Industry Articles - 2005
Boat & Motor Dealer / Marina Dock Age, December 2005
The Challenges of Hiring the Right Person
by Dennis P. Kissman
Marina owners and managers often express frustration at not being able to hire quality people. The reason for their frustration is almost always that there’s “nobody out there to hire.” That’s a cop-out! The real reason is that marinas have not approached their search in the right way or, most likely, have not made the job as appealing as it needs to be to attract the type of person the marina is looking for.
Most positions offered by marina owners do not warrant relocation by the potential employee. This will dictate where and how you need to conduct your search. To complicate the process, you may be the only marina in the area, which limits your ability to attract someone with marina experience.
Another important factor that must be taken into account is the seasonality of the industry. Although seasonality is much more dramatic in the northern parts of the country where there is a definitive boating season, it also occurs in the south (to a lesser degree. but it is still a factor you need to consider).
Regardless of where your marina is located, you’re going to find that a lack of any clear career path is one of the biggest deterrents for ambitious young people considering employment in the marina industry. The ability for someone to advance within an organization is a big factor when considering a job. When employees must change employers to advance their career paths, it often looks like the teeth on a saw — three steps up and forward and two steps down and backward.
Overcoming the challenges
Having identified some of the obstacles marinas face in hiring employees, how are the marinas going to overcome them?
First of all, marinas cannot deal with each of the challenges individually; they all interact to one degree or another. Also, keep in mind that there is no magical way to overcome a hiring challenge. Each situation will present its own difficulties, and the solution one marina comes up with may not work for the next marina, or even the next time the marina needs to hire someone.
I’d like to talk about some of the challenges we just mentioned, and offer my answers on ways that worked for me.
Getting the word out — One of the best ways to attract job applicants is through your current employees. First of all, good employees are not going to recommend someone that would reflect badly on them. Second, if your employees like their work environment, there is a natural tendency to promote the marina as a good place to work. In essence, this frees you up to focus on the applicant’s qualifications without having to sell them on the job or the marina.
Deciding the importance of experience — My attitude towards experience is that it is nice to have, but it is not necessarily the deciding factor on whether or not to hire someone. For example, if a person has a mechanical aptitude, he/she can be taught to repair outboard engines or dock pedestals. Likewise if a person has an aptitude for managerial skills, that individual can learn to manage any number of processes. Basically, I look for a person who has the aptitude for the position I want to fill, then I train them to fit that particular situation. With a few variations, any position in a marina can be found in other industries. That’s why aptitude is more important than specific experience.
Competition in the job market — One of the biggest problems this industry faces is not paying comparable wages or benefits as for similar positions in other industries. For example, you need a maintenance person and are willing to pay $12 per hour with minimal employee benefits. The local shopping mall also has a position open for a maintenance person, but is offering $19 an hour with full employee benefits. Where do you think that person will apply? Before you start your search, find out what similar positions are available in the job market. This is a good idea even if you are not actively looking to hire. It is best to know that your wage structure is competitive in the marketplace, otherwise, you may be faced with replacing some of your good employees when they realize what they could be making somewhere else. Do not overestimate the loyalty of any employee beyond the paycheck.
Making seasonality work for you — If you are in an area where seasons represent dramatic changes in your business model — like possibly closing down in the winter — your challenge is to retain good employees year after year. This is not a difficult task when given a little planning. The biggest problem comes with what I call the shoulder seasons, that is, spring and fall. People working in seasonal businesses usually are accustomed to holding two jobs; let’s say they will work at your marina in the summer and at a local ski resort in the winter. Businesses with the opposite season as yours face the same challenge, except that they are shutting down when you are opening. A little effort on the part of you and those other business owners can usually solve the problem and maintain a happy employee for both businesses. A lot of marinas also employ college or high school students who are not available at the critical time when you're getting the marina ready in the spring or shutting it down in the fall. When planning your staffing requirements, it is best not to schedule these students. It will save you and them a lot of frustration in the end.
Creating a career path — From the viewpoint of a single stand-alone marina, probably the most difficult challenge is encouraging a forward-thinking young person to take up a career in the marina industry. If you are lucky enough to find such a person, your efforts will be richly rewarded. Someone like this is not just looking for a job, but rather is searching for a mentor. If you or another person in your organization has the skills this person is seeking and are prepared to take the time to work with this person and pass along your knowledge of the industry, I can tell you from personal experience that such an employee can make a very positive impact on your marina operation.
The next step
Now let’s say you have found that perfect person for the job. How are you going to verify this person’s credentials?
Check their references. This sounds logical, but have you ever called a reference that was bad? If the person is dumb enough to put down a bad reference on a resume, then you obviously do not want to hire him or her.
Check their last place of employment. Call the person’s last employer, and be prepared for generic responses that offer little information. Now if I had to let someone go, and they were collecting unemployment compensation on my account, do you think I would tell you not to hire that person? No way! I want them off the unemployment rolls to keep my experience factor down. The bottom line is that there are no guarantees that the person you are hiring is the right one for the job.
In our company, we have a very extensive employment application that everyone must fill out even though they have a résumé. This does several things. First, it asks specific questions that are always phrased the same way and have been carefully worded to obtain the information we need to make a sound decision on hiring, regardless of the position to be filled. It also gives us permission to do background checks and verify a number of items that could impact the applicant’s ability to do the job. In today’s litigious society, you cannot be too careful about what you’re asking a job applicant, and the employment application helps to ensure that no mistakes are made in that regard.
One last thing: it has been my experience that good boating customers usually do not make good employees. If you find yourself in this situation, and it does not work out the way it should, you most likely will lose a customer as well as an employee. The reason this usually does not work has nothing to do with the person’s ability to do the job, but rather with the relationship the customer has had with other customers.
Over the years, I have met more qualified than nonqualified people working in this industry, so I guess it is reasonable to say that the right people are out there for any jobs you need to fill — if you take the time to seek them out. Never forget that the success of your marina is highly dependent on the quality of your staff and how they treat customers.
Marina Dock Age, November 2005
A Close Look at Bartering as a Viable Way to Pay for Services Received
by Dennis P. Kissman
One of the consultancy services offered to marinas is something called an “Opinion of Value” of the marina. Unlike a real estate appraisal, where specific guidelines are used to determine value, the “Opinion of Value” looks closely at how the business is being operated and makes a determination of optimum profitability for the existing facility and infrastructure. An “Opinion of Value” will not help in obtaining financing for a marina, but it does provide information to the owner, (or potential owner), of a marina as to what kind of cash flow should be expected from all the profit centers in the marina.
A marina will often want to know the difference between the value placed on a property by a real estate appraiser’s income approach and that of the “Opinion of Value.” The biggest discrepancy in value comes into play when either one of two conditions exist: a) there are nonrecorded cash transactions or b) a number of services are bartered with customers.
It is easy to understand the differences between the first condition and the “Opinion of Value.” The real estate appraiser must rely on recorded financial information to be the basis for his value. What typically happens in this situation is that the cash received never gets recorded, but any expenses associated with the income get recorded. The result is a lower reported income. Even though this is only one of the three methods a real estate appraiser uses to determine the final value of the property, it is often the one on which most of the emphasis is placed. The result is usually a lower value placed on the property by the real estate appraiser’s income approach than by the “Opinion of Value.”
Bartering
It is harder to explain the differences between the “Opinion of Value” and the second condition, in which bartered services are involved. The reason for this is that the value of goods and services offered or received are often subjective. The perceived value attached to what is being bartered has a tendency to vary as time goes on and circumstances change.
Let’s take, for example, the case of nonrecorded cash transactions: a dockage customer pays the going rate for dockage, but the money is diverted and not run through the business. The decision whether or not to record the transaction is the marina owner’s alone. However, in the case of a bartered transaction where no money is exchanged, the value of the services provided to the marina by the dockage customer has to equal that of his dockage. Rarely, if ever, will it come out monetarily the same. What usually happens in a barter transaction is that it starts out with an equally perceived value, but ends up as an imbalance due to time and changes in the scope of the transaction.
