it as just filling sandbags. They view it as saving lives.

“Are your people selling sandbags, or are they saving towns?” Spader asks.

Value of certification
Bob Williams, of Five Star Solutions, discussed certification and its importance to the industry. Though sales have slowed, dealers have an opportunity to focus on the service end of their business to make up the difference.

“Customers like going to places that are certified,” he says, noting that a recent survey showed that 79 percent of consumers are likely to purchase from a certified dealer.

John Lane of JL Solutions discussed value-based selling, noting that selling is a skill, not something just anyone can do.

“We are in the relationship business first,” he says. “Nurture those relationships over a period of time. You’ve got to keep them close.”

Don’t sell the boat, he suggests, but sell what it can do for the customer.

David Parker of Parker Business Planning presented a detailed budget sheet, showing all areas in which money comes in and goes out. He also showed how to go from a negative bottom line into the black by cutting in certain areas.

Some things to look at, he says, are ways to increase gross margin, raise the labor rate and increase billed labor efficiency, get rid of non-current inventory, add a shop supplies charge and save money by ensuring compliance with laws that can cost thousands in violation fees if not complied with.

A marketing panel discussed the importance of maintaining public relations and advertising in down times.

The market may be down, but there’s still 900 people in your area who will buy a boat this year, so make sure they come to you, says Wayne Sorensen of MasterCraft Dealer Services.

A Web presence also is crucial in these times, because it’s often the first place consumers go when researching a boat. Panelists stressed the importance of keeping your site current and fresh, and ensuring it comes up on the first page in a search engine. A Web site is the “new front door” of a dealership, says New England dealer Larry Russo Sr. of Russo Marine.

This article originally appeared in the January 2009 issue.

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