Marina Dock Age, November 2002

Plan for a Crisis
by Dennis P. Kissman

This is the time of year when boats in the North are in storage, while Florida marinas are beginning to enjoy the peak winter boating season. As long as there has been recreational boating, this seasonal pattern has not changed, and there’s obviously nothing you can do about it.

The cyclical nature of the business can cause significant problems for marina owners. One area that has hurt the growth and stability of our industry over the years is cash management. It’s not easy and requires a lot of discipline.

Managing cash in the marina business is especially difficult. It’s relatively easy to understand the annual boating cycle, and most of us can understand the impact of general economic cycles on our businesses. However, the unpredictable factor during the boating season is the weather. The Fourth of July holiday has traditionally been the busiest time for marinas, providing a big cash infusion. Bad weather over this and other key weekends can change the economic picture for your marina for the entire year.

Weather creates other influencing factors. For instance, excess rains or droughts cause inland lakes to fluctuate, sometimes drastically. In some cases, they can make the lake undesirable for boating or the marina inaccessible. In either case, it has a negative impact on profits. Along our Gulf and Eastern coasts, hurricanes can have much the same effect on boating.

If a marina can survive economically on dockage or storage income alone, the above factors have little impact. Unfortunately, the majority of marinas in this country cannot survive without some form of supplemental income, such as boat sales, fuel sales, ship’s store, or repair.

The question is how to manage the cash flow generated from these income sources. This is done via diligent cash management. It means making sure that you have sufficient cash reserves to meet your business obligations. This may strike you as common sense, but I’ve seen too many marina operators who don’t use their native intelligence when it comes to controlling cash.

Most marinas (particularly in the North) require that summer dockage and winter storage be paid in advance. This is good policy because you have the cash in your control to pay the bills when they come due. The problem, however, is that some marina operators go on an immediate spending spree and fail to realize that the money must be saved to be used for operating costs during the peak boating season or slow winter season. Continue »