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Thursday
Aug042016

A NEW SLANT ON BOAT TRAILER STORAGE

This article, by Dennis Kissman, was published in Marina Dock Age –  April 2014

Over the years I have visited a number of marinas both wet slip and dry stack that have what I call a grave yard for boat trailers.  From a boaters perspective the trailer is like a security blanket thinking they can move their boat at any time they chose.  In reality if that trailer has not been used in the last six months most likely it is too dangerous to carry the boat over the road.  Many of those boat owners do not even have a vehicle capable of towing their boat today.  That raises the question in the boaters mind: Why keep the trailer?, and for you as the marina operator: Is there an opportunity to make money out of this situation?

Some of you may be saying “I charge rent on trailer storage” but is the risk worth it? I was recently with a client that had one of these grave yards for trailers.  A wet slip customer was moving and leaving the area after being at the marina for several years.  He wanted his trailer to put the boat on and take it to his new home.  You could have imagined the shape that trailer would have been in.  The only problem was the marina could not find the trailer even though the customer had paid monthly for storage since he first arrived.  The marina ended up buying a new trailer, and it was not cheap, for this boater and any money they received from charging rent was gone.

It appears that lost trailers are more of a problem than you may think.  If you are plagued with this problem I would like to suggest the following to minimize this embarrassing and costly situation:

1. Define an area where trailers are stored and identify a specific area for each trailer.  This is no different than what you do when a customer’s boat is in a slip or dry rack.

2. Record each license plate number and the expiration date associated with the trailer in a given spot.  Current license plates seem to grow legs when setting in a storage yard.

3. Do a weekly inventory of all trailers being stored on the property.  Having a permanent record of what trailers were on the property on a given date.  This may help reduce your insurance premium by having a good control in place.  This is no different than doing dock walks on a regular basis.

4. All trailers should have a manufactures identification number but these numbers are often hard to fine.  I would suggest investing is a steel stamp letter set.  These sets cost less than $100.00 and they are well worth the investment.  With this lettering set you can establish your own unique identification system and place the numbers in a uniform location on the trailers making it easy for employees to inventory the trailers being stored.

5. Take a picture of the trailer when it is placed in the storage yard and keep it with the customer’s record.  It is funny how boat owners seem to forget what their trailer looked like or the condition it was in when it arrived.

It may be that storing trailers on your property is not the best solution.  As a marina owner you want that customer to call your marina their boat’s home.  I would like to throw out an idea that may appeal to you.  Let’s say a new customer comes to your marina and his boat is on a trailer.  What if you suggest to him that you will take his trailer in trade for storage?  Not different than trading in a car.  Let’s say that it is a new trailer with a market value of $1,800.  The wholesale value may be $1,200 and that or less is the storage credit you offer.  Now you have a trailer to sell or keep and rent out.  The renting out of trailers may be particularly lucrative if you have an in-house service department that can maintain trailers as well as boats.  You would only want to keep the best and most versatile trailers in your rental fleet and the size of your fleet will vary depending upon rental activity.  Several trailer rental places I have checked with have only four to six types of trailers in their rental fleet and the average size of the fleet is eight trailers.  Since you will be renting to a captive audience you will be able to design your fleet specific to your customer base.

If this is a revenue stream that you believe would help you, check with your insurance agent first as I understand the laws and insurance coverage may change from state to state.  I further understand that the majority of time liability is covered under the towing vehicle’s insurance policy but not in all circumstances.  Like any other activity where mechanical equipment is involved, keep detailed maintenance records to avoid liability issues should a problem arise.

If you believe this is a good idea but do not want to get in the trailer rental business check in your area for places that commercially rent trailers and work a deal where you can get a commission if you make arrangements for one of your customers to rent a trailer.  In either case you have accomplished getting that boater out of the trailer but he still has his security blanket that a trailer is available if he needs it and he knows it will be in good shape to take over the road.



Friday
Jul152016

COMMERCIAL BOATS AND MARINAS 

This article, by Dennis Kissman, was published in Marina Dock Age –  March 2015

It is not uncommon to have water dependent commercial ventures operating out of a recreational boat marina.  Most of these operations are recreational boats for hire operated by the boat’s owner and operated as a separate business.  As a marina owner or manager these types of operations can have a positive impact on the profitability of the marina but if not controlled properly can have a larger negative impact.