Barter transactions often take on a life of their own and are hard to terminate. When no money is exchanged, it becomes very easy for one side or the other to request more without applying a monetary value to what they are requesting.
Perception
Another factor that enters into a barter transaction is the perceived self worth of the individuals involved. Most people seem to have a short memory as to what they specifically agreed to; after a while, the value of their service becomes greater in their own eyes. The marina usually ends up on the losing end. The reason for this is that you, as a marina owner, are requesting a service. What is typically offered in return is some form of boat storage. The ration-ale is that this is a way to fill empty slips or racks and get value in return, what I call a passive form of bartering. In this situation, because the marina owner is not personally providing the bartered service, the value of the agreement becomes greater to the person actually doing the work than it is to the marina. These relationships are often hard to break because a bond has built up between the two parties that is more than a vendor/customer relationship.
Another popular form of barter is trading services for merchandise sold in the marina’s store. I do not see any advantage to this, as the marina must pay for the merchandise anyway. This most often occurs when the services being provided are for the marina owner personally and not for the business.
The bottom line is that any form of bartering for services does not improve the profitability of the marina and in most cases negatively impacts its value.
And I have not even mentioned the IRS reporting requirements on bartered goods or services. You can read about them on the Internet at www.irs.gov/taxtopics/tc420.html.
Based purely on anecdotal evidence, bartering is quite prevalent in this industry and popular with owner/operators. With few exceptions, however, the marina always ends up being the financial loser.
Marina Dock Age, November 2005
Settling Insurance Claims After a Disaster
by Mark Yearn
At no time in recent history has one hurricane, let alone back-to-back hurricanes, done so much damage across such a widespread area. With a hurricane, one can expect heavy damage along the coastal communities, but with Katrina, the damages were far greater than anyone anticipated. No one expects town after town to be destroyed, especially inland away from the Gulf coast. Hurricanes Katrina and Rita destroyed towns, businesses, and lives and the effects from these storms will be felt for years to come.
Whether from a hurricane or a fire, marina owners across the country are experiencing damage to their businesses this year at a higher rate than in years past. The severity of the damage is greater, due to the large number of facilities damaged by hurricanes, but in all cases, the steps for filing an insurance claim are similar.
STEP ONE:
Contact insurance broker or insurance company
As soon as possible, marina owners and operators should get in touch with the appropriate insurance broker to let them know about filing a claim. The quicker this is done, the more likely it will be the marina is first in line to begin the adjustment process. Be prepared to wait a bit though. The unique nature of the marine business can cause a delay in the whole process while waiting for the right adjuster to arrive.
Most insurance companies will send in a disaster recovery team that will be trained to handle the claims of the majority first, and more than likely, these will be homeowners or small business owners. Marinas require a specialty adjuster, and there are not a large number of qualified individuals in the country to handle these types of claims. Therefore, many marina operators have to show a certain amount of patience in getting their claims adjusted and settled. Patience can be a virtue though, as getting the right adjuster who understands the business and how to rebuild it will be beneficial in the long run to the marina.
As soon as possible, marinas should get instructions — hopefully in writing — from their brokers or insurance companies on how to proceed immediately, and what steps the marinas should take in the short-term and long-term while waiting for the adjuster.
STEP TWO:
Protect the marina from further damage
This requirement exists in all insurance contracts, and failure to properly protect one’s commercial property from further damage could create problems in the claims settlement and adjustment process. The common sense rule applies here: if the marina believes it should be done, it probably should be done.
It may be difficult to obtain the proper services to assist in protecting property immediately following a loss or a hurricane, so document all efforts and do the best with what is available. Obviously, in many instances after Katrina, nothing was available to cover or further protect the damaged properties in the area. Don’t be afraid to be creative however. Sails, canvas, boat tops, etc. may be randomly available and marinas can use them to shore up windows, roofs, holes in walls, etc.
STEP THREE:
Assess the damage
As soon as possible, owners, operators, and managers should begin to assess the damage, making lists of all the items that were damaged or destroyed. This will be a trying time for the marina owners and operators to walk around their marinas, view the property damage and devastation, and make a list of everything that was destroyed. However, the best time to do this is immediately after the storm. Marina owners will remember what is different from before the storm, what was damaged, and what is missing?
With this damage assessment list, the marina can also begin to put a dollar value on each item, including repair and replacement costs. Consider this “inventory of damage” to not only substantiate one’s loss, but also to make sure nothing is missed when the debris removal process has been completed.
As part of this inventory process, it’s important to catalog all the damage with pictures, digital stills, and videos — get as much documentation as possible. The more information that can be included in the inventory catalog, the better off the marina will be. If at all possible, the owner/operator should write a detailed description of damages on each picture, along with other notes, and if available, before and after photos. It cannot be overstated: the more documentation the marina can present to the insurer, the better.
STEP FOUR:
Permits and contractors
At this point, marinas can now begin the process of repairing and replacing the damage done to the marina property. Begin the permit process as soon as possible, because it may prove to be the most difficult part of the marina reconstruction.
If need be, marinas should be prepared to contact their state or federal government representatives for assistance. I have heard that there are marinas in Florida that still do not have the required permits to rebuild their marinas from the hurricanes that hit the state in 2004.
Marinas should begin looking for contractors as soon as possible. If the marina needs to rebuild its docks, it should seek out the experts, that is, companies that have been in the business and have a good reputation. By doing so, marinas should be able to get a quality operator with a good reputation that will be willing to work at “normal” pricing. Marinas should get bids on everything, and should make the contractor describe in detail the entire process, including a timeline to completion.
And don’t be afraid to look out of state. I have a friend whose home in Vero Beach, Fla. was destroyed by one of the many hurricanes to hit Florida in 2004. He was able to get his home repaired, and the claim settled long before many of his neighbors, because he brought in a contractor from out of state. Be creative in looking for a contractor. Companies far from the hurricane areas, like those in Wisconsin, Michigan, or other states, will more than likely be available and ready to come assist those businesses in the hurricane-hit area.
N.B: If the marina is on the navigable waters of the United States, it must be sure that all hired companies, subcontractors, and independent contractors maintain Worker’s Compensation Insurance Coverage, including coverage under the United States Longshore and Harbor Workers Act. As an insurance agent, I cannot recommend that marinas employ anyone who does not have evidence of worker’s compensation insurance, especially, Longshore Protection. If the marina does not obtain evidence of this coverage, including the Longshore Protection, it may end up paying more from uncovered work comp claims than the entire amount of damage the hurricane may have caused.
STEP FIVE:
The adjuster visit
Don’t fret the adjuster’s visit! The adjuster is there to make sure that marina is put back into the same position as before the loss and to make sure that the insurance company does not pay more than it should. Most marine adjusters are very fair and reputable people. After all, most of them are boaters, and boaters are happy people.
The key to any loss adjustment is to put the marina back into the same position as before the loss… not better, not worse. Some policies, by their nature, will put the marina back in a better position, no matter what. If a marina insured its docks for replacement costs, for example, the marina will get “new for old” dock replacement, either on a partial or total loss basis.
Some insurance policies call for the payment of the actual cash value of property. Under this type of policy, just because a dock is insured for $100,000 doesn’t mean that the marina will receive $100,000 if a loss occurs. Think of actual cash value much like depreciated value on a balance sheet or tax statement. With actual cash value, marinas may not receive enough insurance proceeds to rebuild exactly to the condition prior to the loss.
The adjusters are experts. They know the market, pricing, and have been trained to determine the truth. Adjusters who feel that a claimant is trumping up damages or amounts of damage, are more than likely to be aggressive in reducing the actual claim payment than adjusters who feel they are obtaining accurate information from the start.
If marinas work with insurance adjusters, they will be great assets. Moreover, marinas can always engage the services of an insurance consultant to assist in the claims process. These individuals will thoroughly understand the policy language and will be able to protect marinas in making sure they obtain all limits and coverage available under the policy. It is not often necessary to employ these services, but each situation is different.
