consultants to the trade

Marina Dock Age, Winter 1997

Hiring Your Best Asset, or Your Worst - The Manager
by Damian E. Buckley

How do you ensure that the position you need to be filled is filled with the correct person? A hiring mistake can be very costly. It usually takes up to three months to find the right person, and a mistake in hiring may take a few months to discover, after which the recruiting process has to start all over again. This leaves the marina owner back in the same position, or worse, just assigning the position to the nearest warm body. Employee mistakes just do not grow; we let them in with open arms through the hiring process. There is only one valid criterion—is this the right person? The challenge is getting the right person in the first place, knowing when you have the person with those basic qualities; knowing that the person you are looking for has the necessary competency and can be trained to your own methods.

It has been my experience (through personal trial and error) that there are certain traps into which we can all fall. This article is intended to aid those marina operators who do not have their own personnel department helping them through the maze of hiring techniques. Please note also, that as this is an international publication general guidelines only have been given. The respective marina operator should take employment and hiring practices in various countries into account. 

Finding the right person for the job starts off with describing what the functions of the job will be, in writing, for your own recall as well as the basis for a job description, if you do not have one. This should include a job summary, duties and responsibilities; supervision (both given and received); minimum experience required; knowledge; skills and abilities; any necessary physical standards. With this in hand the process can begin.

Cast the recruitment net as widely as possible. Some methods are the usual classified advertising in newspapers and trade magazines. Through the Internet, try to search on “marina employment.” Job experience does not matter; the individual is more important. Conduct brief telephone interviews as soon as responses start coming in. Give yourself a time limit, and do not forget that trade magazine classifieds will take longer to reach their target.

Be aware of traps that will cause problems. Replication of the workforce is not healthy and will create an unbalanced organization. Do not hire somebody because “they are just like you.” Other strengths are necessary for a successful organization. Hiring in your own likeness is rather like having eleven goalkeepers on one soccer team. Education is not always that important. A good education is not always an indication of your best future asset. Applicants with multiple degrees may not have the flexibility of thinking that is required in your operation. Honest, flexibility and intelligence are qualities that are of great importance. Do not sell the position available; let the candidates sell themselves to the position.

When telephone interviews have been conducted to screen the candidates, conduct a short personal interview, if possible. This session should only last ten of fifteen minutes and should be an initial screening. Interviewing is stressful for both parties time and has been set aside to allow for a minimum of interruptions. Put the candidate at ease through exchange of common courtesies, and avoid any disagreement at the start of the interview. Check references for those candidates that seem promising, check CVs or resumes. Talk to the candidates’ direct supervisor, if possible, rather than the personnel department – more information is usually forthcoming. Schedule an in depth interview for a later date. Combine both steps if the candidate has to travel a great distance to the interview. Make sure that you keep the interview employee- centered and ask certain questions that will help you learn more about the candidate. Do not forget that an interview is supposed to give or get information. Some questions that the marina operator will want to ask should include:

    * Describe some areas in your last/current job that you feel that you have done particularly well, and why?
    * What is the most exciting job that you have ever had, and why?
    * Why do you want to leave your current job?
    * What didn’t you like about your last job?
    * What are some of the things that your boss did that you liked (and disliked)?
    * What were your boss’s greatest strengths?
    * What do you want from your next job that you are not getting form your present job?
    * What is your overall career objective?
    * How do you describe yourself?
    * What is your greatest strength?
    * What do you feel that you could most improve upon?
    * What motivates you?

Ask a variety of questions to get more of a response from a candidate. The following questions can be used as a guide to glean information about certain job skills: 

    * Give an example of when you felt that you were able to build motivation in your subordinates. How did you accomplish this?
    * Tell me about a time when you followed the rules, although you did not agree with them.
    * Describe the most creative work-related project you have ever completed.
    * Give an example of a situation in the last twelve months in which you had to deal with a very upset customer, how did you deal with the situation?
    * Give an example of a time when you had to go above and beyond the call of duty.

All of the above questions are designed to draw forth more than a swift answer from the candidate. The questions should be changed to become site specific, and are to be used as a guide only.

Once the interview has terminated, spend some moments assessing the candidates’ skills. Create a form to help with assessing all candidates. List the required in the left-hand column. For example, experience, flexibility, knowledge, languages, credibility and recommendation to be hired may be some of the categories that you will use. In the right hand column, a choice of VG, G, S AND F (Very Good, Good, Satisfactory and Unsatisfactory). Use this form for every employee that you interview. Some employers also use a psychological test which can be completed in less than 2 hours (on site – rather than at home) and can be designed to closely relate an individual’s personality characteristics to the requirements of the job.

Several other people should interview candidates who look promising, after the interview and psychological test, if possible. Interviewing skills are not taught to most managers, and special coaching may be necessary. As the candidate’s personal story, and psychological tests come together you should have developed the “gut feeling” that is so important. Listen to it, but also review the assessments you have made.

 

Marina Dock Age, November/December 1997

Plan Now or Pay Later
by Gene Spinazola

We’ve all been faced with the auto mechanic who says: “You can pay me now, or you can pay me later,” while holding up the inexpensive oil filter he wants to install in your car. He’s telling you that you can avoid replacing the more expensive engine further down the road. 

