Marina Dock Age, September/October 1999

Fight Depreciation with Three Simple Words
by Dennis P. Kissman

Depreciation. We’ve all heard the term, but few marina owners seem to really understand it. If you look up the word in the dictionary you’ll see that there are two meanings for the word. One is a financial term used by accountants when preparing tax returns, and the other is what happens in the real world. Unfortunately, the definition most marina owners are familiar with is the one their accountants use: “an allowance made for a loss in value of property.” To make matters worse, many marina owners put their own spin on the accountants’ version, which goes something like this: “a legal way to reduce an income tax liability.” Then this definition is further interpreted as a method of putting more cash in one’s own pocket.

Wake up, marina owners. The definition of depreciation that applies to a marina is the second one found in the dictionary: “a decrease or loss in value because of age, wear or market conditions.” This is what is really going on in your marina: it’s losing value. Several years ago I remember seeing a commercial on television for an auto transmission company that said, “You can pay me now, or you can pay me later.” This really applies to a marina, and the bottom line is, one way or the other, it will cost you money in the end.

A synonym for the word “depreciation” as it relates to a marina is our old nemesis “deferred maintenance,” and you know that the longer you ignore deferred maintenance the more it will cost you in the end. If you are willing to spend a little money along the way on maintenance issues, your total cash outlay over time will be less than if you ignore them.  

There are three things you can do at your marina that cost very little for the amount of value you get in return. These can be summed up in three words: paint, adjust and lubricate. I like to use the acronym “PAL” to get the message across because “pal” means friend. If you follow your friend’s advice, he will only increase the value of your marina. Continue »