If marinas believe the insurance company adjusters are taken advantage of them, and they do not hire the services of a professional, they still have available options. They should contact the insurance agent, the insurance company, the State Insurance Commissioner Office, and/or the State Attorney General’s Office. There are more laws protecting the consumer than there are protecting the insurance company.
Finally
After a loss is not the time to begin reviewing existing insurance policies and programs. Marinas should make time to visit their brokers prior to hurricane season (June 1 to December 1), thoroughly review all coverages, and make any necessary changes.
By working with marine insurance professionals, marinas can avoid problems with the carrier when the loss occurs. For example, I was recently told that an insurance broker advised a marina owner that he did not need to use the replacement cost estimate of one of the country’s leading dock manufacturers to determine the proper insurable value for his docks. The broker stated that he would determine the replacement cost of the docks, and that the insurance would insure the property based on this valuation, making the dock manufacturer’s valuation unnecessary. One can only imagine how the insurance company would adjust this loss should one occur.
I am often asked: What’s the most common mistake marina owners make in the overall insurance process? I think there are actually two mistakes marinas make: not working with a marine insurance professional and not purchasing insurance from an insurance company with experience in the industry.
There are many insurance brokers in the country, but very few know and understand the marina business. The same can be said for insurance companies. There are many in the country, but only a few that know and understand the marina business. For this reason, marinas should work with marine insurance professionals and should purchase insurance from insurance companies that know and understand the marina business.
By taking the necessary steps prior to a loss, marinas will be able to make the loss adjustment experience a painless, yet beneficial one.
Mark Yearn is a marine insurance specialist exclusive to Marine Insurance Services based in Milford, Mich. He can be reached via e-mail at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Marina Dock Age, September/October 2005
Whether It’s The Customer’s Fault or the Marina’s,
It’s Important to Always Play Fair
by Dennis P. Kissman
The end of the summer season is an important time for a marina to reflect on how its customer service performed during the boating season.
How did you handle the problems throughout the season? Were you proactive enough to put out “fires” before they got out of control? Were you complacent about certain things that eventually got so bad you lost a customer?
This past season, Carole Dudley, director of operations at Crown Bay Marina in St. Thomas, U.S. Virgin Islands, was able to maintain good customer relations despite situations that could have turned ugly had she, as a marina manager, not handled them correctly.
Crown Bay Marina serves a customer base with boats ranging from 20-ft. runabouts to 200-ft. mega-yachts. During the peak season, it’s not uncommon to turn over between 20 to 30 transit boats of all sizes on a daily basis. The marina works hard to avoid putting itself in a position where it must assume financial responsibility for mishaps. “It’s a good way to lose your shirt in a very short time, especially when you’re dealing with 150-ft. mega-yachts,” Dudley explains. The key is staff training, a daily dos and don’ts, and “having your mind in gear and anticipating things.”
However, from time to time, bad things happen at good marinas.
Resolving conflict
Dudley says the best way to address and defuse a bad situation is to first listen to the guests. “Let them vent for however long it takes. This takes the heat off the moment and after the guest has repeated the same thing 47 times, it eventually withers to a point where you can start getting reasonable.”
“Initially, try to be on their side in the understanding department — which isn’t difficult because you’re on a factfinding mission and the best way to obtain information is by appearing to be on their side. You can nod your head as if in agreement, but be careful not to verbalize anything that may come back to bite you,” she cautions.
“Understand that regardless of how ridiculous their beef may sound to you — as in, ‘ You know that you can resolve this in 60 seconds!’ — it’s obviously very important to them or they wouldn’t be ranting. Be genuinely interested in what they are saying, ask some key questions to demonstrate not only that you are tuned in but to gather information that may assist you later on, and do be sympathetic and understanding. In other words, ease into it.”
Slow to speak
When it’s time to speak, choose your words carefully, Dudley advises.
“What I do, which proves particularly effective, is I never raise my voice. In fact, I speak softly, slowly, quietly and deliberately so the person has to lean in to hear me. The message I want to relay is, ‘Calm down. It’s not the end of the world. I’m in charge. I mean what I say. Listen to me and I will help you.’”
In devising a solution to a customer’s problem, it’s important to be fair. This means that if the marina is at fault, then the marina needs to take the high road, own up to it, and make amends for it. “For example, if we put a 94-ft. sailboat with a 24-ft. beam into a 94-ft. slip with a 24-ft. beam, then, yes, we do need to pay to have the side of the boat painted — and a particularly alert staff member actually did that,” Dudley says. “Very few ways to get out of that one”
On the other hand, if a captain claims that a power surge has blown out the electrical panel on his boat and claims it’s the marina’s fault, he might be wrong. Crown Bay Marina requires that slip holders sign an agreement that “states very clearly that the marina cannot be held responsible for fluctuations from our electric provider.”
Dudley further notes, “Our electricity in the marina is quite good and the breaker should have tripped either at the dock or the main feeder box. In the event of a standoff, we call our electrician to the property and let him call it. If he says it’s our fault — that the breaker didn’t trip — then so be it. We do not bias the electrician beforehand because that is not fair. If he says it’s the guest’s fault, he then explains to the guest what happened, why it happened, and boards his vessel to show him.”
Above all, always be polite and professional. “We find that if you take the time to explain things to people, they may not like what they hear, but ultimately do appreciate it. In the end, if you come out on top, you still want to remain gracious, shake hands, express your regret one last time for their dilemma, and assure them that you are there to assist them in any manner possible as they proceed to the next step of replacing their $10,000 panel box.”
A free marina T-shirt and hat (a goodwill gift) may not appease a customer facing an expensive bill. But what about giving a complimentary night’s dockage to help ease things a bit? Or inviting the captain to enjoy a free dinner at the on-site restaurant? “Now and again a case of beer with a bow on top and a sense of humor can go a long way. Most people like to smile and laugh and it lightens things up a bit,” Dudley says.
Be sure to follow up with the guest, too. “The next day, go out to his vessel a couple of times during the day to see how he’s doing. Offer some assistance. Let him know that you know he is there and you’re concerned.”
Always help customers
Crown Bay Marina sells 1.5 million gallons of fuel per year. Mega-yachts often ask for the specs on the fuel, and the marina supplies the most current specs. If they wish to take a sample of the fuel and send it off to have it analyzed before they pump, the marina gladly obliges them. Despite all this precaution, it’s still possible to hear customers complain about fuel — not just fuel prices.
“From time to time we have a dinghy owner come in, take on gas, leave, and his engine cuts out. He then returns to us saying it’s our fault, that there was water in the fuel and he wants a new engine. Again, we communicate with the individual. We explain that we have very strict daily opening procedures. All tanks are hand dipped using a water paste. All tanks are bled every morning because some condensation does form that will result in minor amounts of water. We have large filters in our pump area, and we have filters at the dispensers. We do not have water in our fuel, and any minor amounts that we do have occurs in the natural course of things and are addressed each morning. SO, no, we are not going to purchase you a new engine or even some parts for it,” Dudley states.
Then there’s the guest who puts gas in his diesel-powered boat or vice versa. “The pumps are clearly marked and the hoses are color-coded. Not our problem. But, we will arrange to have someone come in and the boat owner may pay him or her to pump the fuel out and remove it from the property. We will provide them with courtesy dockage to do this if the fuel dock is full that day. We are here to serve our guests, not turn our backs on them.”
Be clean
Dudley says that if a guest comes to the office and complains about the state of the showers and restroom, go immediately to them, inspect them and address the problem on the spot. “No staff member is above doing whatever is needed — unclog the toilet, wash the floor, put in extra rolls of toilet paper, stop the sink from leaking, or sweep the floor. Do it right in front of the guest. It usually takes only a few minutes and the situation is resolved and the guest is happy,” she said.
When a guest complains about a staff member, remember that there are two sides to every story. To be fair, you need to listen to both sides. “I always interview the staff member, then I walk a fine line. The guest is always right unless I say otherwise!”
Never just abandon a guest, Dudley says. “Communication and shared information go a long way. If you are the party at fault, take the high road: own up to it and negotiate a resolution. You will end up with a very satisfied customer and that customer will relay the news to others.”