The marina industry is faced with the choice of the oil filter or the engine, too. Look at it this way. The marina is the big expense, like buying a car; your safety program is like the oil filter, a small expense that keeps things running smoothly; and the lawsuit is like the engine in the car. Sometimes it costs more to replace the engine than the car is worth.

When we talk about a well-run marina, we may be talking about the same marina but looking at different things. I’m a boater, and while I like clean restrooms and showers, I need more than those things for me to feel that a marina is safe and well run. 

This past summer, I was boating and stopped at a marina for the night. At 3:00 p.m. the boating tenants had a fire drill. I have been boating for years, and this is the first time that I have ever witnessed a fire drill at a marina. According to the boaters, the marina staff has a drill once a month. Also, a special training session was held in the spring just for boaters; the topic was the portable fire extinguisher. Each boater was shown how to use an extinguisher, and each boater—spouse included—put out a small fire. When the boaters told us about “their marina,” there was a noticeable hint of pride in this safety-minded facility.

As a marina operator, you should make several of the National Fire Protection Association’s standards required reading. The first publication you should check out is the 1995 edition of Fire Protection Standards for Marinas and Boatyards (NFPA 303). The standards are usually revised on a five year cycle, and review of the NFPA 303 will start shortly. This standard is intended to provide a minimum acceptable level of safety to life and property from fire and electrical hazards at marinas and related facilities.

According to NFPA, this standard applies to the construction and operation of marinas, boatyards, yacht clubs, boat condominiums, multiple docking facilities at multiple-family residences, and all associated piers, docks and floats. Single family residences with docking facilities for private, non-commercial use are not intended to be covered by this standard, but use of the standard by the authority having jurisdiction or by single-family residences shall be permitted. This standard also applies to support facilities and structures used for construction, repair, storage, hauling and launching or fueling of vessels if fire on a dock would pose an immediate threat to these facilities, or if a fire at a referenced facility would pose an immediate threat to a dock area.

The NFPA 303 Standards Committee includes members representing insurance companies, boat builders, marina operators, ABYC, Underwriters Lab, National Marine Manufacturers Association, marina consultants, fire departments, sprinkler companies and fire marshals. Until his recent death, Ernest Braatz chaired this committee.

If you have a fuel dock at your facility, then you should also tuck a copy of Automotive and Marine Service Station Codes (304) under your pillow. In case those of you with dry stack storage facilities feel left out, you can get a copy of NFPA’s Rack Storage of Materials (231C). There are also other standards like Standpipes and Hose Systems and Installation of Sprinkler Systems.

If you’re going to be held to these standards, you should get a copy of those that apply to you and read them. You can call National Fire Protection Association at (800) 344-3555 or write them at 1 Batterymarch Park, P.O. Box 9101, Quincy, Mass. 02269-9101. 

If, after reading one of the books, you should want to make a change to a section or add something to the document, you can share your ideas. At the back of the standards document, there is a form and a set of instructions that will guide you through the process. Changing the standard, however, will take time. For example, the NFPA standard 303 will begin the review process later this year and any approved changes will be incorporated in the edition that is due out in the year 2000. Interim changes are passable if there’s a compelling reason, but most changes will appear in the next issue of this document.

Read this stuff. Make it your standard or you may soon be in court, buying a new “engine.”

Gene Spinazola specializes in marina fire and safety issues, and he welcomes calls: (207) 326-9147. He is president of Gene Spinazola P.E. & Associates Inc., in Casane, Maine. www.marinafires.com

 

Marina Dock Age, November/December 1997

Cater to Your Clients
by Dennis P. Kissman

Not all marinas are created equal. As a marina consultant, I usually have the pleasure of visiting three or four new marinas a month. Almost without exception, marina owners tell me how different their marina is from others.

Yet most owners try to emulate what the marina down the street is doing. If you believe that your marina is unique, then make it unique. Just because an amenity looks nice somewhere else doesn’t necessarily mean it’s what you need.

In recent years, the trend has been to try to provide a total boating experience for the customer. The emphasis has been on providing amenities for the entire family. I do not disagree with this approach, but it won’t work everywhere. I have visited marinas that could never become a family attraction—nor should they. Families are not that marina’s customer base, and trying to change it would be a financial disaster.

Marinas have a tendency to cater to a segment of the boating market. If your customer base is fishermen, you should consider selling live bait. Rather than spending $10,000 on a playground, picnic area or pool, that money is better spent on installing a live bait well. But do not forget to plan on opening the store at 6:00 A.M. to accommodate those fishermen.

If you look up the word "service" in the dictionary, you find a definition that reads something like this: work done for others as an occupation or a business. My definition of service for the marina industry is: Service is fulfilling the needs, wants and desires of customers for profit.