Some of the more common enterprises include sport fishing charters, day sailing cruises, dive boats and what is commonly referred to as head or party boats where a large number of people are on the boat for a particular activity or event.  These types of operations operating out of your marina attract a different type of clientele than the typical recreational boater.

There are three important aspects to consider when a commercial venture operates out of a recreational marina.  First, is the increased risk of liability, second, additional wear and tear on the marina’s infrastructure and third is if the marina is designed to accommodate commercial ventures.  Let’s look at each of these three issues and understand what is at stake.

First on the subject of risk; as the marina operator you need to ask yourself the following questions.  Are the boats that are working out of your marina for hire recognized by the public as a legitimate business?  Do they have a business license and do they carry the proper insurance coverage that includes the marina as an additionally insured on their liability policy?  If you answered no to either of these two questions you could be placing your marina at risk should an incident occur involving one of these operators’ paying customers while on marina property.  One of the more frequent incidents with people not familiar with marinas is the “slip and fall”.  If a slip and fall accident occurs when that person is either boarding or disembarking the charter boat it is unclear who is at fault, the marina, the boat owner or the injured person.  What you can be sure of is that the marina will be named in any litigation resulting from that accident.

If you have the possibility of this happening at your marina talk to your insurance agent to make sure you are properly protected.  Also have your insurance agent review the boat owners insurance to confirm they have the proper protection for the marina.

Second, boats operating as commercial ventures will add additional wear and tear on the marina’s infrastructure as compared to that of a recreational boating customer for two reasons; first the increased number of people coming to the marina and second the frequency in which it happens.  Also, a commercial charter boat, because of the frequency it departs the dock and returns, puts more pressure on the mooring cleats, pilings and the dock structure itself than you would expect from a pleasure boat customer.

Is there a designated location in the marina where commercial boats are docked or are they scattered throughout your marina?  If they are scattered throughout the marina it is a problem.  It is like trying to mix oil and water.  Recreational boaters come to their boat to relax and enjoy the ambiance of the marina and being out on the water.  Once there is commercial activity on the dock that ambiance is lost and often times results in losing your recreational boating customer all together.

To minimize this impact on the marina all commercial activity working out of your marina ideally should have separate access to a dock dedicated to this type of activity.  Depending upon your marinas configuration this may not be possible but you should try to at least group these boats with like activity as much as possible and keep then as close to the bulkhead or shoreline as possible.  Although your recreational boat customers may have to walk pass this activity when going to their boat they will not have people walking by their boat on a frequent basis.

The third issue; is your marina designed to accommodate commercial ventures? Charter boats will add additional demands not only on the docks but also on the marina’s parking lot and restroom facilities.  Most times these issues are not mentioned in any permitting requirements imposed on a marina but the marina should address these issues so as not to inconvenience your recreational boating customers when wanting to use their boat.  If it is your decision to cater to the commercial boat customer then you should take into consideration their specific needs.  One example is that we have found these commercially operated boats always need more secured storage space whether on the dock or in a dedicated storage facility than that of a typical recreational boat owner.  Also, these commercial operated boats will usually demand more utility services than the recreational boater.  Make sure that your utility infrastructure can accommodate the higher demands.  If your dockage rate structure includes any utility services these commercially operated businesses should be sub metered and charged based on usage.  If you do not do this there is a good chance that the marina will end up subsidizing their businesses.

If you have or are considering commercial boats working out of your marina consider an alternate rate structure that would be appropriate for commercial boats for hire working out of your marina as their demands on the marina are far greater than the recreational boater.  As previously stated, commercial ventures operating out of your marina can have either a positive or negative financial impact on your marina.  Since no two marinas are exactly alike I think it is safe to say that thinking through all the consequences of your decision is paramount.  Take into consideration either the short and long term gains or losses keeping in mind short term gains in profitability may result in long term losses.



Tuesday
Jun282016

ONE MORE REASON FOR GOOD RECORD KEEPING

This article, by Dennis Kissman, was published in Marina Dock Age –  May/June 2014

One topic that I have written and spoken on at many marina conferences is the importance of good record keeping and financial reporting.  I think it is time to revisit this topic as many marina owners do not put enough emphasis on it when conducting their business and making those important decisions that will guide their business and, more importantly, their profitability going forward.

There are several issues that come to mind but I believe the most important is having consistency in how and what you report.  Even if your information is not the most detailed or complete, having consistent information that is presented in a consistent format will allow you to compare from one year to the next on how well you are doing.

