consultants to the trade

Marina Dock Age, November/December 1998

Working with Your Local Emergency Officials
by Gene Spinazola

Several years ago, during a conference presentation, I asked for a show of hands from all the marina managers in the room who had a business plan. My intent was to show the importance placed on the business plan, and of course the next question was going to be, “How many have an emergency plan?” To my surprise, I didn’t get many raised hands for the business plan, so the second question came out as, “How many have an insurance plan?”

How do you plan to handle emergencies in your marina? You will have emergencies, and right or wrong, you will have to handle these situations, but some advanced planning will improve the final outcome. Work with your emergency responders, develop rapport with them and openly share important information about your marina.

Depending on your location, there are five or six major emergencies that you as the marina manager may be faced with at any time. Four of those are surprise events for which you have little or no time to prepare. For example, a tornado is one event for which there may be little or no warning. A hurricane, on the other hand, happens with some significant lead time, and different levels of preparation can occur as the storm is approaching. Your response to all emergencies, however, must be correct and not left to chance. For that reason, emergency planning must be done well in advance, and all parties involved need to understand and practice the plan.

I can’t tell you how many times I have heard marina managers say, “I’m not going to invite the fire department to my marina because they will find something wrong.” Think of it this way: If they find something wrong at your marina, there probably is something wrong at your marina. It may not mean that you have to fix it right this minute, but over time, you may need to work on and resolve that problem.

A simple and common problem that I have encountered in reviewing many marina fires is the fact that the fire department is not familiar with the property and unprepared for the realities of a multiple-boat fire. The second part of that equation is that the marina staff members are also not familiar with the property and are unprepared to assist the fire department.

Do emergency response people come to your marina and drive around the property to become familiar with the site? Well, that’s good. But this would be better: The next time they show up in their fancy truck, run out of your office and stop them. Get them to walk the property with you, and show them the hydrants and other sources of water that they might use, such as your boat ramp or TraveLift. Walk them into the dry rack storage building and to the end of your longest dock. One problem that seems to be a common thread with each marina fire that we have researched is that getting an adequate water supply took too long at the beginning of the fire. Marinas are located on the water. That being the case, why does it take so long to get this wet stuff to the red stuff? The better they know your property, the better their response will be. 

What can you do to reach out to the emergency personnel? You can work with the training officer for the different emergency services and offer to be a training site for their program. Donate that old derelict fiberglass boat that has been in storage (one that you have title to, of course) for a fiberglass boat burning session or search and rescue exercise. Invite the neighboring marina personnel to join in too, and don’t forget your boaters. The better the awareness that all parties have about the kinds of problems that can occur in the marina, the easier it will be to get your training program on track.

A number of marinas provide, free of charge, a boat slip for the marine patrol, police department or fire and rescue service. In Texas, a marina association got together and purchased a boat and motor for the fire and rescue service, and the fire pump was supplied by the fire department. 

Is your staff trained to recognize and respond to a fuel spill? Offer to be the site for an oil spill and containment exercise. Remember, your staff cannot do spill cleanup unless they have received a minimum level of training. The 29 CFR (Code of Federal Register) states, “First responders at the awareness level are individuals who…have been trained to initiate an emergency response sequence by notifying the proper authorities…They would take no further action beyond notifying the authorities.”

Staff participation in an oil spill and containment exercise, which you can document with training records, is a start to preparing your staff for emergency response. Take advantage of local and regional training programs that support the goals you have established for your emergency program.

Working with your emergency response providers will take some effort and time on your part, but the rewards can be outstanding. The better that you and your staff can support the emergency responders, the more productive the emergency response becomes.

Gene Spinazola specializes in marina fire and safety issues, and he welcomes calls: (207) 326-9147. He is president of Gene Spinazola P.E. & Associates Inc., in Casane, Maine. www.marinafires.com

 

Marina Dock Age, November/December 1998

Your Peers Can Help Solve Problems
by Dennis P. Kissman

I recently returned from a trip to Northern Italy and Croatia on the Adriatic Sea where the International Boating Facilities Committee of the International Council of Marine Industry Associations met and of which I am a member. The IFBC is probably best known for its organization of the International Marina Conference that is held every three years. The next conference, called IMC 99, will be held here in the United States this Feb. 15 and 16 in Fort Lauderdale.

This will be the first of these conferences to be held here in the United States and offers each of us an opportunity to meet and understand the problems and solutions our peers have encountered both in this country as well as in other parts of the world. I would like to encourage everyone to attend this conference if at all possible. From being involved in the previous conferences, I can honestly say I believe it will be very rewarding and well worth your time. If you would like more information or would like to register for the conference, please contact Ron Stone, the current chairman of our committee at (202) 721-1645.

During one of the informal gatherings at the IBFC meeting, a group of us were discussing the rising cost of electricity and how marina owners are trying to recoup their cost. I know this is a problem here in the United States where we are restricted from making a profit on reselling electricity to our customers. Interestingly enough, most other countries have the same restrictions we have in this country and are addressing the problem in the same manner we are.