 

Marina Operator International, October 1997

Keeping Your Eyes Open for Good Ideas
by Damian E. Buckley

Sometimes the best solutions to problems are right before our eyes. In my position I have the opportunity to visit a number of marinas and as the saying goes "no two marinas are the same" may be true but many of the problems marinas face are the same. Through the years as recreational boating has become a popular family recreation there is one problem that both boat and dock manufactures have not resolved to any degree of satisfaction for the boating public and that providing a safe and convenient way to board a boat. Whenever you have a situation where the water level changes the problem is compounded with a fixed dock system, where the distance between the dock height and the amount of free board is never constant. By contrast floating dock systems at least offer a constant amount of freeboard above the dock surface but that is where it ends.

Since the dock surface is usually about two feet above the water with a boats freeboard easily between five or six feet and neither the boat or the dock are fixed the question is how does one easily and safely board a boat. As a marina operator you may say that it’s not my problem but it is, we are in the service side of this industry. The burden does fall on us to make the boating experience as enjoyable as possible for the boater. Besides if an accident does occur in the marina regardless whos fault it is the marina is the one that ultimately suffers. In one of the marinas we manage with a floating dock system we have a customer that has designed and built one of the safest boarding steps that I have seen. I think the idea is so good that I want to share it with you and in turn I hope you find merit in it and share it with your staff and customers with similar problems.

Boarding steps are frequently located on narrow finger piers with boats tied to both sides. The wider the boarding steps, the more problematical it is for the second user, of the same finger, to gain entry or egress to or from their boat. Picture 1 shows boarding steps that occupy more than three-quarters of the width of the finger. This boater obviously hopes that nobody is going to use that empty berth next to him, because it is very difficult to get past. He is obviously the type of boater that believes that the finger is for his private use. My experience has shown that in most marinas the finger piers are meant to be shared by the boats on either side.

I have seen where local emergency services particularly fire departments, while making a routine safety inspection of a marina will put in their report the obstacles they encounter which has included boarding steps. You know that if the local fire department has problems at the marina other emergency services will also face the same problem. Now the question is, if you have an emergency at the marina and one of these services are called and they have problems getting past boarding steps that occupy a full width of the finger pier and have commented about it on a previous inspection yet nothing done to correct the situation, your problems may just only be beginning. Not only might damage to the finger piers or the to boats on either side of the finger occur, there is also a chance of someone getting hurt. If there is an accident that has occurred involving the boarding steps then you had better check your insurance policy. Sometimes an insurance company can deny the claim on grounds that you knew about the problem and elected not to correct it.

Here is one boater’s idea that is very simple yet innovated. How do you correct this problem and instruct boaters on a way that will give their boarding steps stability, look good, and not hinder other users of the same finger? A boarding step that was designed with others in mind is shown in Picture 2. The stair tread is slightly narrower, but the real thought comes at the base. The base of the boarding steps goes completely across the finger. Half the width of the finger is used by the steps and the other half by the stable platform. Both boaters are now happy. The advantage of this design is that it can be used for a boat of any height. The base is hollow and contains cinder blocks for added stability. This particular design has withstood gusts of over 75 mph. More stability is needed for the boarding steps the higher they are built These boarding steps are bolted together rather than nailed, they are therefore easily dismantled, stowed and transported. This boater has decided to use untreated wood and paint it, matching the trim on his boat and making the boarding steps look spiffier. Treated wood could be used. He has used a darker paint on the treads to help retain heat in order to dry off any moisture that can accumulate overnight. Holes have been drilled in the tread to help remove moisture as well. These drain holes will also help when snow and ice form on the treads making the surface slippery. A handrail had been added for safety. Some boaters have built in dockboxes into their steps for added storage and as long as belongings are not visible either through the tread or through the back, this is acceptable.

If your marina is like most you probably have as many different designs for boarding steps as you have personalities in the marina. As owner or operator of a marina it is up to you to set the rules. In the particular marina where this customer has his boat berthed, the rules regarding boarding steps were vague and hard to enforce. What we have done in our marina newsletter, an acknowledgment of this boater and we have stated that his design will be our new standard for dock steps. Although we just published the article in our most recent marina newsletter, the first reactions were positive from other boaters. We believe that this is partly due to the idea coming from another boater rather than just another demand placed on the our customer by management

Boarding steps are only one of the problems that faces management. I am sure that there are other good ideas that are around we just have to keep our eyes open and acknowledge them when they appear. I would like to know of any suggestions that can improve our ability to manage and make the marina an enjoyable experience for our customer.

 

Marina Dock Age, September/October 1997

Explore Every Option to Improve Marina Income
by Dennis P. Kissman

As the boating season is winding down for many marinas, a lot of you already have your eye on what changes could be made to improve the marinas income in the off season and for the next years boating season. Those changes could include capital expenditures, staffing changes or product line changes. In each case, if the wrong decision is made, the expected increases in income could turn into decreases before you realize what happened. Under these circumstances the cost to correct the situation usually far exceeds the cost involved in making the initial change.

I always recommend that marina operators work through the effects of those changes on paper before committing to the actual change. For example, say that you sell new boats. The new boat sales office is located in your ships store, and new boats are also displayed on a limited basis in the stores retail area and outside at the marinas entrance. Excess new boat inventory is kept in the marinas dry stack building in vacant racks. New boats are rigged and warranty repairs are performed by your in-house repair department.

