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Creating new profit centers

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Kelsey Houle
March 1, 2014
Filed under Features, Top Stories

The advantages of finding new ways to boost revenue

If nothing else, the last few years have brought home the fact that simply relying on boat sales was a recipe for disaster for most dealers.

While some dealers relied more heavily on storage and service revenue, others are finding ways to expand even beyond those core competencies. Whether it’s running a restaurant or bar, selling more gear or opening up a supercharged webstore, it’s all about finding more customers and increasing the revenue from existing ones.

Untapped potential

At Parks Marina, diversification has been an important part of the culture for years under owner Butch Parks. The Parks strategy is that anything that brings people to the water is good for the business.

“We still have a lot of reasons for people to come see us, even though this may not be their year for a boat purchase,” said Parks CFO Darren Anderson. “From a financial aspect, even if boat sales stay flat, and the rest of those profit centers make gains … that all contributed to gross profit in years that we had the potential of boat sales dropping off.”

Parks has managed double-digit growth over the last several years, even through most of the downturn. At the same time, the company’s margins have stayed solid. A lot of that can be credited to the company’s diversified offerings, Anderson said. For example, in 2012, boat sales represented about two-thirds of the dealership’s sales dollars, but less than half of its profit margin.

Parks Marina

Parks Marina

Parks is now known as a little piece of the tropics in Okoboji, Iowa, where visitors can get a drink at the Barefoot Bar or buy branded merchandise at the store, surrounded by palm trees and Tiki huts. But that tropical oasis started out as one simple Tiki bar where the Parks team could sit down with a prospect and get a drink while talking about a boat. Growing it took a team effort.

“It did not come easy when we started,” said Debbie Parks. “We threw a little Tiki bar out on the lakeside. We all had a part in it, we all emptied the garbage, we all changed the tables. As a group we had to grow with it.”

Having a team that buys into the vision is an important of any plan to diversify. By involving the entire team, you’ll get the best creative spirit – and ideas – out of everyone, Butch Parks said.

The Barefoot Bar gives boaters a place to come on Lake Okoboji, drawing them to Parks when they are not in the market for a new boat.

“In the boating business, the most important thing is for boaters to have a purpose, a destination,” Butch Parks said. “It gets boring really fast if you’re just driving around in circles, but if you have a place to go …”

Parks Marina

Parks Marina

Simply by creating excitement in the lake region, Parks has been able to draw more people to the area, whether it’s to grab a bite to eat or take a cruise on one of the company’s seven excursion boats.

“We’re just in front of them all the time with all the things we do,” said Debbie Parks. “The more things you offer, the bigger customer base you have.”

If there’s a good idea for growing the business, Parks will pursue it.

“You’ll never know unless you try,” Butch Parks said. “You’ve got to be willing to give it a chance. If it doesn’t work, move on to something else.”

He cites the example of the company’s boat fleet that started with a single vessel, the Barefoot Barge, in 2006. Parks is now working on its eighth boat for the fleet, a two-story cruise boat featuring palm trees and a Tiki theme.

“I just found out our entire fleet is already booked up for the July 4 weekend and that’s six months in advance,” he said. “We didn’t know if that would ever be a profit center and it turned into a good one.”

Gage Marine’s Pier 290 restaurant has increased traffic to the Wisconsin-based marina.

Gage Marine’s Pier 290 restaurant has increased traffic to the Wisconsin-based marina.

A similar strategy has helped Wisconsin-based Gage Marine grow its Lake Geneva business.

A complete renovation of the Gage Marina in 2012 included the creation of a lakeside restaurant. The piers on Lake Geneva are numbered and Gage Marina is located at pier No. 290. Hence, the Pier 290 restaurant opened in July 2012 and has greatly increased the marina traffic and interest in Gage Marine services. The addition of the restaurant has expanded the customer base and enhanced the experience of Gage’s current customers.

The addition of live music and other events helps makes Gage Marina and Pier 290 a destination twelve months of the year. Together Gage Marina and Pier 290 Restaurant provide opportunities for customers, residents and visitors to enjoy lakeside living, even if they don’t have a home on the water, said company president William Gage.

Winter work

Omaha Marine Center’s successful foray into winter sports gear and apparel came after the closure of other local businesses left an opportunity in the marketplace.

Restaurants can boost your business, but they also present new challenges.

Restaurants can boost your business, but they also present new challenges.