There appear to be four ways that almost everyone in the business is dealing with this problem. First they incorporate it into their basic rate structure. This usually puts them at a disadvantage with their competition unless everyone in the marketplace is looking at utility charges in the same way and estimating the same usage. Second, some marinas charge a flat rate for electricity, usually based on slip size. This approach often leads to usage inequities among your customers and complaints about its not being fair. Third, some marinas have installed sub-meters at a cost to record electricity usage at each slip. Each slip holder is billed for their usage at the same rate the marina was charged plus the possibility of adding a minimal administrative charge. Lastly, there is the fourth way to address this problem: doing nothing. The marina operators who do nothing often cannot understand why their profitability is continually decreasing year after year.

A committee member from Belgium shared with us how the marina operators in his country have solved this problem. Faced with these same government restrictions they successfully argued that, not only were they reselling power, they were also distributing it by virtue of the capital investment required to provide electricity to boaters. I am sure anyone who is faced with updating a marina’s electrical distribution system is well aware of the investment required. The question is how you recoup that investment. Just passing your utility charges through to your customers or attempting to incorporate a return into your rate—the best solutions under current restrictions—will not work.

In Belgium, marina owners who sub-meter their electricity to their customers can increase their rate charged to include a return on their electrical distribution system investment. This is no different from what utility companies do to justify their rate structure. I believe these marina owners won this position by doing their homework and making a logical case for the industry. Notice that I said industry. They did not accomplish this as a single marina owner: they did it by combining their voices through their marina associations.

What we need to learn is that there is power to get things done if we work together and what better way than to become involved in your local marina industry association and the Marina Operators Association of America. One of the things I often hear from owners I suggest this to is that this or that group has its own agenda. To these marina operators, these groups do nothing for them and are a waste of their time. They are absolutely right. Unless you become involved and make your voice heard, these groups will not do anything for you. Just think what it would mean to your marina’s profit if, as a group working together through local marina industry associations and MOAA, we could accomplish what they accomplished in Belgium.

 

Marina Dock Age, September/October 1998

Maximize the Value of Your Marina on Paper
by Dennis P. Kissman

With the recent flurry of activity by Wall Street to get into the marina industry and make a quick buck on the consolidation play, there is no shortage of funds for these people to acquire marinas. They make their money on the difference in value from when they buy your marina and when they sell the group of marinas they acquired to the public through a public offering. Right now we see a lot of huffing and puffing, knocking on doors and jockeying for position but still not many deals closing. The bottom line is these groups cannot overpay for a marina and make their plans work. It all comes back to the same dilemma this industry has always faced, “What is the real value of a marina?”

What is happening today is not the same as what happened to our industry in the mid to late 1980s when there was a lot of money floating around to buy marinas and prices were paid way beyond the level the marina could support. We all know what resulted, and many of you in the business today profited by picking up foreclosed marinas at less than half their true value when lenders would take anything just to get rid of the marina. Today, lenders are much smarter and are not going to fall into the same trap. Even though consolidators today say they have the money, they still need the traditional lender to finance the deal in order to realize their expected returns. Now the question is how does today’s lender value a marina. The consolidator got your attention, but it is the lender that will make the final call on what your marina is worth.

The value of your marina is going to be based on the income it produces. Simply put, the lenders take a reportable income and apply a multiplier or cap rate to that number. Then they take into consideration costs associated with an owner/operator and deferred maintenance items, and they adjust the net operating income accordingly. Thus lenders arrive at an amount they will lend on a property. The cap rate that is floating around the industry today is 12 percent, and lenders may lend up to 80 percent of that amount. What we are saying is that if the adjusted net operating income is $300,000, the value of your marina is $2.5 million, and the lender will finance $2 million. The difference must come from the consolidator.

Here is where the difference in the value of your marina comes into play. Today, lenders are looking at marinas on a profit-center basis and applying different cap rates to the income each profit center can produce. For example, lenders typically put zero value on boat sales income, while on the traditional core profit centers of a marina, such as slip fees, the cap rate could be as low as 8 percent. If we use the same net operating income from the previous example and assume one-half of the net operating income is derived from boat sales and the other half from slip fees, the marina would be worth $1,875,000. On the other hand, if 100 percent of the marina’s income came from slip fees, the marina would be worth $3,750,000. This is a simplified explanation of how lenders look at a marina’s value. There are a number of cap rates or multipliers and other factors based on various profit centers that come into play when establishing value. I firmly believe that marina owners should have a realistic idea of what their marina is worth before someone comes knocking on the door proposing to buy the marina at a price that is “too good to be true,” and probably is.