While reviewing your last 12 months of boat sales, you determined that you lost $100,000 to your bottom line from selling new boats. You believe you have three options. One: Get out of the new boat business. Two: Set up your new boat salesperson in business for himself by letting him take over the new boat sales profit center. Then have him lease space back from the marina. Three: Understand why you lost money and make the necessary changes to make new boat sales profitable.

At this point, you’re psyched up about options one and two—getting out of the business and letting someone else have the headaches. This is where I make a simple request: Prove that you lost what you said you lost. The majority of marina operators in this situation cannot provide proof, and often stop at: “I just know.” If you make your decision on the strength of that statement alone, your chances are good that it will be the wrong one.

Now the question becomes: How do you go about making the right decision? Begin with the assumption that if you lost $100,000 of profit in boat sales, it would be fair to assume you should have made a profit. Say that, based on your sales volume, you should have made a $200,000 profit.

Now step back and look at the options again: Which option is best? With option one—getting out of the new boat sales business—would your profits increase by $300,000 (the $100,000 loss plus the $200,000 you should have had in profits)?

There is a good chance that they would not have. Here are three reasons. First, boat sales are an intricate part of your business and the overhead and operating costs that were allocated to the boat sales profit center will have to be absorbed by the remaining profit centers.

Second, the repair business would most likely decrease because of the reduced volume. If the rigging and warranty business is not as profitable as other types of repair business, and if you do not have the billable hours to take up this void, then your non-productive labor could increase.

How many boats do you sell that remain in the marina? Those boats become the third reason that you may not profit from the decision to get rid of boat sales. If you have to look elsewhere for new customers, can you attract them at the same rate as you do when you have a captive audience with the dealership on site? If the answer is no, then the storage rate increase you planned this year—because occupancy increases warrant it—might have to be put off for another year. All of a sudden, that $300,000 increase in profit you thought you would get is rapidly decreasing and option one may be losing some of its appeal.

With option two, you have a different set of circumstances to consider. First, can you get $300,000 in rent to offset the income potential if the profit center was run right? Most likely you can not. Taking into account that you will still have a dealership on site, you may not lose repair and storage spillover but you will lose some control over how those services are sold by the dealership. With both option one and two you will still have fixed overhead and expenses that you cannot eliminate. They will have to be absorbed by the remaining profit centers, including some of it charged back against the dealership rental income.

The other thing to consider is turning over or selling the dealership to someone who was not able to make a profit for you. Chances are that if this person could not make a go of it for you, then he most likely will fail on his own, leaving you with a bigger problem than you have now.

This brings the example full circle, to the third option—the one that was the least desirable to begin with. This may still turn out to be the least desirable, but until you know what is causing the problem, you cannot take steps to solve it. 

The first step in analyzing the problem is reviewing each revenue, cost and expense line reported in your financial statements. Do not just list what is in them; understand in detail what makes up each line. This is not an easy process; plan to go back through the list more than once.

Then ask yourself: What would I change if I followed each of my three options? List each line item as it is in the financial statements, then set up a column that represents the total actual amount from the financial statements as well as a column for each option to consider and an area for notes to jog my memory as to why I made the decision I did at the time. In each of the option columns, I either add or subtract an amount that I believe would impact that option.

For example, take the sales office and display area in the ships store. By eliminating the new boat sales as proposed in option one, what will change? It probably will not change the utility cost since it was all in the same building. It will add retail floor space, but do you really need more retail space? If so, then estimate how much your gross profit on sales will increase, but remember to subtract the carrying cost of the additional inventory required to generate those sales. Also ask if it will require an additional salesperson. If it does, then add the additional employee cost and related employee benefit cost.

If you ask the same question about utilities for option two, the answer would be the same as for option one. This time you would be getting some additional rental income that you would not have had before, but on the other hand, there would be no opportunity to expand your retail sales as suggested with option one. 

Back to option three, again, there is no change in utility cost, but you do have other choices to make. Maybe the best solution would be to eliminate the indoor new boat display and convert it into additional retail space that will generate more income without negatively impacting new boat sales. Now you are beginning to solve your problem. You have taken some non-income producing space, turned it into income-producing space and concentrated your new boat sales area. The utility cost that could not be eliminated now has a larger profit base on which to be allocated.

This is but one simplified example of how to analyze a profit or cost center in your marina. Every profit or cost center could be reviewed in a similar manner and each would produce its own set of results.

In this example, even though the utility cost line item did not change with all three options, the impact it had on the operations profitability did change because you figured out a way to increase sales without increasing utility costs. Often just eliminating the problem and not understanding what the real problem is makes you fall far short of your intended goal. The bottom line: Understand your bottom line before you start making changes.

Marina Dock Age, July/August 1997

Charge Live-Aboards for Amenities
by Dennis P. Kissman

Having been a live-aboard boater for several years, and now that I work with marina owners and operators on their problems, I can see the dilemma many marina operators face when deciding whether or not to accept the live-aboard boater. 