Following in importance is non financial information.  We are in a reactionary business and there are a number of outside factors that you have no control over but still have to react to.  This can impact your profitability. Some examples are the weather, inland lake water levels, economy and other recreational activities in your market area.  One of the busiest holidays for boating activity is the Fourth of July.  If July fourth falls on a Tuesday, Wednesday or Thursday, boating activity in that year will be less than if the fourth falls on any other day of the week.  Keeping track of this non financial information in a consistent manner is just as important as the financial information.  Make sure that when you look at what you wrote a year ago it still has meaning.  To help me, I like to make what I call a “cheat sheet”.  This is just a list of the external issues that impact your business.  The one thing that tops the list of issues is weather.  Typically if there is bad weather when a holiday occurs most likely it will negatively impact your bottom line for the year.

I would like to get back to the financial information and how non financial information plays a role in helping make the right business decisions.  I stated how important consistency is in financial reporting but many times the difference in a number does not tell you what is going on in your business.  If you did not understand the makeup of the amount reported for prior year as well as the current year the decision you make guiding your business may be the wrong one.  Let’s take a look at one example, fuel sales, and dissect what is or is not important.  What are the important components that impact the profitability of your fuel sales; gallons of fuel sold, the price you paid for the fuel, the price you sold the fuel for, the weather and local economic conditions and last but not least, the fuel inventory balance.

I want to put some numbers to the analysis mentioned above to show how you arrive at some meaningful information to make a business decision on.

In this example the marina only sold one type of fuel.  If more than one type of fuel is sold a similar analysis should be performed.  The information shown in the first section represents basic information that is from your accounts payable for fuel and your daily sales log of fuel sold.  The information shown in the second section in the table represents what you have recorded as revenue and cost of sales for the period.  The bottom section of the table is the analysis of the numbers that are previously stated in the table.

 

 

Month

 

 

Prior

Current

Difference

Gallons of Fuel Sold

8,740.0

6,928.0

(1,812.0)

Average Sales Price Per Gallon

$4.45

$4.70

$0.25

Average Costs Per Gallon

$3.25

$3.17

($0.08)

Gross Profit Per Gallon

$1.20

$1.53

 $0.32

 


   

 

Total Fuel Sales

$38,893.00

$32,561.60

($6,331.40)

Total Fuel Costs

$28,405.00

$21,961.76

($6,443.24)

Gross Profit on Fuel Sales

$10,488.00

$10,599.84

$111.84

 


   

 

Due to reduction of Gallons Sold

($2,174.40)

 

Due to the Price Increase on Gallons Sold

$1,732.00

 

Due to the Cost Decrease on Gallons Sold

$554.24

 

Net increase in Gross Profit

 

$111.84

 

 

 

 

 

 

You may be asking how you arrive at those numbers to explain the increase in gross profits.  Here are the formulas:

  1.        To get the Reduction of Gallons Sold you take the difference in the top line ($1,812.0) times the gross profit per gallon for the prior month ($1.20).
  2.        To get the Price Difference you take the gallons sold for the current period (6,928.0) times the difference in the average sales price per gallon ($0.25).
  3.        To get the Cost Difference you take current number of gallons sold (6,928.0) times the difference in the cost per gallon sold ($0.08).
  4.        The Gross Profit is the net of one through three above.  Keep in mind as a general rule decreases in gallons sold result in a negative number while price increases and cost decreases result in positive numbers.

Now that you have the financial information analyzed you can apply the non financial information to further explain the change and make changes accordingly.  For example, there are three factors that could have reduced the number of gallons sold.  They are: local economy, weather, or price of fuel which would be a factor in the status of the economy.

This is just one account that we have analyzed but similar types of analysis can be set up for every type of revenue and expense account as long as you understand what the components are that goes into determining the amounts reflected in your profit and loss statement.

This is just one more reason for keeping good records of your business’ performance.  This whole process may sound complicated at first but once you get into it you will see how much easier it is to make the right decisions to improve your marinas profitability.


Wednesday
Jun012016

Preparing for Every Marina Emergency

This article, by Carl Wolf, was published in Marina Dock Age –  March 2016

Since 1976, when I started my career on the waterfront, I’ve encountered numerous emergency events, either first-hand or at the expense of another marina.  The outcome of various marina emergencies depends upon how well the marina was prepared for the emergency.  I’m a firm believer that marinas should be prepared for any type of emergency that may occur within their facilities.