Most marina owners I work with today do not properly allocate income. They leave this call up to a lender, which typically has the marina ending up on the short end of the deal. It is often difficult to accept a value that someone, who is not emotionally involved, places on your marina. I always encourage my clients to continually monitor the value of their marina by creating proper cost-center accounting so as to avoid surprises and improve their value on paper. Once it is set up, it is not difficult to maintain regardless of what accounting system you use.

Remember, sellers always sell on what “could be” while buyers buy on what “has been.” Regardless of what anybody thinks, the buyer will be the controlling influence in a sale. Although, we have focused on selling a marina in this article, this same theory applies to marina owners who want to refinance or borrow money from a lender to renovate or expand their property. The more knowledge you have about your business, the more profitable you will become.

 

Marina Operator International, Summer 1998

Take Over has its Special Problems
by Damian E. Buckley

“Electrical inspectors cutting off power to the whole marina, contaminated fuel, irate customers and floating docks that simply did not float were amongst the challenges we recently faced when we took on a new management contract”, says Damian Buckley.

Within days of taking over the property, somebody called the local electrical inspector. The situation went from bad to worse when he arrived and threatened to close down the marina because of the abominable condition of the electrical system. It was obvious that the previous owners had done things ‘on the cheap.’

One of the slip holders, in return for free dockage, had organized repair work at the property. There were customers who did maintenance work for a free berth and customers who pumped fuel in return for free something or other. We had an immediate management nightmare on our hands.

The electrical inspector was amazed. “Nothing here resembles anything like the guidelines in the Electrical Code—not for this county, for this country”, he stated. We had to agree—and ask him for his help. He closed down one dock that was the worst of the lot, pointing out that he was not concerned about sinking boats or the fact that we had to move boats to other slips, but about life-threatening situations.  

He gave us a couple of weeks to have emergency repairs made to other parts of the property and to carry out a thorough inspection of the remaining docks in order to bring them up to Code. So far, so good. However, delays were inevitable. Rain stopped play for a week, the electrical engineer needed non-existent plans and the customers were still complaining.

Eventually, the contractor finished the emergency work and the electrical engineer completed his plans. We sat down together, discussed the plans and forwarded them to the local electrical inspector. He took one look at our efforts and disagreed with the type of electrical cable that had been specified. Both contractor and engineer insisted that their individual choice of cabling met Code Requirements but interpretation of the code itself was evidently the major issue. Realizing that the electrical inspector had other weapons he could use against the property, we felt it would be prudent to acquiesce with his suggestions. The engineer redrew the plans to indicate the changes and the electrical contractors applied for a permit. Finally, the electrical inspector signed off the plans and issued a permit for the work.

Whilst being deeply entrenched with the electrical inspector, we were also mindful of the fact that we had but a short time to deal with the two fuel tanks on the property. They evidently needed some attention, if not replacement, although a tightness test had been performed with success the previous year. The major issue was to decide on the financial viability of continuing to offer a fuel sales service. So little fuel had been sold at the marina over the previous two year period that it seemed a waste of money to spend out on the maintenance required. Having worked out that the pay-back for new tanks would be over 15 years and that removing them would cost less than one third of the cost of bringing them up to Code, the choice was obvious. Several quotes for tank removal were sought from various companies and a contractor appointed.  

Tank removal permits were applied for and obtained and appointments made with local officials to be present when the tanks were lifted out. The day before ‘removal day’ the tanks were emptied and the concrete pads on top, broken up and set aside. A new day dawned, crowds gathered and the earth moving equipment swept into action. We soon realized it was going to be a long process but were unprepared for yet another problem. As the compacted in-fill material gave way to a different type of soil, an all-pervading smell of sulfur rose up into the air and bubbling crude appeared. It was not, alas, black gold or Texas tea—we had a leak. Something was wrong. We dug some more. The smell got worse.

As one of the tanks was exposed and pulled out of the ground with a slow slurp, the extent of the leak was evident. It was also high tide and the water level in the excavated hole created a vision of nothing but fuel oil filling the void. At this precise moment the environment inspector pulled up and promptly announced that we had contaminated soil. He then told us that we had to have the soil removed from the area within two days – that was ‘procedure’. It was Friday. The following day we had the flag raising ceremony for a local yacht club and the marina was in turmoil. Fortunately, the inspector listened to reason and allowed us to put all of the contaminated soil back into the hole once the tanks had been removed. We covered it up so that the area would not look like a war zone from the yacht club.

The flag-raising ceremony was a success and the following week the hole was re-excavated and the contaminated soil disposed of. New backfill material was ploughed into the hole and the marina is starting to look better.

There were, however, plenty of irate marina customers but anyone who takes over a new marina encounters this. In the first few weeks we find that customers, especially, are resistant to change. Instituting professional management uncovers the fact that many people have been getting away with not paying slip fees and others, although fully paid-up are simply resistant to change. Nonetheless, changes such as those mentioned in this article ultimately benefit the marina users and they soon realize that it is better to have a well cared for environment.