Marina Dock Age, July/August 2005
Preventive Measures Can Protect Marinas
By Mark Yearn
Marina owners are astute business professionals who take extra steps to protect their investments. This is evident when it comes to selecting the right contractor to build buildings that stand the test of time, determining the right building materials for maintenance free, long-lasting life, interviewing and choosing the best available employees to meet all job descriptions, and providing the necessary security precautions to protect the facility’s property and that of the marina’s customers.
Marinas also protect their businesses by purchasing insurance. This involves an investment of time in working with an insurance broker, who after several questions, presents a quote on the cost of the planned coverage. Once the appropriate insurance program has been determined and purchased, a payment plan is selected and the entire insurance scenario is forgotten until the next contract renewal period.
Once marinas have purchased their insurance, they believe they have done everything they can to protect their investments. What else needs to be done?
In the area of prevention, marinas can actually do quite a bit more. There are many actions marinas can take to reduce their business losses. These are called the “power of prevention” tools.
The power of prevention
The first step in using the “power of prevention” tools is to be proactive, not reactive. In everything marinas do, they should try and anticipate the outcome and put themselves in a proactive position, not a reactive one. For example, owners and managers should fix that loose dock board (the one they have known about for quite a while) before an injury occurs. This is being proactive, not reactive.
Good insurance managers like to remind their clients that it’s often the smallest items that end up costing their clients the most. For instance, a loose board or uneven walking surface can cost business owners thousands of dollars in payments to an injured person — resulting in an overall increase in insurance costs. What’s mind-boggling is that in every case, the business owners knew about the potential problem before the injury occurred.
Here are some other prevention areas marinas should focus on to reduce exposure to loss, whether insured or not.
Preplanning
Most business owners develop action plans only if a government authority forces them to do so. In Michigan, for example, any business dispensing fuel must have a “red” book available that describes all the steps to be taken in the event of a fuel spill. These “red” books range from a single page stating “Call the Coast Guard” in case of an emergency to plans resembling a college thesis! In both instances, the only reason the businesses had action plans was because it was required.
Marina owners and operators should think about what could happen at their facilities, and when it is most likely to happen. If a fire is going to occur, it will typically happen the first night the manager and his/her family go on that much needed vacation. Having spent all day traveling, the manager checks into the hotel room and hears the cell phone ring. One of the marina’s employees is on the line yelling, “We have a fire at the marina, what do we do?”
When the marina is burning is not the time to develop an action plan to handle a fire. Gene Spinazola, a noted fire safety consultant, says that the time to find the key to the electrical panels is not when the fire department arrives and asks where the main breaker is. Marina operators and managers should develop procedures, including a list of which systems do what, along with training, drills, and a manual outlining all of these activities, so that marinas can handle a fire emergency no matter who is at the marina.
On an annual basis, marinas need to create and review all emergency action plans, spill prevention and cost containment plans, and, where needed, hurricane preparation plans. Every person on staff should be trained and drilled in how to handle these emergencies. Moreover, every staff person should know where the plan manual is located if an emergency situation occurs.
Contract issues
Most marinas use contracts in some form or fashion to operate their daily businesses. Marina storage contracts, slip lease agreements, repair authorization forms, hauling/launching agreements are all contracts.
When was the last time the marina reviewed these contracts? Who reviewed them? Have the laws that apply to the marina business been amended? Are they more restrictive, less restrictive, etc.?
Recently, an insurance agent asked a marina for a “hold harmless” agreement. The insurance agent was surprised to learn that a document being used for one activity applied to a completely unrelated activity. In addition, the agreement was actually written by the former business owner, and not by the client.
The lesson: Attorneys need to review marina contracts on a regular basis. So many times, when a claim occurs, the first thing the insurance agent asks for is the contract. If it has been written correctly, it will assist the insurance company in reducing the overall loss payment, if they have to pay at all. If it has been poorly-written, it will usually end up increasing the overall settlement costs, which will ultimately increase a marina’s insurance costs.
Marinas need to see this contract review as a preventive measure. The extra time and money spent with an attorney up front, on a regular basis, will very often decrease the amount of money paid to a claimant, which will help lower insurance costs.
Think about it this way, if a person doesn’t change the oil in his or her car, the cost to repair the engine is far greater than the regularly scheduled oil changes that are required to keep the car running properly.
Access issues
Because marinas own and operate public facilities, they should view themselves as the landlords of their properties. Marinas lease space to individual boat owners, restaurant owners, canvas shop owners, repair shop owners, etc. In addition, marinas have other business operators, including individuals, who are hired to enter the property to work on customers’ boats, property, or deliver fuel.
With all of these activities, how many marinas require evidence of insurance for everyone either leasing from the marinas or entering the property to con duct work? Think about the landlord of an office building. What is one of the first items in the lease agreement that is required from the tenant? Insurance.
How many marinas have an insurance requirement in their slip agreement with boat-owners? If so, how many of them monitor and follow-up to make sure that insurance is in effect for that “tenant”?
As the property owner, a marina should not allow any person(s) on the premises to conduct business without having them first provide the marina owner with evidence of insurance. There have been examples where an uninsured contractor has filed a claim against the marina owner for injuries sustained on the property of the marina owner and been paid!
Why should some business entity be allowed to come on to marina property to earn a living without providing the marina with the same protection? What if there is a fuel spill from a subcontractor. Who pays to clean it up if the contractor cannot? It is the property owner. This scenario becomes even more costly should the spill occur in the water.
Here are some simple steps marinas managers can take to further protect the marina from costly claims and to assist marina owners in proactively reducing overall insurance costs:
| • | review the current activities and regulations; |
| • |
consider instituting rules that require contractors to file insurance certificates prior to being allowed access to the property consider writing in insurance requirement language in your lease agreements and storage agreements with your boat-owners |
Final note
Accident prevention is a mind-set, a culture, a daily activity that will reduce a marina’s loss exposure and keep insurance costs down.
Mark Yearn is a marine insurance specialist exclusive to Marine Insurance Services based in Milford, Mich. He can be reached via e-mail at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Marina Dock Age, July/August 2005
Seek Solutions, Not Programs
Changing the way marinas look at software
By Tim Keogh
It seems that every time an industry conference takes place, a hot topic of discussion is marina management software. Although this is a positive trend towards improving the overall performance and professionalism of the marina industry, there’s no consensus on the subject.
For marinas, purchasing a software solution is a major investment that should be part of a well thought out plan to improve the way a marina conducts business. There are a number of programs on the market, but finding the right one is not as easy as one might think.
As both a buyer and seller of marina software, I would like to offer a unique perspective on the subject of marina software. Here is the way marina operators should view their software, define the questions they should be asking themselves when making software purchasing decisions, and describe the benefits a good software solution can and should provide to their businesses.
Terminology
When speaking about software, marinas need to use the term “solution,” and not “program.” Although this may seem like splitting hairs, it really isn’t. This is an important distinction that can help change the way marinas think about software and management tools.
There is a difference between a software program and a software solution. When people think about software programs, they often think about the games that can be played on their computers, such as solitaire or Super Mario Kart. In other words, programs are for entertainment and development is focused on graphics and pictures.
When thinking about software solutions, people think about changing data and numbers into information that can be used to make informed business decisions. A software solution is a technology that has been developed to solve problems associated with the operation of a business. A software program looks nice on the surface, but provides little in the way of useful information.
This shift in terminology is not trivial. When marina operators start to think about software as a solution, they will find themselves moving past superficial ideas. They will start to ask important questions about the business of owning and operating a marina.
Software’s role
The business of operating a marina has changed over the years and involves more than just offering storage for boats. Today’s marinas are fast-becoming the centers of boating in the community, offering new convenience-based services. It is important that marina management be able to communicate these services to new and existing customers. Technology and software can help in that communication process. As the marina becomes the service center for all aspects of boating, it is important to have a system in place that will track the benefits of those services to customers and to the bottom line. When looking at a marina’s problem areas, a software solution should be aimed at improving staff efficiency and customer service.