In the 1980’s, at a marina I was managing, an incident happened that opened my eyes to the unusual types of emergencies that can and will happen.  Since we had an appropriate plan in place, the event had a positive outcome.  But it could have ended differently.  On a cold October night, off of the waters of Lake Erie, three individuals had broken into the marina; the night watchman had called the local police and then me.  Two of the individuals were caught, but one was still missing and was presumed to be in the water.  After carefully listening to the night watchman’s general idea of where the person was last seen, and knowing the general construction of the floating docks, I had an idea of where to look.  Using a flashlight, I started walking down the floating pier.  After walking about 50 feet and looking through the cracks between the deck boards, I saw fingers.  The person was still in the water and shaking uncontrollably because of the cold water temperatures.  After alerting the first responders at the marina, we were able to pull the person out of the water.  Had the night watchman not called the police department and myself, the outcome could have been so different, and the individual pulled from the water was a minor.

Why is it important to have an emergency preparedness plan?  Two primary reasons.  First, you want to maximize the safety for your customers, employees, visitors, the marina and the environment. Second, an emergency plan can help minimize the disruption to the marina’s business.  To form a plan, your marina needs to evaluate the potential emergencies it may face, based upon historical events, the geographical location of the marina, and the physical and the makeup of the marina.

Some potential emergencies that could face your marina are: fires; first aid/medical; persons in the water/drownings; boat sinking; spills; hurricanes/storm surges; tornadoes/wind storms; moving ice/heavy snow; flooding/droughts; earthquakes; and terrorism.  While some emergencies may be spontaneous, such as fires, spills, or persons in the water, others may evolve over a period of time, whether days or weeks, like a hurricane.  The key question to ask of yourself, is your marina prepared?

There are three stages in preparing your marina for potential emergencies.  The planning stage, writing of the plan and training the staff.

Planning Stage

This is where you try to understand the potential impact that an emergency may have on your marina. The impact could affect your customers/employees, the docks, buildings, boats/equipment, and interrupt the operations of the marina.  You need to identify the resources to assist in creating an emergency response plan, such as employees; existing plans; online resources; governmental agencies; and outside commercial help.

It is important to assemble your team for potential emergencies.  The team may vary from one type of emergency to another.  Members of your team could include managers/supervisors; employees; governmental agencies; or external business support.

You need a plan for each and every type of potential emergency that you have identified.  Some of these plans may be redundant in structure, and others will vary greatly.  Parts of your plan can include identifying the team and any preparations that are needed.  Safety issues should be outlined, and the plans for the initial response and the equipment needed, including important contact information and communications.  The plan should have an appropriate follow up response and might address security issues, hazmat and waste handling; employee training, paperwork and filing issues.  Overall, the plan should be designed to minimize business interruption.   

Training

The training for an emergency is the most critical part of your emergency response plan.  The training needs to be continuous for all marina employees and cover each type of event.  Training should include local first responders and other members you have identified in your team.

Parts of the training can involve making sure the necessary equipment is operational and in good running order, such as safety gear; fire equipment; pumps and hoses; lines and tools; generators; vehicles; company boats; boat equipment; the appropriate employee protection and safety gear; first aid supplies; and environmental response supplies.

Your marina has a plan for the various potential emergencies and your employees should be trained for them.  If an event occurs at your marina, be smart and stay calm.  Everyone will be watching, listening and waiting for you.

After the emergency as safety permits, your goal is to start the operations of the marina.  It is your responsibility, your duty, to your employees, your customers, your employer and to the business to be as prepared as you can possibly be.

 

 

 

Monday
May232016

RATE STRUCTURING: SO THE MARINA AND CUSTOMER CAN PART ON GOOD TERMS

This article, by Dennis Kissman, was published in Marina Dock Age –  December 2013

If you are going to create the proper rate structure for keeping boats at your marina there are two things to keep in mind about a marina.  First you have a fixed amount of physical space from which you can generate revenue and second you are in an industry that is highly seasonal.  With both these constraints you have very little flexibility or control over changing your business model.  We often talk about all the profit centers to generate additional income from at a marina but do not lose site of the fact that your core business and principle income generator still comes from storing boats.