 

Marina Dock Age, July/August 1998

Watch Receipt and Disbursement Patterns
by Dennis P. Kissman

Does the future of your business have to be this big unknown? Most of you have heard the phrases “look into the past to predict the future” or “history always repeats itself.” Not bad phrases to remember if you are a marina owner.

Now the question is: How do you put these phrases to work for you? As a professional marina management company for absentee owners, many of whom are financial institutions with troubled properties, we have, among other things, a responsibility to make the most accurate financial projections possible. We have found that looking into past records, no matter how incomplete they may be, can tell you a lot about an operation-much more than raw numbers might suggest. As the owner or operator of a marina, you have all the knowledge you need to project into the future with a good degree of accuracy.

First of all, we need to agree that the marina industry is a cyclical business, and the primary cycle of every marina is annual. If we agree on this point, then we also need to agree that cash receipts are the basis by which we can judge the health of a marina.

I am a proponent of strong financial reporting and gathering of statistical information for comparison purposes on marinas. What I am going to suggest here is simply a technique to project how healthy your bank balance will be at the end of any given period.  

To begin the example, we need to make one other assumption. We must assume you deposited all cash received into the bank. In this example, you will be using your checkbook, but if by chance not all the cash got to the bank, you at least need to know how much was received on a daily basis and factor that amount into the example.

Using a columnar pad or a computer spreadsheet program, list your daily cash receipts. Total each month and the year. Next divide the monthly total into each day of the month to come up with the percentage of cash received on a daily basis for the month. Then do the same with the monthly totals to the yearly total to determine the percentage of cash received on a monthly basis. What you will see develop is a pattern of when cash is received. This information tells you a number of things. First, it identifies the terms by which you operate. Next, it reveals the payment patterns of your customers. And finally, it tells you the seasonality of the operation. I am sure every marina operator has a feel for this information, but until you commit it to paper, it is difficult to put it into perspective or really use the information.

Some patterns I’ve observed are: at a high-volume transient marina, the day most transient boats leave the marina is Thursday, making Thursday a good cash receipts day. At still another marina, the winter storage fee is due to be paid by November 1, but the majority of customer payment is received between November 16 and November 20. At this same marina, we noted that 22 percent of the total year’s cash receipts was collected in November. At a different marina, where the primary boating season is December through April, 58 percent of the total year’s cash receipts was received between January and April. Having tracked this information over several years at these same marinas, the percentages do not vary by more than 1 percent in either direction. What you need to keep in mind here is that the dollar amount is not always the same, but the percentage is, and that is the key to predicting the future.

Expanding on what we just said, assume the marina that did 58 percent of its business between January and April last year did $3 million annually. That would mean it would deposit $1.74 million during this four-month period. This year, the marina deposited $2 million for the same period. That $2 million would still represent 58 percent of the total year’s receipts, and we can, with some degree of accuracy, project this year’s total receipts to be $3.448 million-a 14.9-percent increase over last year.  

This has proven to be a very accurate barometer for projecting future cash receipts. When tracking marinas using this methodology in a changing economy, the relationships of the numbers remain the same.

Independent of the cash receipts, you can follow the same methodology to develop your cash disbursement schedules. Even though you have more latitude on when you spend your money, there is still a pattern. For example, if you are faced with annual maintenance dredging at your marina, it will normally occur at the same time each year. Your utility cost will fluctuate with the seasons as well as your trash removal. The bottom line is, over time, both your cash receipts and cash disbursements will develop a pattern.

Taking this information to the final step, the difference between the cash receipts and cash disbursements will give you a fairly good indication of your cash position into the future. The more knowledgeable you are about your business, the more profitable you will become.

 

Marina Dock Age, May/June 1998

Rental Boats: Predict the Pitfalls
by Dennis P. Kissman

Today’s marina owner must often look to sources of revenue beyond slip and storage fees to make a marina profitable. There are a number of ways to increase revenues that should be considered before making the final decision about which to pursue. The question then becomes: Which one should you choose and why?

There are a few rules of thumb that I recommend to our clients. First, is there a market for this service? Second, is it compatible with your existing revenue streams? Third, can you use existing assets to generate the additional revenue without requiring a large capital outlay? This may include staff, equipment and facilities. If the answer to these questions is yes, the change may improve your bottom line.

One of the sources of revenue that I am often asked about is the rental of boats or personal watercraft. This can be a very good source of additional revenue, but when it comes to profits, it may be a different story.

There are several factors that can make boat and personal watercraft rentals either a success story or failure. Rentals, by their very nature, are high maintenance. Unless you already have a service department that is qualified and ready to continually service your rental pool, the chances of being profitable are rather slim. When the equipment is down for servicing, it can’t be rented, so not only do you have an outlay of expenses, but also a revenue stream to cover the cost.