Many marinas are restricted by laws and ordinances that do not allow live-aboard boaters. But others have the choice whether or not to accept live-aboards, and that decision should be made as a conscious one, and not by default.

The question is: What is the best way for a marina operator to deal with the live-aboard boater? As a marina operator, the first and foremost item to keep focused on is that a live-aboard boater is at your marina at your invitation and has to abide by your guidelines. Do not be afraid to expand the marina rules that may apply only to live-aboard boaters.

The key here is to establish these guidelines or rules that are designed for the overall safety and well-being of both the marina and its customers. Do not establish guidelines that have any hint of discrimination. Here are some examples of guidelines that could apply only to live-aboards: adults only, minimum boat size, minimum holding tank size, and minimum shore power connection.

You may also want to require that all live-aboards leave the marina at least once a year in their boat, under its own power. Also require that they undergo an annual boat safety inspection by an outside agency such as the U.S. Coast Guard. A good rule—for all boaters—is to insist on the boat registration being current.

You want the boater who lives aboard to be there because he or she has chosen that lifestyle, not because its become a form of “subsidized” housing. One of the easiest ways to determine what type of live-aboard boater you are dealing with is to look at the condition of the boat. Most likely, if the boat is in poor condition, you will have problems down the road.

If you elect to allow live-aboards in your marina, the question comes down to economics. I see marinas charging live-aboard fees as low as $50 per month. On a daily basis, that equates to $1.67 a day. I would like someone to tell me where a person can live that cheap anywhere. Probably, in addition to this ridiculously low live-aboard rate, these boaters have long-term agreements with the marina, meaning that they are paying low slip rates.

To put this situation into prospective, consider the boat as a condominium. From the boat owner’s prospective, the combined payment on the boat and slip fee is the cost of his or her domicile. The live-aboard fees are similar to common area maintenance fees that cover such basics as trash removal, parking lot maintenance, landscaping, laundry room and security.

Live-aboards will say that you are discriminating against them because all marina customers can utilize these services. Granted, that is true, but your other customers typically do not utilize the marina on a daily basis. Take for example, a parking lot: Most marina customers utilize the marina during the day and are not concerned about the night lighting—for security—throughout the entire parking lot, nor are they particularly concerned about having convenient pathways available in inclement weather.

Each marina operator should determine the cost of these added services at his or her marina and put a value on them. I would venture to say that if you really look at your operation, the value could easily equate to $5 to $10 per day. If your live-aboard boaters are not willing to pay for such services, maybe they are not the type of live-aboard boater you want in your marina.

A word of caution: Make sure that the fees you charge are in line with the services provided. Speaking from experience as a live-aboard, I did not mind paying for services that had value.

Once you have made the commitment that you want live-aboards in your marina, make sure you understand and recognize how their needs differ from your other boaters. The natural tendency for the live-aboards is to become possessive and feel that they deserve a say in running the marina. Never let yourself get into a tenant/landlord relationship with your live-aboards because if you do, and a legal issue arises, you are dealing with a completely different set of rules than you are with a license agreement relationship.

Live-aboards can be an asset to your marina, but only if they pay their fair share and understand the rules, and only if you remain in control of the marina. Only then will the relationship work. With these issues properly addressed, it boils down to a purely economic decision.

 

Marina Dock Age, July/August 1997

Make Time for Training
by Gene Spinazola

Baseball teams all have spring training. Before they start playing for all the marbles or whatever it is they play for, they have some practice games to get ready for the real games. We’re not talking about OJT, or on-the-job training; we’re talking about BJT, before-the-job training. And that’s something that marina operators need to do too. I know that this concept may be somewhat difficult to get used to, but at least give it a glance.

Think back to last summer: It was hectic. Only half of the staff returned. And remember the new gas dock attendant, young Jack Daniels? After that boat exploded at the fuel dock, all we saw from him was tail lights.

Every year you deal with the same situations: get the docks in, moorings set, grass cut, rest rooms clean, OSHA requirements met, and the list goes on and on. 

You need to hold spring training when the timing’s right for you because spring hits at different times for different marinas. In Maine, for example, spring lasts until the 4th of July and then we start fall. Yet we have the same hectic pace here that you do in every other part of the country: When the weather starts to get warm—it’s kind of like dandelions—people start popping up at the marina.

Don’t wait until fall and then say, “Next year, we need to do some emergency planning and training with the employees.” It’s time to do that now.

One of the best programs you can offer is a lesson in the care and use of fire extinguishers. Fire extinguishers are the single most effective piece of fire fighting equipment available on the market. It’s true: Little red fire extinguishers put out more fires than big red fire trucks. 

Set aside an hour in the workday for extinguisher training. Don’t assume anything about the basics and don’t think that “because we did this last year” everyone remembers. First, you have some new employees, and second, learning is improved by repetition.

Explain the burning process and the four classes of fire. Explain how to recognize each type of fire extinguisher used in the marina and how each one works to extinguish a fire. Have your staff discharge several extinguishers and emphasize PASS: Pull the pin; Aim the nozzle at the base of the fire; Squeeze the trigger; and Sweep the agent back and forth to blanket the fire.