Each year, marina operators spend thousands of dollars on repairs and maintenance, including the tools to perform the work, and this is just to maintain the condition of the property.
If marina operators start to think of software as a solution or tool, it will help them understand the benefits software can add to the business. If they view the antiquated processes through which they conduct business as being broken, then software can become the tool that can be used to fix and improve that process.
It is important to note that the software system should not change the way marinas conduct business. It should adapt to and improve the efficiency of the operation, and this point is crucial to the successful implementation of a software solution.
There are two basic ways that a good software solution can improve a marina’s business; the first is to limit expenses and the second is to increase revenue.
The most obvious benefit of a solid business solution is doing more work in less time. For example, with a software solution, a monthly invoice becomes a push-button task accomplished in a few minutes rather than the hours or even days it takes in some marinas. In other instances, marinas will have the ability to handle bookings and operations at peak times with no extra staff because the software will have significantly increased staff efficiency.
As a supplier of software to marinas, there have been some installations that allowed several marinas to increase their staff’s operating efficiency so as to require one less employee. It has often been said that employing one staff member for an entire year is often two to three times more expensive than the cost of purchasing a good software solution.
These are just a few examples, but they highlight the new ways marinas should think about how software can improve their business operations. It is not all about nice pictures and fun graphics; it’s about concrete evidence on how the solution can save money for the marina business.
Reducing losses
Although a software solution will not uncover new ways for the marina to generate income, it does have the ability to find lost income. For example, software installations have uncovered countless examples of customers not being billed correctly, and, in some cases, not at all. A good solution will ensure that all customers are charged correctly, billed on time, and done so in an efficient manner.
Having just celebrated one of the busiest boating days of the year, July 4th, most marinas were probably at full capacity during the holiday weekend. But amidst all the chaos and activity of the weekend, some, if not many, marinas also missed some golden opportunities to provide dockage. A good software solution would allow staff, in an efficient manner, to find that last space when the marina was near capacity, thereby increasing revenue by maximizing the marina’s footprint and fully charging for all spaces leased.
Expectations
Choosing the best marina software is just one part of “the software solution.” The next step is implementation. Marinas should expect to spend some time implementing the solution.
The first three months after purchasing a new software solution are the most critical period in the implementation and support process. With any new system, there are certain levels of change that should be expected, but it is important to select a system that will adapt to the way the marina conducts business.
It is important that all staff, especially the information technology personnel, be onboard with the implementation process. There is a learning curve with any change and new technology can be extremely difficult to use if there is not a willingness to learn.
After spending money on the purchase and taking time to implement the software solution, many marinas are now ready to fulfill the highest expectation a marina can have of a new software solution: return on the investment. Time and money are not well spent if the business does not realize an adequate return on the investment.
Marina Dock Age, July/August 2005
Why Marinas Should Remain Positive Despite High Fuel Prices
By Dennis P. Kissman
Now is the peak of the boating season, and for marinas in the northern part of the country, the late arrival of summer is surely negatively impacting cash flow. This is especially true for marina owners relying on boat sales to generate that much-needed cash flow before the boating activity kicks in. If a marina sells and caters to powerboats, then the high price of fuel has further impacted profitability — not only in boat sales, but also in its existing customer base.
At such times, marinas need to go beyond thinking, “I just need to be able to survive this season.” Marinas that fail to take the time now to plan will be saying the same thing next year. It may be for a different reason, but the marina will likely still be operating in a crisis mode. So what specifically can be done today to help eliminate the chance of operating in a crisis mode in the future?
Problem analysis
The first thing marina owners and operators should do is make sure they understand the components of their marinas, and how they impact one another. This sounds like a simple concept — one that is readily understood. However, the relationship between profit centers is constantly changing, so that a minor impact in one area of the business can have a major impact on another.
The next thing to recognize is whether these problems are going to have a short- or long-term impact on the facility. Next, one has to ask whether the condition that exists is more of an anomaly or one that is likely to occur again on a regular basis?
For purposes of this article, I will focus on one perceived problem — the price of fuel — and how it can impact a marina’s business.
Let’s use a dry stack and wet slip marina with a fuel dock. Let’s assume that it caters to powerboats, its in-season occupancy is more than 90%, and it sells new outboard and inboard/outboard powered boats and broker-used boats. There is an active service center for repair and a customer-base that extends beyond the boats in the marina. There is a good transient business that is attracted to the marina’s waterfront restaurant.
Given this scenario, let’s examine how the price of fuel impacts each of these profit centers, beginning by addressing those three questions in reverse order.
First, is the high price of fuel an anomaly or is it here to stay? Based on media reports, one would conclude that the cost of fuel isn’t going to drop any time soon and, in fact, is more likely to go up higher in the future. Marina owners have no alternative but to live with this fact.
Is this high cost of fuel going to have a long- or short-term effect on the marina business? To answer this question, we need only to look at the recent history of retail gasoline prices and our own behavior. In July 1990, the price of regular gasoline was around $1.19 per gallon. Today, that same gallon is about $2.40. But ask yourself, “Even though the price of gas has doubled in the past 15 years, have my driving habits changed over this period?” Most of us grumble a lot about the price of gasoline, but we’re not changing our driving habits or the size of the vehicles we drive.
Boaters most likely will curtail some of their boating activity because they feel guilty about spending more money on recreation — but they have a way of justifying a good time and, to boaters, being on the water fits the bill. Thus, the cost of fuel is going to have little, if any, impact on the marina business in the long term. We will just get use to paying higher fuel prices.
The good news for marinas is that they can remain competitive and profitable by keeping their fuel marked up at a fixed number of cents per gallon over cost and not based on a percentage of cost. At some marinas, as the price of gasoline approaches $3 a gallon — as it has in some markets already — many of the price calculators in the dispensers max out at registering a price of $2.99.9 per gallon. It would be wise to make sure your pump can exceed this limit, otherwise you will be selling the cheapest fuel in your market and not making a fair profit. In the very near term, high fuel prices may have a small negative impact on the volume of fuel sold. In the northern part of the country, however, where the boating season is so condensed, there most likely will not be any decline once fuel sales for the entire season are reviewed.
Profit center impact
Assuming high fuel prices are here to stay and will have little, if any, long-term negative impact on the marina business, there’s still the matter of the various profit centers. How will they be affected?
With a better than 90% occupancy in dockage and storage, the marina’s income should not be affected. The fact that one is in the boat brokerage business could increase with more people wanting to sell their boats. Keep in mind that most boats do not move out of a marina just because owners change. Most likely, a marina will end up with new customers, but the same boats. In the meantime, the marina has made a commission on selling the boat — a clear positive to the marina.
In the short-term, the biggest negative impact will occur in boat sales, particularly those in the lower-entry level price range. People are not generally excited about getting into a new recreational activity when they’re unsure about the future costs associated with boating. Existing boaters are also reluctant to upgrade or change from the boats they already have. On the other hand, existing boaters are more prone to spend more money on maintaining their current boats. This will often lead to more work for a marina’s service department, if it has one, because the older the boat, the more things go wrong. Also, the older boats will probably not be used as often during the season and, as all boaters know, a boat that is seldom used is more likely to have problems than one that is regularly used. So, boat sales may be down for the short term, but boat repair is likely to be on the rise.
Probably the biggest unknown factor is the impact the high cost of fuel will have on the transient boat traffic that comes into the restaurant. This is also the one area that a marina owner or operator has the greatest control over. Through creative advertising and promotions, the local boaters that would go off to some other area to dine most likely will stay closer to home. It is up to the marina to entice the local boater to the marina to dine.
Summary
Weighing all the factors that the high price of fuel will have on a marina’s profitability, marina owners and operators should plan to finish out this season with less profit on new boat sales and fuel sales, while increasing profit on service shop income and brokered boats, and keeping the status quo on dockage and storage fees. They should focus on increasing traffic to the restaurant, and in doing this, high fuel costs will have very little impact either positive or negative on their operations.