If the craft you intend to put into your rental fleet is not designed to meet the rigors of a rental operation, down time will probably exceed rental time. This is particularly true when your rental fleet begins to age. Marinas that have a boat dealership connected with their operation want to put their outdated inventory or trade-ins into the rental fleet. I strongly recommend against this practice. If you can’t sell the boat in your market, why would somebody rent it? I’m not implying that it’s not a good boat; it’s just not a good boat for your market.

Secondly, trade-ins often have problems to begin with, and if you rent these boats, those problems will surface almost immediately and get worse as time passes. Renters never take care of boats like owners. Also, you want your fleet to be similar so that parts are interchangeable and weak points are known, keeping repair time to a minimum. Usually your outdated inventory is a mix of models and manufacturers, and trade-ins are one-of-a-kind. For a successful rental fleet, I recommend a mix of the most rugged models in the fleet.

The next issue to consider when exploring the rental business is the size of your fleet. Experience has shown that a fleet fewer than five boats or personal watercraft is marginally profitable, assuming there is no excessive down time and the fleet is rented more than 50 percent of the time. This seems to hold true whether we are talking about personal watercraft rented by the hour or houseboats rented by the week. The numbers change with both of these scenarios, but profitability is minimal.

A rental operation not only taxes your service department but is also administratively intensive. If employees who monitor the rental operation are not trained properly, they can cost you in repairs. One of the best tools to help them do their job is a good rental agreement and sufficient deposit. We found that a boat will be returned with some form of damage or lost equipment approximately 12 percent of the time. By having a rental agreement and properly instructing the renter about the operation of the equipment beforehand, we were able to collect on most damage. We also conducted an inspection of the craft with the renter to determine the condition of the equipment. This gave the renter a chance to note any visible problems.  

Not only were we able to recover the cost of our equipment losses, but we also made a profit, thanks to good documentation that was properly administered by our employees. We used a simple checklist of all the equipment on board, indicating replacement costs should anything be lost or damaged. Our employee would go over the equipment checklist with the renter and have him sign to acknowledge receipt of the equipment. The form clearly stated that the renter was responsible for the cost of replacement, which is one way to make extra profit from your rental operation on top of the rental fee.

A boat rental operation can be a good addition to your operation for several reasons, mainly because it can increase business in other areas such as fuel sales, ships store and food service. Just keep the pitfalls in mind and plan the operation on paper first. It is less costly to find out what to expect before you start writing checks.

 

Marina Dock Age, March/April 1998

Is Your Marina Running You?
by Dennis P. Kissman

With all the technology available to us through the use of computers and the variety of software packages out there to make life easier, we need to step back and ask ourselves a basic question. Do you know more about your business today than you did five years ago?  

Chances are the answer is no. Many times we become caught up in the hype of new computer software that promises to solve all our problems. Yes, you may get pretty pictures, a little music now and then, or funny characters dancing across your monitor, but do you know how productive your mechanics are, or the average amount of money your customers spend per month at the marina beyond their slip or storage fees? Do you know what times during the day the marina is the busiest, and whether there is enough staff on hand to meet the customers’ needs? These are just a few of the many things you should know if you are managing your marina effectively, but most often the answer to these types of questions is no.  

Don’t get me wrong—I’m not against computers, I’m against how people are using them. I would be very interested in knowing how many readers who rely on some computer software package to help them manage their marinas know for a fact that the time and money invested in a computer system has improved the marina’s profitability from what it was before. Many of the marina operators I come in contact with cannot even answer that question because they do not have a clue about how much their computer system is even costing them.  

If you are going to successfully use the information that is available to you, you should understand what it is telling you. It is impossible to understand what the information is telling you if you do not have an objective or purpose in mind. I think it is safe to say that receiving information without an objective or purpose in mind is meaningless.

For example, your system tells you that your gasoline sales are showing a 26 percent margin. At first glance, you may say that seems reasonable. On the other hand, if your objective was to achieve a 30 percent margin, you would know that you have to make some changes. Because you had an objective and you know the facts, you are in a position to make an intelligent business decision to help you achieve your 30 percent desired margin.

I have often sat down with marina managers to review an income statement for their marina, only to realize that instead of looking at the entire statement and the relationship the numbers have to one another, they have focused in on a single number.

Let’s use the expense you have recorded for credit card discounts as an illustration. You estimate that credit card discounts should cost about $1,200 per month. This month the cost is $2,000. Do you have a problem here? And, if so, how do you begin to research what it is?

The first thing to recognize is that your sales volume could impact your fees. If the same percentage of customers pay by credit card, and sales volume increases, the logical answer is that the credit card fees will increase by the same ratio. Armed with this understanding, you look at your sales for the month to see if they increased from the prior month, only to discover that rather than increasing they have decreased. At this point, you may not realize that most often credit card discounts will be recognized the month after the transaction took place. With this information, you can look at last month’s sales and see if the same relationship to sales and credit card discounts apply.