Impress on your staff that their own personal safety is always number one on the priority list and the safety of others is the second priority.

Who gets this training? The National Fire Protection Association’s standard, NFPA 303, Fire Protection Standard for Marinas and Boatyards, Employee Training, reads: “All employees, including office personnel, shall be given training in the use of portable fire extinguishers and hoses in the fighting of fire.”

The expense involved in this training is the recharging or replacement of the extinguisher. The extinguisher discharge area should be remote and well clear of boats, cars and other property that will be affected by the extinguishing agent. If you need some help with this training session, ask your supplier or the fire department. It’s even better if the help comes from someone who knows boats and boat fires and how your marina operates. And remember the saying about “little red fire extinguishers and big red fire trucks.”

Here’s a little fuel dock story that goes a long way to explain the need for training: An electrical fire in the engine of a 20-foot open fishing boat ignited some of the gas and oil in and around the engine. The fuel dock was equipped with two B40:C extinguishers as required by NFPA 303. In addition, the manager had bought a 75-pound dry chemical wheel cart with 25 feet of hose, which was also located at the fuel dock.

When the fire occurred, staffers grabbed the two hand-held portable extinguishers, which they used up quickly. Next they used the hand-portable extinguishers from the dry stack building. Next, well, you get the idea. But most importantly, they ran by the big, red 75-pound wheel cart and never even considered using it on the fire.

Teach your staff to be prepared. They should know things like when to call for help; who to call for help; and how to get the right response for help. Think about hearing this: “We have a fire in a boat,” or, “We have a boat fire in the dry stack building.” Which of those statements will get the best response? Sure, the second one will get all the king’s horses and all the king’s men and women and the big red fire trucks, too.

Do you have a written emergency response plan? Do you review it annually? Do you use it as a training tool for new and old employees? Do you keep records of your staff training sessions? Can you defend your position and say, “I have a well-trained staff,” when you go to court?

While the emphasis here appears to be on the fire issue, it really is on the need for emergency response planning to prepare your staff for any emergency. Police, medical, oil spill, storm and fire all need to be addressed.

What do you want your staff to do if young Jack Daniels pumps 50 gallons of gasoline through the fishing rod holder and into his bilge—at your fuel dock? Think about it.

Gene Spinazola specializes in marina fire and safety issues, and he welcomes calls: (207) 326-9147. He is president of Gene Spinazola P.E. & Associates Inc., in Casane, Maine. www.marinafires.com

 

Marina Dock Age, May/June 1997

Weathering an Economic Downturn: Can Storage Cover Your Cost?
by Dennis P. Kissman

I’m not suggesting gloom and doom for marina owners just when were coming out of a downturn in the economy and the future is looking bright, but there is one thing that we do know for sure: The soft economy that we experienced for the past several years will occur again when we are least prepared. However, there are ways we can minimize the impact on marinas. Rather than being proactive, most marina owners and operators react to changes in the economy. If you react, then the effects of a downturn in the economy will surely affect you.

As a rule, the marina industry is considered a reactive industry to the overall marine industry. In a sense, that is true. The marina owner must store and service the products the marine industry produces. Beyond this correlation, marina owners are in control of their own future and face an altogether different set of problems when it comes to addressing changes in the general economy.

To reduce or prevent the financial hardships associated with a downturn in the economy, you must first recognize what your core business is and the reason a marina exists in the first place.

Marinas exist because boat owners need a place to store their boats. In recent years, the industry has promoted the full-service marina concept to attract and retain customers. It is important to grow and remain competitive when times are good. But when times are bad, if the marinas core business (the storage of boats) cannot sustain the marina’s financial obligations, then it is in for some hard times.

The strength of the marine industry is selling new products, while the strength of the marina industry is caring for existing products. When positioned correctly, marinas are less volatile in a downward shifting economy than the industry in general.

Now the question is: How do you take advantage of the fact that boats do not disappear? Typically, boats do not leave a marina in hard economic times. Boat owners usually cut back on maintaining boats and they definitely cut back on using boats. Each of these factors can have a negative impact on a marinas profitability when that marina relies heavily on these profit centers as a main source of income. 

When a marina derives the majority of its net operating profit from boat storage fees, it is impacted less than a marina that relies heavily on profit centers. I suggest the following approach to see if your marina is ready to face a downturn in the economy. 

First, look at all the revenue generated from storing boats, including fees for utilities if they are not already included in the basic rate. If your utility charges are a pass-through as boaters reduce their usage, your cost will go down proportionally. But if there is some other arrangement where minimum usage or minimum hook-ups are required, these costs should be factored in as fixed costs.

If your marina is seasonal and part of the year customers store their boats on land at a reduce rate, be prepared to leave some of those boats out of the water during the boating season. You may want to consider how you structure your storage agreements, so as not to lock yourself into a situation that is detrimental to the marina should a number of customers opt to keep boats on land during the boating season—a typical situation if a bank owns the boat. 

