I had the pleasure of interviewing a repair manager and a parts manager of one of the larger boatyards in Maryland the other day.  It sparked some research and some very interesting conclusions on boatyard operations.

Boat Repairs are Special Purpose Businesses

Although a marina may have lots of business activities and operations, boat repairs are a key linchpin.  In many ways, they parallel automobile dealerships, which I’ve blogged about extensively.  The range of technical experience and types of services offered are staggering.  As I have heard on the witness stand, “no two marinas are alike”, so it should come as no surprise that no two repair operations are alike either.  They are certainly businesses because they depend on highly skilled mechanics, highly skilled management personnel, special purpose computer software and other items.  What makes them different is their critical role within the total business enterprise and their dependencies on other areas of the marina.  They are truly special purpose businesses.

What Does a Boat Repair Business Do?

As you might guess, it’s hard to come up with a finite list of services a boat repair business performs.  They can rebuild engines, transmissions, propellers, fix the fiberglass exterior, redesign the cabin interior, install a wide variety of electronics, redesign the electrical system, install cabinetry, repair air conditioning, and apply all these services and more to new boats as well.  In addition, sailboat repair operations must address canvas and a whole range of other sailboat-type specific issues.  This is only the tip of the iceberg.  I don’t pretend to understand all the workings of the repair business but I’ve learned how to evaluate the market position of a boatyard.

How Boat Repairs Generate Revenue

It comes as no surprise that the repair business is dependent on other areas of a marina.  The two most important areas are the new and used boat sales operation.

• New boats generate business for the repair shop because boats can be customized to the needs of the owner.  Want a different GPS?  Want some additional equipment?  Just like most new cars are purchased with options above the base stock model, new boats too receive their share of upgrades and change orders.
• Used boats are typically a larger generator of repair business than new boat sales.  For a boat to be financed, virtually every bank will require the service of a marine surveyor.  This is a skilled professional that can evaluate the condition of the boat, its parts and make repair recommendations.  Even if a bank is not involved, boaters know the cost of boat repairs can be staggering, much more than an automobile, so the marine surveyor is used anyway.  I’d guess that 90 percent plus of used boats that are sold are evaluated by marine surveyors.  For many boatyards, that’s their primary source of repair revenue.
• Depending on how involved management is with their customers, some boatyards perform free annual condition reviews on their own.  That generates a list for the boat owner so they know what condition the boat is in, what will likely fail in the next season or two, and all this typically results in more work.  A good capture rate is 30 percent of all marina-generated condition reports turning into repair orders.
• Warranty work is another important area that generates repair work.  Having personnel that are skilled liaisons with the manufacturer is a big plus.  Of course, it’s easier to get warranty work when the boat was originally sold at the marina’s dealership.
• Boats that are purchased and made available for resale also generate repair work because repairs frequently have to be done to one or more systems to make the boat fully marketable and realize top dollar.
• Boatyards also provide amenity attractions to prospective slip renters and help retention of existing slip tenants.  Occupancy rates are higher in these types of marinas.

Let’s Not Forget the Parts Department

Although some parts can be sold in the marina’s Ships Store, having a well stocked inventory is obviously import for repairing the boat and delivering it back to the owner in a timely manner.  Where science becomes art is in the reordering process.  For seasonal marinas, ordering the right parts and in the right quantity for the next season requires skill.  You don’t want to stock too much and you don’t want to stock too little – quite a balancing act, I’d say.  To make it more difficult, just because, say, engine repairs were “hot” last year doesn’t mean they will be this year.  Who would have guessed that major repairs would be at such low levels last year due partially to high gas prices in-season?  Maybe that’s why parts managers use computers.

Now that I’ve setup the interrelationships of the repair business to the other parts of the marina, Part 2 will provide some of the secrets to running a profitable boatyard.