In our twenty five years of consulting with clients about marina operations I believe it is fair to say that as no two marinas are exactly alike, neither is there a single approach to setting up a rate structure to charge customers.  With that said, there is one thing that should be common regardless of how you decide to structure your dockage and storage rates.  Owning a boat is an option and not a necessity to living therefore as circumstances changes in a person’s life their reason why they wanted to own a boat may change.  When this happens suddenly like a job transfer or lost of a job maybe an illness in the family boating may be out of the picture.  Even though a person may have made a long term commitment with the marina in order to receive a lower dockage or storage rate they cannot keep their commitment.  When this happens the customer often times creates a reason why the marina is not good in an effort to break the agreement.  The end result is the marina is out the revenue it would have received on a shorter term agreement with that customer as well the customer spreading negative comments about the marina that are not true to justify reasons for breaking his agreement.  When this happens the marina is the loser.

Now the question becomes, how do you eliminate this problem.  Your goal should be if a customer has to break his agreement with the marina for any reason you want that customer to be welcome back in the marina when his circumstances change.  The way that you accomplish this is by making the monetary reward for offering a lower rate at the end of the agreement if the customer fulfills his obligation.  There are a number of ways this can be done and it will depend upon how your rates are structured.

Here is one scenario that you can use as a guide when looking at your particular situation.  Let’s say your marina is located in an area where boating is year round but there is a peak season.  The peak season could be either the summer or winter months depending upon your location.  In your rate structure you have a monthly, seasonal (six months) and annual rate with the longer you commitment to stay the less per foot per month the rate.  For this example we will say the monthly per foot rate is $15.00, the seasonal per foot rate is $14.00 and the annual per foot rate is $13.00 per month.  A customer comes in with a thirty foot boat and says he plans to stay for the year.  You offer him the annual rate of $13.00 per foot and his monthly charge is $390.00.  Four months into his agreement circumstances change and he takes his boat out of the marina.  On a monthly agreement the marina would have received $450.00 per month not the $390.00 per month annual rate.  The marina is out $240.00 for the four months from what they should have received on a shorter term agreement.  Because he has an annual agreement at a reduced rate excuses are made as why the marina is no good and that is why he is taking his boat out of the marina.

A better policy would be for the marina to charge everybody the monthly rate and then at the end of the term he has free months.  Working through the mechanics on how this would work:  If the customer had honored his commitment he would have paid a total of $4,680 for twelve months at the annual rate.  Paying at the monthly rate $450.00 he will reach paying the total annual rate in the eleventh month of his annual agreement.  This breaks down as fellows; the first ten months adds up to $4.500, in the eleventh month he pays the balance of the annual agreement of $168.00 and the twelfth month he pays nothing.  Bottom line, customer leaves after four months, no bad feelings or lies to break an agreement and the marina is fully compensated for the time the customer is in the marina.

Here is another scenario that applies sometimes.  Rather than rates based on length of stay you may have rates based on time of year.  This is particularly true in areas subject to hurricanes or where special events are held annually that attract boaters.  Using hurricanes as an example the season is typically designated from June 1 through October 31, five months.  Some marinas are considered safer locations than others during this season and as a result will have a higher rate for boats coming into the marina during these months.  Sometimes these rates are two to three times higher than the normal published rates.

Now comes the boater to your marina in July and wants to sign up for your annual rate which is lower than the hurricane season rates.  The question is do you give him your published annual rate or the hurricane rate.  The answer is the higher hurricane rate.  Here is how you work this so if plans change and the boater leaves earlier than the stated time when the hurricane ends you begin giving him credit towards his annual slip fees until such time the difference is used up.  Here is the example; remember we said boat arrived at the marina on July 1 and let’s assume the hurricane season rate is twice that of the non hurricane season rate.  From July through October he would have paid four additional months dockage fee based on the annual dockage rate.  We will also assume he was not just trying to negotiate a lower rate then leave at the end of hurricane season but really intends to stay longer.  Your program should state that for every month after hurricane season that the boat is in the marina 50% of the annual per month fee would be credited towards his dockage until excess is used up.  Let’s say that the annual rate for the customer’s boat is $800 per month and the hurricane rate was twice that amount for the months of July through October.  Since he was there for four months of hurricane season for the next eight months starting November 1 he would only pay only half of the normal monthly dockage or $400.  Let’s also assume he really intended to leave at the end of December but did not want to tell you but does leave.  The marina would have only credited him for one month dockage over the months of November and December.  The marina is not out any extra money that they would have been if they offered this customer the annual rate when he first came into the marina.  He did not live up to what he committed but there is no reason to leave on a bad note and the boater is welcome back any time.

There are more examples that could be given but always keep in mind that you want the burden put on the boater to fulfill his obligation if he wants the reward.  This is an easy concept to sell to your customers because it is fair.