Most likely, this will answer your concerns, but if it does not, you have used information from your system to zero in on a problem and take your research to the next level, which will review the entries that make up the reported balance. Now you have used data to help manage your business.

I firmly believe that you must first understand how data comes together to allow you to analyze a certain situation—and have a grasp on what the answer should be—before you can expect any meaningful results from a computer system. A computer is not smart; you are. A computer will only do two things for you: It will consistently feedback the data, right or wrong, that you put into the system; and it will give the data back to you much faster than if you kept it by hand.

Beyond speed and consistency, a computer system will not benefit you. I have seen too many marina operators under the false impression that since the information is in the computer and can be spit out in a report, it must be right. Don’t be lulled into a false sense of security by thinking that your computer system is keeping your business on the right road. You just may find a dead end sign at the end of the road, and you may have gone too far to backtrack.

 

Marina Operator International, Autumn 1998

Symbiosis and Marinas
by Damian E. Buckley

I had the opportunity to take my cousin with me on a recent trip to a marina. We had just taken over the management of the property and it was not visually attractive. It was messy, it was dirty, and some of the boats were of poor quality. My cousin Bill is a pre-eminent architect in Austin, TX and I was really relishing the visit because I thought that he would be able to give me some great architectural advice.

I was hoping for ideas on how to make the dry rack storage. I got what I was hoping for but what I also got was a comment that I will never forget.

Bill asked several questions about the work that was being performed in the yard. His questions ranged from bottom painting and hull repair to mechanical work in water and in the shop. “It would seem,” he said, “that you have a symbiotic relationship with nature.” I know about symbiosis, but was unsure as to where he was heading and asked him for some clarification. He went on to explain that industry is so technologically advanced that it should be able to come up with materials that can withstand the ravages of nature. Hence the symbiotic relationship that the marina industry has. Nature continues to destroy and the marina industry continues to have to repair and replace. With these deep thoughts in mind since his visit I had another look at the marina that we had visited. The ravages of time were quite evident, but could that be construed as that weathered, or even distressed look?

It is very important to keep any marina clean and tidy. Many marinas that are run down may be in financial distress, but there is no need for a marina to look disheveled and neglected. Sometimes employees lose the will to do anything at the property but sometimes they just lack direction. Lack of praise for jobs well done and lack of any recognition whatsoever has been compounded and the property as a result becomes neglected.

“What are we going to do with the marina?” is a question that I hear from employees when we take over a run-down property. I believe that employee recognition at this crucial juncture is very important. Listen to your employees. They may tell you things about the marina that you may not think of yourself. The opposite can also be true, where employees are so entrenched in their ways; they may not see the bigger picture. No matter which route you decide to take ‘employee cohesion’ is fundamental to the operation of your marina.

There may be initial employee changes in the marina staffing. However, as a result of the changes the remaining, and new employees, will start to see everything in a different light. It will not be easy, but eventually one little spark of interest from one of your employees should be kindled and encouraged to burn fiercely. That spark of enthusiasm should then transfer to other employees. Without the spark you will find that a neglected property has but a faint pulse. The answer to the ‘what are we going to do with the marina’ question lies with you, the marina operator or owner, but also to a very large extent with the employees. For example, the property might have had little success in the past with boat sales and little success with maintenance work. The existing employees might view the problem as scattering the resources rather than concentrating them in one area. They might want to get rid of boat sales and concentrate on the mechanical aspect of the property. Listen to their points of view and act accordingly.

Pride of ownership will soon set in with your employees. In the properties we manage we ask the employees to compare “their” property physically with the competition. The result often helps rekindle that spark. The marina will become clean and tidy through the desire of the employees to make "their" marina a better place to work in. If the marina contains a yard they will clean up the yard, paint and clean jack stands and cradles. One of the properties that we manage has had flea markets, or yard sales, in order to get rid of its excess or unwanted inventory. The flea market idea also gives boaters and opportunity to join in and exchange their ‘treasures.’

Sooner or later your customers will see the change and will visit the marina, and their boat, more often. They will tell their friends and profits will go up without increasing rates.

Not only does the marina then enjoy the symbiotic relationship with nature, but so do your customers.

 

Marina Operator International, Spring 1998

Winter Work
by Damian E. Buckley

On the face of it, managing a marina can be a lot of fun. For a few months during the busy season, all the work, or lack of, that you have put into effect during the " off season" winter months will show. The non-cognoscenti often ask me what do you do during the "off season." When I pick myself up off the floor I calmly answer a question with a question—what does a farmer do during the "off season"? Most people seem to relate to farmers and the life that they have. They understand that fields must be cared for in order that crops might grow. They understand that cows still need to be milked during the "off season." They understand that buildings must be painted and maintained. They also understand that chickens lay eggs in the "off season." The assumption that we all have an easy life in the "off season" is only slightly bewildering. What do we do during the "off season"?