Now, address the fixed costs associated with the marina. Closely look at your labor costs and determine the minimum amount of staffers that you will require, assuming that the demand for other services will be reduced and this amount becomes your fixed labor cost. Don’t consider closing profit centers in a downturn, but do look at reducing staff and hours of operation. Lets fact it: No one wants to lose good employees, but sometimes it is necessary if the marina is to survive.

When you look at the balance of the fixed costs, go beyond the costs associated with the day-to-day operations. Look at all your liabilities to be sure that you are able to meet all of your commitments, such as payroll and income taxes, note and mortgage payments and customer deposit refunds.

If your storage fees can cover the fixed costs, then you should come through hard times. On the other hand, if you anticipate shortfalls, then you should seriously consider restructuring your storage rates if you expect to be in business for the long term.

 

Marina Dock Age, March/April 1997

Marina Owners: Face Financial Reality on Your Facility’s Worth
by Dennis P. Kissman

I recently had the opportunity to be one of three faculty members for an International Marina Institute course held in Tampa, Fla., on marina financing and appraising. The topic was presented from three points of view. First, the real estate appraiser’s perspective, which was presented by Mark Stroud of The Stroud Corp. Then there was the lender’s perspective, presented by Harry Neiman of Nations Credit Commercial Corp. And third was my mission to present a buyer’s and seller’s perspective. 

The course was well attended and represented a good cross section of interested people. We had appraisers, lenders, prospective marina buyers and marina owners in attendance. I must admit it was an education for me as well. Even though we faculty members worked with each other on a one-on-one basis on specific projects, it was very enlightening to learn the amount of reliance that each of us places on the other’s work.

The faculty’s consensus was that, although each of us approached evaluating a particular marina a little differently, the income approach is the common thread that makes or breaks a deal. This holds true whether you are a buyer, seller or an owner planning to refinance your marina.

The course format provided for some very lively discussions when we were going through the marina case study. It was interesting to see the different directions that each participant came from, depending upon his or her background. 

Since the focus was on establishing a cap rate to be applied to the net operating income of the marina, the major question centered on what cap rate to apply. In one example, I used a cap rate of 18 percent—and that got everybody’s attention. The buyers and lenders were all smiles, while the marina owners and appraisers wondered what I was smoking. Before, I had always talked in the 10 percent to 12 percent range, which in today’s market is probably where the rate should be to remain competitive with other types of investments. Just as the 18 percent rate may sound ridiculous to a marina owner, by the same token, the marina owner who believes his marina is worth selling at a 7 percent rate is just as ridiculous.

Here is an example using these extremes: For discussion purposes, say that a marina has a net operating income, or NOI, before depreciation, debt service and income taxes, of $500,000. Apply a cap rate of 18 percent, and that marina should sell for a rounded $2,800,000. This amount is obtained by dividing the rate into the NOI. Using this same example, apply a cap rate of 7 percent and the marina should sell for $7,100,000.

Settle on the rate that seems to be a compromise—where marinas will actually transact at— and that is the 10 percent to 12 percent range. So, using the 11 percent cap rate, the marina should sell for $4,500,000 in a competitive market.

The next obvious question: How many marinas sold at the 18 percent cap rate and how many at the 7 percent cap rate? The answer: A few distressed properties held by lenders sold at the 18 percent cap rate. No one, including myself, could think of one sale that took place at the 7 percent cap rate. And that is my point.

Take the same example and assume that the marina is worth the $7,100,000 and buyers are willing to buy at an 11 percent cap rate. The NOI would have to reflect $781,000, not the $500,000 now showing.

When will this industry wake up to the fact that you—marina owners—sit on a valuable asset, and the only reason you cannot get the true value out of the property is because you are afraid to charge customers what it is really worth. Instead of just wishing you could get more than $7 million for your marina, why don’t you do something about it?

 

Marina Dock Age, March/April 1997

Stay Water-Wise, Fire-Free
by Gene Spinazola

At almost all marina fires I have researched, the fire fighting water supply has been a significant and time consuming problem. Water supply problems are not limited to rural or volunteer fire departments, but these areas are less likely to have a water main and hydrant system. Don’t have a false sense of security because your marina is on the water. Yes, fire trucks are made to pump water and you have water at the marina. However, getting water to the fire can’t be left to chance and must be the result of assessment and planning.

The water supply must be available 24 hours a day, seven days a week, without fail. Another area of concern is temperature. If your facility is subject to freezing conditions, you need to plan a water supply that is available in the worst conditions. Obviously, fire departments prefer properly designed hydrant systems that meet all prerequisites for water supply. 

The fact that you have a hydrant system that services your marina doesn’t automatically mean that you have an adequate water supply. If you have increased the size of your marina by adding more slips or a dry stack building, or if a housing subdivision or other development has been built in your area, your existing water system may not be adequate.

In areas where hydrants are not available or are of insufficient size to handle the demand of a large marina fire, alternate water supply systems must be planned. The water supply needs to be close enough to the marina and boat storage areas so you won’t need tanker truck shuttling or long hose lays, or runs, to fight a fire. Both are time consuming. And you know that time consuming will be boat consuming. 