If it looks like fuel prices will continue to rise into next season, these marinas will have a jump on how to approach this situation without losing sleep trying to figure out what to do after the fact. If marinas look at each of its perceived problems in this way, their businesses can easily turn what appeared to be negatives into positives.
Marina Dock Age, May/June 2005
Identifying the Critical Factors Involved with
Communicating with Marina Customers
by Dennis P. Kissman
I was recently talking with some of my boating friends who keep their boats at different marinas, and I asked them how their marinas communicate information about the facility.
Let me begin by saying that I do not believe there is a single right or wrong way on what, when or how to communicate with customers. My boating friends could have easily been customers of the same marina, and they would still represent a cross-section of a single customer base. I think it is fair to say that no matter how a facility approaches communicating with its customers, there will always be at least one customer who prefers a different approach. A marina manager must decide what works best for his or her particular marina.
What
In deciding on a communications approach, marinas should first determine what they want to communicate and why they want to communicate it. A manager should never forget that his/her prime reason for communicating with customers is to sell services and promote more business for the marina.
A specific problem I have encountered with marinas occurs when they promise customers something they cannot deliver. This is the quickest way to lose credibility with customers and, ultimately, lose their business. If marinas do talk about future changes, they should state them in a way that gives them an out, in case circumstances arise beyond their control — like permit issues — that may prevent marinas from following through on promises.
In most marinas, there are usually a number of improvements routinely done that go unnoticed by some customers. Marinas should toot their own horns! There is nothing wrong with pointing out improvements in, say, a newsletter because the next time a customer comes to the marina, he/she is likely to ask “what’s new?”
When
An important aspect of communicating is when it should be done. Whatever schedule a marina decides on should be one that can be consistently followed. In other words, people are creatures of habit, so the marina’s message will have more of an impact on people as they begin to rely on consistent delivery of the message — and the more frequently this is done, the more aware the recipient is of the marina.
Here are some other key points to keep in mind. Always promote any planned events well in advance of their scheduled dates to ensure the greatest number of participants. Just as important as promoting upcoming events is reporting on how the event went right after it occurred.
I believe a monthly newsletter is the right frequency to communicate. One of the more difficult habits to overcome with a monthly newsletter is to put too much information into one month, leaving the next month without much meaningful information. To avoid this, create a schedule and make a firm commitment to produce and distribute a newsletter.
How
Finally, consider how to communicate with customers. This is one area that is changing on a daily basis.
Although the Internet is an excellent way to communicate, if it is not done in an attractive and simple manner, it can be a disaster.
If marinas plan to use the Internet as a communication tool, here are some important things to consider:
First, it must download fast.
Second, it should be short so someone can peruse through it less than five minutes. Remember: a picture is worth a thousand words and is a quick way to get a message across.
If a marina has a Web site, it should not use a page for the newsletter and expect people to visit the site and search for the newsletter. People are too busy today to do that. If marinas expect customers to read the newsletter, they should send it directly to customers. This is especially important if the marina is promoting some upcoming event or sale.
Third, format the Web site in such a way that it will print on a couple of pages. I may be old fashioned, but just as I enjoy picking up this magazine and reading it, I often print out information from the Internet to sit and read it. There is something about seeing the whole article at once rather than navigating around a computer screen trying to read something — especially when it is either too wide to fit on the screen or too small to read.
No matter how marinas decide to communicate, they should do it in a concise and consistent manner.
Marina Dock Age, April 2005
Marina Privatization Benefits a Few at the Expense of the Many
by Dennis P. Kissman
It seems like every time we pick up a trade magazine or cruise the marine news on the Internet there is an article about how water access is being denied in one form or another. Now the hot topic in Florida is that developers are converting marinas and boatyards into high-rise residential developments and either eliminating or privatizing the existing marina associated with the property.
It is this insatiable appetite by developers for waterfront land that is changing what was formerly a common bond between the marina industry and boater advocacy groups fighting for the same cause: access to the water. Both groups want the same end — access to the water — but for different reasons.
In Florida, we are seeing a disturbing trend — the privatization of marinas, particularly those on submerged land leases with state government. Don’t get me wrong. I’m all for creating the most profit out of a piece of waterfront property, but how one goes about this could have major consequences for the industry in the years to come.
Case study
One of the most publicized cases involving the privatization of a marina is Whitley Bay Marina in Coco, FL, the only public marina in Coco.
Last September, a Naples, FL-based developer bought the existing wet slip marina and announced plans to renovate the marina and “sell” the slips. The area of contention here is what is being bought and sold.
One could argue that the sale of Whitley Bay Marina is a prepaid lease, not a sale, because you cannot sell something you do not own. If your slips are on a submerged land lease, you do not own the bottomland and, therefore, cannot sell it.
One could also say, “What’s the difference if one person occupies a particular slip, say, for 10 years with a single agreement or with 10, one-year agreements?” The difference is that with the one, 10-year agreement, the person has to come up with the money for all 10 years upfront, while the 10, one-year agreements allow for payments over the duration of the agreement. It boils down to the amount of cash needed upfront.
A developer’s modus operandi is to acquire a property, create value, and then sell it for a profit. For example, lets say a town is growing and a piece of agricultural land on the edge of town now has more value if homes were built on it. In this case, the owner would most likely be inclined to sell the land to a residential developer and realize the value based on the highest and best use of the property. If that person wanted to remain in the agricultural business, he/she would find a similar piece of land further out of town where an agricultural use would be the highest and best use for that parcel of land.
If marinas were that easy to relocate or build, there would not be this public outcry by the boating community about privatization. Although everyone in America is entitled to improve their economic condition the most that they can, the current sale of marinas to developers is of concern to those of us who are in this industry for the long term. We depend on marinas for our livelihood, so we should consider the impact these short-term gains by a few may have on the future of marinas.
Considerations
Already, government agencies place burdensome demands on how and where marinas can conduct business. Now that the privatization of marinas is making news — lead by boater advocacy groups typically friendly to our cause — politicians have more ammunition to intervene into how the marina industry conducts its business.
It’s important to remember that the majority of marinas in the United States require some form of government-controlled submerged land lease or concessionaire agreement. As a marina owner, how would you like the government dictating what rates you can charge, what profit margins you can make, what types of boats are allowed in your marina?
If the issue of privatization remains an issue before elected politicians, as is now the case in Florida, the future of the entire marine industry is at stake. Fortunately, one county in Florida, Palm Beach County, has recognized the value of the marine industry.
Last November, voters in Palm Beach County passed a bond issue that allows the county to buy development rights when the marina is no longer the highest and best use for the property. This action preserves the marina, while allowing the owner to sell and realize the added value of his/her property. This is a step in the right direction, but to leave the future of our industry in someone else’s hands — particularly the government — is a dangerous position.
Who knows this industry better than those who work in it? Isn’t it time we get creative and come up with our own solutions? Isn’t it time that we provide a long-term solution that keeps the industry vibrant?
Marina Dock Age, March 2005
Marina Management Software has Made
Great Strides Forward in the Last 20 Years
by Dennis P. Kissman
Over time, many marina owners and operators have raised their expectations regarding business-related computer programs, as the ever-increasing sophistication in software development has made it easier to demand more. On the other hand, some marinas generally still avoid investing in computer products. Either way, it’s important to take note that one of the biggest changes in the marina industry has been in the area of marina management software.
The past
In the late 1980s, marina owners and operators primarily viewed their computer software as an extension of their existing accounting system, whether it was manual or computerized. The computer system also helped marinas keep track of customer account balances and more easily create customer bills in a timely manner. Today, these same marina owners and operators — as well as a new generation of owners and operators — expect their software program not only to do what these earlier programs did, but also be a management tool to help them make critical and timely business decisions.
Computer software for marinas has evolved for three main reasons. First, the proliferation of software available in other industries has sparked interest for similar types of software in the marina industry. Second, it’s simply becoming easier and, therefore, increasingly popular for people to navigate through the world of computer software. And third, it’s evolved in response to the large number of marinas and other businesses that rely on the Internet to communicate with their customers.