There is necessarily a challenge for marina operators because maintenance is the cornerstone of marina safety and long term survival. Maintenance items should be monitored on a daily basis in any case. The marina manager may not be familiar with daily conditions of the facility, nor should he be. However, one should determine the size of the maintenance department in a marina by the size of the facility. In a small marina, the owner/operator/marina manager may even do the maintenance. In a large marina facility, several maintenance personnel will report to a department head. He will report to the marina manager accordingly. A maintenance plan is the basis for all repair work in a marina. If one exists already fine, if not prepare one immediately. Draft a maintenance plan, taking into account that all items regarding maintenance are included in the plan. This should include regular underwater inspections of the docks, pilings, and permanent anchor systems. Although a licensed diver can carry out simple repair work, use a marine diver, accustomed to marina construction. The experienced marine diver will be able to determine if problems exist and will be able to repair them quickly and effectively, preventing possible failure and additional expense. The use of a professional marine diver his will also minimise risk and may decrease insurance rates accordingly.

How do you develop a maintenance plan? Marina Management Services, Inc. has taken over several properties that have suffered from years of deferred maintenance. Demoralised staff and missing documents and procedures long gone have been the norm. Activity in the maintenance department has created a flurry of activity throughout the marina, and spirits soon perk up. In one marina that we manage, we contracted with the dock manufacturer to provide a complete inspection of the marina to determine the state of the docks and their recommendations to fix them. We also obtained up to date dock drawings from them, and a suggested maintenance plan for them. They provided detailed drawings of major components of the dock system such as pilings connections and float construction. With all of this information to hand, we were able to prepare a maintenance plan for the largest portion of the marina property. We also had a magnificent stroke of luck. Weather conditions were such that the water level in the river reached an all time low. With a low tide and high winds, we had the opportunity to see, photograph and video many areas that are covered by water. Those pieces of information have been safely stored for further use.

Prepare a checklist for maintenance inspections. The checklist can be as detailed as possible and can be used in conjunction with the daily dock checklist. Note repair items revealed in the daily dock walks and inform the maintenance staff on a daily basis of items uncovered. We have found that zoning the marina into easily definable areas works best. The two main zones would naturally be land facilities and water facilities. The land based facilities would include any upland structures such as fueling facilities, haul out facilities, parking areas, embankments or bulkheads, laundry facilities, general housekeeping areas, painting, toilet and bathroom facilities and fire fighting equipment. The water facilities would include fixed or floating piers or docks, access ramps, pilings, docks including electric receptacles and water connections, any floating fuel facility, fire fighting equipment, wave attenuators and their connections, de icing systems and bulkheads. This is by no means an exhaustive list, but will give the marina operator the basis for practical implementation of the ideas and concepts. The best time to make a list of all maintenance items to be accomplished id during the height of the "ON season." During that time of year, the marina is usually fully staffed. There are always certain periods during the day when boaters are out of the property (although sometimes it does not seem like that). This gives the marina operator the staff and the time to create a list of repairs needed.  

Some marinas have such bad maintenance plans that no maintenance is done at all. This generally happens in a cash poor situation, or a bankruptcy situation. We have started to manage a property that is a challenge. The accomplishment of a large amount of deferred maintenance over several years occurs at a particular marina. Marina Management Services, Inc. was recently contracted to manage that marina. Our first task was to call in an electrical contractor and engineer to assess the danger to the situation. Picture 1 shows a very dangerous situation where the placement of plywood boards placed on top of rotting wooden docks created an additional hazard. Picture 2 shows the main feeder exposed on the dock and an electricity pedestal attached to rotten supports. What a way to start a management contract. It can only get better.

This article has been a very small section of a much larger issue in marina maintenance. The challenge is to follow up and prepare your maintenance plan according to your property. It is relatively simple, and then you will be able to tell the non-cognoscenti what marina operators and farmers do in the "off season."

 

Marina Dock Age, January/February 1998

Don’t let Profit Margins Slip
by Dennis P. Kissman

Do you ever get the feeling that your ships store, fuel dock and parts department are not contributing to your profitability as they did a few years ago? Just passing along the cost increase to the consumer is not enough. I have seen many marina operators look at the raw numbers without ever looking at the percentages between sales and cost.  

I have heard talk about how profit margins are shrinking when, in fact, it is the cost of sales percentage to sales. For example, look at how terms are used. An item in the ships store costs $74, and it sells for $135. The difference is $61. That is the amount used to cover overhead and operating costs. What is left is profit.

If you are going to remain profitable, the number you want to focus on is the profit margin. By maintaining an acceptable profit margin as your business grows, your profits will also grow. Too often, it seems that there is a real profit, while in reality, the margin is continually shrinking.

One of the easiest areas for this to occur is at the fuel dock, where costs often fluctuate from delivery to delivery. For consistency, consider the above example and assume the cost of the item increases by 3 percent. That means you have now paid $76.22 for the same item. If you follow the policy of passing costs along to the customer, your new sales price becomes $137.22. Under this scenario, you still have $61 to cover costs and make a profit. Not really better off, are you?

