The next example would be laughable if not for the fact that it’s so tragic. What’s happening at a once successful marina proves that old adage, “Don’t throw the baby out with the bathwater.”

In this particular case, the customers of this marina live about one to two hours away. The area around the marina lacked good places to eat, both in terms of quantity and quality. The marina had a very successful restaurant on its property, popular with non-boaters as well as marina customers and which was, due its location, a favorite weekend get-away for transient boaters.

Five years ago, the owners of the marina decided to operate the restaurant themselves despite having no previous restaurant experience. They determined that the previous operator of the restaurant on the property was successful and, lured by the potential profits, they plunged in.

The restaurant was well-known for its weekend brunches, and the owners wanted to improve on the already successful operation by adding shrimp to the weekend menu. This was a welcomed addition, and the weekend brunch became even more popular with non-boaters. The owners knew the shrimp was bringing them in because it was the most frequently ordered item, disappearing by the platefuls.

Then reality hit. The marina’s management discovered it was losing between $8,000 to $10,000 a month, which was directly linked to the amount of shrimp being consumed each week. Here is where the decision-making was flawed. When there’s an increased demand for a product, it's time to raise prices, right? Not in this case. Instead of increasing the price of the brunch to cover the additional cost of the shrimp — or take the shrimp off the menu altogether — the decision was made to shut down the restaurant.

It was a judgment call that has had a major, negative impact on the property. Over the last several years, the occupancy rate has slowly decreased. Transient activity is a fraction of what it was, and the other commercial tenants on the property are hurting financially with a decrease in traffic through the property.

It is management’s responsibility to make the tough calls. It’s also management’s responsibility to not underestimate the negative impact any decisions are likely to have on the business. Best advice: think through all of the ramifications of your decision before it is put into effect. And in those cases where you try to think of all the consequences of a decision and you find you’ve overlooked something, as long as you learn from the decision, you will become a better manager.

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