In fact, at the International Marina Conference (IMC 2005) that was held in early January in San Diego, California — where I served as a panel moderator — I discovered that the majority of marina owners and operators interested in software matters were primarily interested in one thing: Would the software allow them to communicate with their customers via the Internet? They wanted to be able to provide the same kind of services other businesses offer — online billing, which would permit the customer to review and pay his or her account online, and the ability to send newsletters and promotions by email. They also wanted the customer to be able to reserve a slip or rack online.
In a nutshell: Marina owners and operators are looking for a computer program that will do far more than supplement their accounting tasks of bygone days. Now, they are searching for one comprehensive software program that can handle all the marina’s operations, whether within the program itself or linked to other popular off-the-shelf software programs, like those for accounting and point-of-sale applications. One of the most requested features, besides those just mentioned, include the ability to view operational and financial metrics of the business in an easy to understand graphical format. An additional, highly requested feature was for a visual representation of the marina so that the user can navigate directly to all information that pertains to a particular slip or rack simply by clicking on the screen.
At IMC 2005, I also noticed that the level of interest in management software, especially with non-technical people, is greater when the program is Windows®-based as compared to one that is not, perhaps because most of them own PCs. I do know from personal experience that the learning curve is much shorter, the user’s confidence level is much higher, and the number of program features used by the user are far greater when the program is Windows®-based than when it is not.
Need for flexibility
In listening to attendees during marina management program demonstrations, a familiar refrain came up, “Our operation does not do it that way. We do it a different way.” Thus, the more flexible the program is in adapting to the user’s style of business, the more interested that person becomes.
Most purchasers of marina management software expect it to streamline operations and improve operational efficiency. This is not an unrealistic expectation, but it does not occur immediately following the installation of a well-designed program. Over time, by using the program and initially following current business processes, users will be able to evaluate current business processes and identify ways to improve them within the new functionalities available in the new software program.
Another interesting fact to note is the value the current software buyer places on software today as compared to 1988. A single-owner marina operator was willing to spend around $2,500 on software in 1988. Today, that same figure is between $8,000-$10,000 — depending on the complexity of the marina’s operations. Although this may seem like a lot of money to invest in software, it really isn’t. The programs on the market today are so superior to those earlier programs that marinas are truly getting their money’s worth. Marinas will gain real savings that will usually more than offset software costs in the first year.
Because of the added features in today’s software programs, marinas should seriously consider getting technical assistance in setting up their new program if they expect to use its full capabilities. Marinas should only buy software that can be fully supported over the Internet if they plan to use the software program as a management tool to help in daily business operations.
Conclusion
The marina industry has come a long way since 1988 in marina management software development. Much of this advancement is due to software developers who listen and respond to user demands. The best way to keep the momentum going in software development is to have marina owners, operators, and managers, demand more ways to improve the marina business through the use of the computer.
Marina Dock Age, March 2005
Some Practical Tips on Purchasing Marina Insurance
By Mark Yearn
Insurance, as a fixed cost of doing business, is one of the largest single line items of every marina’s budget. Because most marinas go their entire business lifespan without ever filing a claim, they often view insurance as an expense that’s too costly and unnecessary — that is, until disaster strikes.
A sympathetic ear
Many business people — including me — must purchase insurance, and there seems to be an almost universal expression that insurance costs are too high. Right here in Michigan, the cost of auto insurance seems to be out of control. My corporate auto policy currently insures three vehicles, and the premium for these vehicles is 40% higher than it was three years ago — but not because of any claims, tickets, or accidents on my part. It’s simply the increased cost of purchasing insurance in my area.
Over the last couple of years, I have been invited to speak to a variety of trade groups about the best way to purchase marina insurance. It seems that every group is hoping there is some magic formula that will permit them to greatly reduce their insurance costs. The groups even have some creative ideas of their own! For instance, one idea involves combining attractive packages in order to entice an underwriter to reduce rates due to the large amount of business he or she will write. Kudos to everyone for this creativity.
However, to put it bluntly, there is no magic formula, package or creative idea that will allow a marina operator to greatly reduce his or her overall insurance costs. Sorry to say, but that is the unvarnished truth. The reason? Underwriters know what they are willing to take as a risk and for what price — regardless of who you are, what group you belong to, or what your loss experience is.
For example, a great marina operation in the Southeastern portion of the United States spared no expense in its recent construction activity. The marina was well maintained and operated, and had a great loss experience. Even with all this, one of the leading marine underwriters in the country looked at the risk and determined that the amount of premium available was not large enough for the overall risk size that existed in this hurricane-prone area. Therefore, he passed on quoting the insurance program.
At a recent trade conference in the Midwest Region of the United States, the group members asked me if they could combine their membership to obtain lower dock insurance rates. The answer was “no.” I explained that the amount of premium available to an underwriter from the group was too small in comparison to the amount of risk the underwriter would take on.
Let me elaborate. If there were 20 marinas in the group, each of whom had $1 million in dock values, and they were able to negotiate a $.80/$100 rate on the insurance premium, the underwriter would assume $20 million in risk for a total premium of $160,000. See the problem? Even if the rate were $2, the underwriter would still only obtain a total premium of $400,000. Now that may seem like a huge amount of money to many marina owners, but to the underwriter, it wasn’t enough for the potential risk involved.
After I addressed this particular group in November, a severe snowstorm hit the area, causing a great number of docks, boats, and facilities to collapse or sustain damage. I was told about an insurance company that had losses totaling more than $5 million from this one, single snowstorm! The $180,000 or even $400,000 in premium doesn’t look like a great deal of money now, does it? Underwriters have a greater chance at profitability by picking and choosing the risks they agree to provide coverage on, as opposed to writing every marina in a region or territory.
What to do
Given this situation, what, if anything, can marinas do to buy cost-effective marina insurance?
First, marina owners should realize what they have as a business. In the old days, a marina was a place where one would dock boats, maybe provide fuel, and in some states, store the boats out of the water. Today, a marina can be everything from a hotel to a casino, to a boatyard to the largest restaurant in the area, in addition to having 500 slips for customers to dock their boats.
Because each marina has its own unique characteristics, each marina cannot be put into some magical insurance or liability box. Each marina needs to be looked at for the type of operation it is — whether it’s simply a marina, or a large recreation resort with marina, golf course, restaurants, hotel, etc.
Knowing what a marina business involves is the first step in determining how much insurance is needed to cover the business. When I first began working in the marina insurance field, my job was pretty easy — use the number of docks, value of docks, revenues for dockage, storage, and other factors, and combine them to determine a premium for the simple risk of a marina.
Times have changed. The marina where I first worked — a lifetime ago — now has a restaurant (with more than $5 million a year in revenues), boat sales, repairs, swimming pool, work out facility, volleyball and tennis courts, dockage, storage, fueling, boat rentals, and a 350-passenger charter boat. It's also in the process of adding two 12-story high-rise condominium buildings with offices, restaurants, shops and other amenities. All this on the navigable waters of the United States, which brings Federal Maritime issues into play, as well as Homeland Security, Coast Guard Security and don’t forget the local and state EPA, DNR, and other authorities monitoring environmental quality. What was once a dockage and storage facility is now a multi-use facility combining a variety of businesses under one heading: marina.
Advice
In the absence of a magic formula, what is the best advice for marina operators looking to buy marina insurance? Without being self-serving, the simple answer is to find an insurance agent who specializes in the marina business and can properly analyze the various businesses that operate at “the marina” — whether it’s as extensive as the location described above or a facility that only provides dockage and fueling. A specialist doesn’t have to be located in the marina’s backyard, but he or she must know the business.
Marinas should take time to know the agent. They should spend time interviewing him or her. The operator should feel comfortable and be able to relate well with the agent. Once the operator picks one, he or she should let the agent go to work putting together an insurance program for the business.
Go through the same process in choosing an agent as in choosing an attorney. Marina operators should consider questions like: “How many times in my business career have I changed attorneys? How did I find my attorney and why do I keep my attorney?”