Now look at how the percentages changed. The cost of sales as a percentage of sales is $55.5 percent, the markup is 80 percent, and the margin is down to 44.5 percent. Your profitability on sales has decreased by 0.7 of 1 percent. This may not sound like much, but if this happens throughout your organization, you have a real problem. These pennies soon add up to dollars.

Remember, you want to keep a consistent profit margin if you intend to grow the business. First, review how to compute profit margins. To calculate profit margin, take the difference between the sales price and the cost and divide by the sales price: ($135 - $74)/$135 = 45.2 percent. Now look at what the sales price should be if the cost went up the 3 percent, as in the example. Use the same formula to calculate sales price when both the cost and profit margins are known. But unless you like playing with algebra, it can get a little tricky: $74/(1 - 45.2 percent) = $135.

There is a simple solution using percentages. If you know what percentage your cost went up, simply multiply your old sales price by 100 percent plus the percentage increase (3 percent per the example) to arrive at the new selling price with your desired profit margin. For example, the new cost is $76.22, an increase of 3 percent. The old selling price was $135. If you multiply the old selling price by 103 percent, you get the new selling price of $139.05 at a 45.2 percent profit margin. This now means you have $62.83 to cover your costs and realize a profit.

Most of us believe we are too busy to involve ourselves in this level of detail, but it will make the difference in the end. The big problems would not occur in the first place. 

 

Marina Operator International, Winter 1998

Photographic Evidence
by Damian E. Buckley

Did you photograph your marina today? No—nor did I. The weather wasn’t very good, it was a little overcast, the flowers weren’t out and the boats I wanted to include in my shot were not just so. I am sure that you have had days like that. I am not a photographer. However, what I do is take some sort of photograph, wither digital or regular, of most things in a marina when we are asked to evaluate a new property or take over an existing property. I take general shots, mostly of untidy areas, potential environmental problems, mudslides and sunken boats.  

I went to a conference recently and saw a slide show. It was captioned along the lines of “your marina.” The photographer decided that there were only so many pretty pictures of boats with bougainvillea waving quietly in the warm breeze that could be taken for such a presentation. He did not take any. What we saw was a half-hour presentation of the worst set of slides of marinas that I have ever seen. It was presented in such a way that it was humorous to the extreme. We saw decks that were so rotten that the cleats were being pulled out by the few boats that were still attached to them. We saw a marina where the only toilets were construction-type portables. We saw rust eaten junction boxes that were lying open to the elements (and any unsuspecting passer-by). The pitted electrical feed that supplied power to the pedestals was sitting atop the deck, running side by side with the water lines that were leaking badly. There were shots of wooden pilings that had disintegrated so badly that passing wildfowl used them as a perch. Boats were on the bottom. Old barrels were lying around. Thankfully, the photographs were not all taken at the same marina!  

Most marina operators know that they must maintain their property. The above examples come from marinas that are either being driven out of existence by disgruntled employees, or those whose owners are purposefully deferring maintenance.  

One effect that the presentation had for me, apart from comic relief, was to remind me of the importance of photographs as a memory jogger. My suggestion is to take a photograph of the areas of your marina that need attention and place them on a message board. The constant visual reminder will help get that repair work done as soon as possible.

The other effect that the presentation had on me was to make me realize that photographs are a useful tool for potential marina investors. Can you imagine showing them a slide show of some of the worst nightmares in marina history? How about showing them the slide of the disintegrated wooden pilings, with bird perch, to remind them what can happen if piling caps are not used. Electricity usually gets most marina operators fixing things quickly, but including a slide show of rust eaten junction boxes, corroded terminals and water and electricity mixed conduits gets the point across rather quickly. Show your contacts slides of construction type toilets that could be used instead of building the correct facilities. It will save money! The electrical installation can also be a money saver. Surely, the rust eaten junction boxes are something your boating public will not mind? Why bother placing your electricity underground or under the decking of floating docks? Need a new seawall? Why not just go with what you have always been like that. New restaurant or snack bar? What is wrong with “Charlies’ Oar-ouse?”

One of my colleagues brought a cleat into my office to be used as a paperweight. It still has the wood attached where it was pulled from the deck surface. It is no good as a paperweight, but makes a fabulous doorstop.

The above illustration shows how important photographs are for a variety of uses. Let us not forget that the value of a marina is reduced f for f, y for y, or $ for $ by the amount of maintenance that has been deferred. Taking photographs as often as possible will help you in any lawsuit. It may also provide evidence to an enforcement department before they close your business.

I manage marinas for third party investors. Photographs are necessary so that funding can be put in place to make those all-important improvements. Photographs also set the base line for facility improvement and give your employees something to look at—even if only to say ‘remember when?’ A picture is worth a thousand words.