Properly designed boat ramps are integral to getting to the water supply. When the lake is low or the tide is out, the fire apparatus needs to go farther down the ramp. A fire truck may weigh 15 tons or more, and the ramp construction must be considered. Some fire departments are reluctant to use salt water because of its long-term effects on their equipment. 

Not all marinas have boat ramps. And not all ramps are aimed in the right direction. That leads to another water system referred to as dry hydrants, or drafting hydrants.

A dry hydrant is a large diameter pipe, usually six inches in diameter or longer, that is permanently installed so that one end is in the water and the other end is located where fire apparatus can connect to it. A section of flexible but hard suction hose is connected to the dry hydrant and, using its onboard fire pump, the fire apparatus will supply water for fire fighting.

By strategically planning the location of the dry hydrants, you can improve your water supply system. There are design limits and restrictions to dry hydrants, however, and they are not the solution to every problem.

There are some problems and concerns associated with dry hydrants. The first consideration is the suction lift, which is the vertical distance from the surface of the water to the suction eye or inlet of the pump. If this vertical distance exceeds 15 feet at low water, the fire apparatus may not be able to get water. New fire apparatus generally can produce a suction lift of 20 feet to 22 feet, but don’t build a dry hydrant based on brand new apparatus. The general rule for suction lift is 12 feet to 15 feet.

Second, consider how close, horizontally, the fire apparatus can get to the water. The horizontal distance adds friction loss to the system, which reduces the ability of the apparatus to get adequate water. There are several ways to reduce this friction loss, such as increasing the pipe size or reducing elbows.

Consider the marine growth in your area. In some areas it is impossible to use a fixed dry hydrant system because the marine life will grow rapidly and clog the pipe in a matter of months. You must put together a water supply system that will meet the needs and specific operating conditions at your marina. If the fire department tells you that everything is all set, and the water supply is all planned out, ask the department to do a timed training evolution at your marina. Remember, time is boats. Work with your fire department to develop a workable plan that is specific to your marina.

Gene Spinazola specializes in marina fire and safety issues, and he welcomes calls: (207) 326-9147. He is president of Gene Spinazola P.E. & Associates Inc., in Casane, Maine. www.marinafires.com  

 

Marina Dock Age, January/February 1997

Create an Available Reserve for Repair, Replacement Cost
by Dennis P. Kissman

This is the time of year when thoughts turn toward the coming summer boating season and what that will mean to the year’s profitability. It also means that we must assess wear and tear from the past year and then look at the cost of putting the marina back in shape for the coming season.

Many marina owners subscribe to the old adage that if it’s not broken, don’t fix it. This philosophy may work in some businesses, but in a marina it could put you out of business. Typically, marina facilities deteriorate over time. Oftentimes, owners tend to ignore this gradual decline and learn to live with the problems it creates. 

This brings us to a common subject that is not frequently addressed in a serious manner: how to establish a replacement reserve for those deteriorating assets. The key to establishing a replacement reserve is to make it part of your normal course of business. One way that works is viewing the annual replacement reserve amount as if it were an insurance premium. The next question is how to establish the amount of the premium since there are no guidelines on the subject.

As you know, many marina improvements are subjected to harsh environmental conditions to a far greater degree than most other businesses. The effect often shortens the useful life of the asset and increases the annual maintenance cost. 

To properly account for this cost, an accurate assessment of the useful life of each asset as it relates to the local conditions at the specific marina, along with its estimated current replacement value, should be made on an annual basis. Notice that the useful life is based on "local conditions," not what the IRS may set as the useful lives of depreciable assets for tax purposes.

Next, divide the replacement cost by the estimated life to get an annual reserve amount for the current year. For example, if the current replacement cost of an asset is $180,000 with an estimated life (based on a specific marinas environment) of 15 years, the annual reserve amount is $12,000. As part of a year-end calculation, be sure to delete all retired assets and include all those acquired during the year.

The annual amount booked to the reserve should equal the composite annual amount estimated for all assets, less actual repairs and maintenance costs recorded for the year. 

Assume your total reserve amount is $62,500 and during the past year you spent $47,700 on repairs, maintenance and replacement of existing assets. Based on these assumptions, the additional amount to be booked to the reserve is $14,800. Do not attempt to relate specific asset reserve balances to repair and maintenance costs. If the replacement reserve calculations are handled in an objective manner, the composite amount will be the most accurate over time.

Should the actual repairs and maintenance expenses for the year exceed the annual reserve calculation, the reserve amount must be reduced, provided there is a sufficient reserve balance. At no time should the reserve account be less than zero. If this occurs frequently, the estimated useful life of assets is too long or the estimated current replacement cost is too low. If this replacement reserve exercise is to have any validity, you must discipline yourself to make the financial commitment. The offset to the reserve account cannot just be a book entry. If you really look at the reserve as a form of insurance premium prepayment, then any annual surplus amount must be deposited in an interest bearing cash or cash equivalent account that can be readily drawn upon to make necessary repairs or acquire replacements.

By using this method to control maintenance costs and keep your marina in good repair, there are some additional benefits. You will be able to better control your cash flow, keep your customers happy and reduce competitive pressures from other marinas in your market area.