An existing ski shop had expanded into boat sales and ended up going out of business. At the same time, the rise of “big box” sporting goods stores like Dick’s and Sports Authority were pushing smaller stores out of the market.

Many of Omaha Marine Center’s customers were also winter sport enthusiasts who needed a place to tune their skis and buy their gear. Company president Paul Davis (as well as several other employees) had a background in winter sports from skiing to snowmobiling, so they recognized the opportunity and invested in $100,000 of ski tuning equipment in 2008. Even though Omaha is located about eight hours from the ski hills there is demand for the service so people don’t have to spend time dealing with it when they get to their destination.

Since then, the company has expanded to offer skis, snowboards, boots, clothing and other accessories. Omaha Marine Center focuses on carrying items that are of a higher price and quality than the local big boxes carry.

“They’ve got the basic black, blue color stuff up to that $200 price point,” Davis said. “We took it from there to the stuff that was higher-tech, more features, taking it to the next level.”

Opening a bar or restaurant gives boaters a “destination.”

Opening a bar or restaurant gives boaters a “destination.”

The dealership just built a new showroom building that will allow an expanded accessory area to house its growing winter gear department. While initially launched with the idea of offering services to its existing customers, the business has quickly grown beyond that group.

“It’s brought in people who never knew we existed,” Davis said. “They’re finding us on the Web because we’re the only ones in town that can tune their skis the same day.”

Many of these new customers don’t have any interest in buying one of the company’s boats, but that have helped expand other areas of the business – even in the summer.

“What they are interested in, though, are our little paddleboards, kayaks, electric boats, things like that,” Davis said. “They’re in that $500 to $5,000 price range that they can afford.”

Global reach

But what if you’re located in an area with little potential for growth? That was the challenge facing White Lake Marine when the market crashed in 2008.

Offering a wide range of winter gear has expanded Omaha Marine Center’s customer base.

Offering a wide range of winter gear has expanded Omaha Marine Center’s customer base.

When the dealership started selling Correct Craft boats in the remote corner of southeastern North Carolina in 1955, White Lake was a vacation destination for people from the more populous western half of the state.

“The reason we’re here is that Ralph Meloon came and set up a dealership in the ‘50s,” said second-generation owner David deAndrade. “There were no lakes in the western half of the state. All those are manmade lakes that didn’t exist then.”

Over the years, White Lake Marine has expanded its footprint outside of the area, selling at boat shows and even opening another location closer to Raleigh, leading to only 10 percent of the company’s boats going to White Lake.

In 2008, hit by the double whammy of the market crash and a fire that shut down its western location for an entire season, deAndrade and his father, Carl, had to figure out how to regroup.

“It’s not like we have this huge profit center of a massive service department, no dry dock, no storage that other dealers may have,” deAndrade said. “What we did have is that we know a lot about Nautique boats.”

White Lake Marine had a small parts department, but the management team saw an opportunity to take that department global. On Jan. 1, 2010, they launched NautiqueParts.com. In addition to parts available from Nautique Boat Company, the company has sourced and had manufactured replacement parts for Correct Craft/Nautique boats of all ages. The investment has been a huge success for White Lake and a unique story of survival.

By focusing on the niche of Nautique parts, the company doesn’t compete with larger parts companies. The staff’s decades of experience with the boats allows them to identify most parts even when a customer doesn’t know exactly what they are looking for.

By launching NautiqueParts.com White Lake Marine took its parts business worldwide.

By launching NautiqueParts.com White Lake Marine took its parts business worldwide.

“It’s been shocking in how far-reaching it is,” deAndrade said. “It did grow faster than we expected. Once we saw that growth, we had to adapt and change quickly. Now we’re looking for ways to make sure we maintain and keep a positive forward motion.”

The downside of that success has been the pressure on the rest of the business. During the summer, it’s not uncommon for the company to get 300 phone calls a day for its parts site.

“It almost wanted to take us out as a dealer and turn us into a parts website,” deAndrade said. “The parts thing is nice, but we can’t be as successful as we can be unless we’re a successful dealer as well.”

It was with that concern in mind that deAndrade attended the Marine Dealer Conference & Expo in 2013 to get the company “back on track.” The conference helped the company get refocused and reenergized, which has paid off in sales.

“We’ve presold more boats now than we have since ’08,” he said. “Just getting our eye back on the ball has made a huge difference in our sales already.”

 

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