Individuals and businesses that have an attorney know there are other attorneys in the same local area. But which individual or business would give up their corporate attorney for less money?
When it comes to insurance agents, marinas should treat the agent the same way. Here’s another way to look at this concept. If a person makes the wrong choice in an agent or an insurance program, that person may wind up needing his or her attorney, so why not pick an agent using the same criteria one would use to choose an attorney or CPA?
Once chosen, let the agent do the quoting and negotiating with the various underwriters. In the long run, the result will be a far superior insurance program, at a better price, with an agent who will work harder for the marina owner because the agent knows he or she has the owner’s support.
There are two processes involved in purchasing insurance: one is the price and the other is obtaining the proper insurance protection. The agent — if he or she is truly a marina insurance specialist — will know which insurance market will best fit the owner’s particular business characteristics and offer the best protection at the most affordable rates.
Each insurance company offers special coverage enhancements, while not offering other coverage that an owner may need. It is the job of the marina insurance specialist to know which carrier has the broadest coverage protection for a marina with the least amount of exclusions. The old adage, “You get what you pay for” applies to this situation.
In today’s world, it is not all that rare to either read about or hear of operators purchasing insurance from non-marine specialty insurance companies, and then complaining about not getting their claims paid, or taking too long to obtain their payouts or simply not understanding what they were purchasing in the first place. In most instances, they thought their agent knew the marina business. They thought they were getting a great deal, only to find out at the time of the loss they were wrong.
Synopsis
When it comes to buying marina insurance, it’s worth it to hire a marina insurance specialist. Make sure that individual knows the marina business and support him or her 100%. In the long run, marina operators who follow this course will discover that the agent is someone who will watch the operator’s dollars as if it were his/her own money.
Marina operators have plenty of resources to help them identify qualified agents. They can contact local trade associations, other trade associations, dock manufacturers, other trustworthy vendors, or even a corporate attorney. Operators shouldn’t be afraid to hire someone from outside the area. If an out-of-towner knows the marina business, he or she will know the business, regardless of geographic location.
It cannot be overstated: Marina owners operate a very specialized business so they should get advice from someone who is both a specialist in the insurance field and in the marina business.
Mark Yearn is a marine insurance specialist exclusive to Marine Insurance Services based in Milford, Mich. He can be reached via e-mail at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Marina Dock Age, January/February 2005
How to Build and Maintain a Successful Marina Organization
by Dennis P. Kissman
I was recently asked if I could comment how to retain good employees. I thought about it for some time, and believe there are two ways to approach this question. An organization can be either proactive or reactive in their approach to retaining employees.
If an organization believes that its employees are an organization’s most valued assets, then it will most likely be proactive in its approach to retaining employees. Conversely, if it does not subscribe to the fact that employees are the most valued assets, then it will most likely espouse a reactive approach.
Reactive approach
Lets discuss the reactive position and the consequences of this way of thinking.
In a reactive approach, thoughts about retaining employees do not enter into an employer’s mind until an employee decides to leave. under these circumstances, the employer has three reasons for wanting to retain an employee who has decided to leave. First, the employee has done a good job and has the skills to perform the tasks the job requires. Second, the employer suddenly realizes that he/she does not know what the employee contributes to the organization. Third, it is easier to keep the status quo than to make a change, or in other words, this is the lazy way out.
The only reason an organization should ever consider retaining an employee is because he/she has done a good job. If the employer wants to keep an employee out of fear of not knowing what that employee contributes to the business, then the employer should first be asking himself/herself the question of why they let themselves get into this situation, and what they can do to prevent it in the future.
Now, I have found this situation occurs more. often than not in small, owner-operated businesses where many times an employee becomes part of the extended family and operates independently for his/her own benefit at the expense of the business. If a marina has someone in the organization like this, the first thing that needs to be done to prevent a reoccurrence is to understand the job the employee does. This does not mean that the marina needs to know every detailed aspect of the job, but employers should know enough to identify those talents in an individual.
If the reason for not making the change is to keep the status quo, I have only one thing to say: The price the organization pays today to retain that employee is nothing compared to what it will cost in the future. In fact, regardless of the reasons why employees want to leave or the organization’s desire to keep that employee, the relationship will change. The employer is no longer in control. Recognizing this fact should be reason enough to consider a proactive approach to keeping employees.
Proactive approach
To implement a proactive program for retaining employees, the first step is to recognize the three reasons for keeping employees from leaving for another job. One, the job is not challenging; two, the wage scale is not competitive in the marketplace for the job; and three, the working conditions are below other employers in the marketplace.
There are hosts of other reasons why people leave jobs, but they are out of the organization’s control. Thus, the marina organization needs to be proactive in addressing the three reasons why people change jobs that are in their control. If they are successful in these areas, turnover will be minimal.
As for the first reason, the real question is this: How can I make a job challenging when it involves the simplest of tasks? The key to answering this question is to make sure employees have the responsibility and authority to get their jobs done. Then they will take pride in their jobs and the results will be rewarding, to say the least.
As employers, we must make sure all employees know what is expected of them. It has been my experience that the smaller the organization, the less likely it will have written job descriptions. I am not advocating that job descriptions have to be written, but if they are not, the employer should make sure each and every employee understands what the employer expects of them. Employers need to be patient with employees, because not every employee is going to do the job expected of them the first time. Moreover, timely communication is the key here, both positive when a job is well done and negative when it is not.
It is the employer’s responsibility to recognize if employees are capable of doing the job they have been asked to perform. That old saying that all people are created equal does not apply in the workplace. Some people have different skills than others. It is up to the marrina manager to recognize those skills in individuals, capitalize on their strengths’ and support their weaknesses.
Pay challenges
The second reason why employees leave is that the wage scale is not competitive with the marketplace for the job. Here is where many marinas put on blinders and look only at what is being paid in similar industries and not what is being paid for like duties. For example, if a marina has a dry stack operation that requires forklift operators. the marina must recognize that it is competing with every business that employs forklift operators, such as warehouse operations, trucking companies. or manufacturers, to name a few. If these types of businesses are in the marina’s area, the marina must consider this competition when setting the wage scale for forklift operators.
We in the marina industry like to think that there is some romance associated with working in a marina. This only applies to owners. Employees are exactly that, employees. At the end of the day, employees go home to return the next day. Their primary reason for being at the marina is pay. not romance.
One of the more common arguments I hear when it comes to wages paid at a marina is that the marina cannot afford to pay more. Now, marinas need to ask themselves why they can’t pay more? The answer is always the same — because they do not bring in enough revenue.
Operating marinas is a business, and every successful business passes increased operating costs along to their customers. Marina owners typically have a problem with this concept, and as a result, they do not charge enough to pay employees a competitive wage. Thus, before marinas are able to attract and keep good employees with competitive wages, they must correct their pricing policies, or face the reality that any proactive program for retaining employees will eventually fail.
Good workplace
The third reason for an employee to leave that is under management’s control is poor working conditions. In marinas, this often translates into dangerous working conditions. Besides correcting the physical deficiencies in the marina, it is equally important for employers to take the time and train employees not only in what the marina expects from them as workers, but also in the inherent dangers of working around the water and boating equipment. Once a person understands these dangers, the poor working conditions diminish.
As I previously said, the physical deficiencies need to be corrected. In this regard, I have heard the same arguments from marina owners about why a marina has deferred maintenance issues as their reason for not being able to pay competitive wages. The answer to correct the problem is the same. The costs to maintain a facility must be passed along to the customer, a concept that marina owners have a hard time grasping.
There is one last thing that can bring an employee retention program into perspective, and that is to remember that there always will be a difference in perspective between the owner of a business and the employee. If an owner is going to be successful in building a dynamic organization, he/she must look at the business, as well as themselves, from an employee’s perspective. Although this is difficult, if it is done objectively, the points made in the previous paragraphs will become obvious, solutions will be easily implemented, and marina owners, operators, and managers well be on their way to running a successful and profitable business with their most valued asset — their employees.
at the
Ft Lauderdale Boat Show