Jim Tyler pretty much grew up in the boat and motor dealership that his father started 50 years ago when he took on some boat lines and became a Johnson dealer. Jim worked summers at the dealership while in high school and college and then
joined the company full time when he graduated. He successfully grew the business over the years and became highly respected by all of his suppliers and other dealers. But then the marine industry started tanking in 2008, and Tyler Boats, like thousands of other boat dealers, saw its boat sales almost screech to a halt.
Tyler Boats was loaded with new inventory when sales dropped dramatically in the last quarter of 2008 and into 2009. Then, to make matters worse, marine lenders started putting the squeeze on boat dealers whose cash reserves were being rapidly depleted.
When I interviewed Tyler about this situation, he said, “I had to let some stuff go back, and I have sold some boats also, but I am trying to do what’s right. I’m not one of those guys who take the easy way out and declares bankruptcy. I’m going to dig my way out of this mess and go back to the basics.”
He added, “Most dealers are going to have to go back to the basics, just like we did years ago. You have to get your own floor plan and forget about these floor plan companies. With floor-planned product, when the bottom fell out of the boat market, I had to let some stuff go back.
“Manufacturers want you to stock a lot of inventory, but the problem is most banks won’t go that far in floor plans these days,” Tyler said. “And most manufacturers don’t stock anything anymore. Now when you place an order you have to wait so long to get it. If you order a sold boat, sometimes the customer won’t wait if it takes a long time to get it from the factory. Many will just cancel the deal. I have seen a lot of boat builders and engine manufacturers cut back on their inventory and just build to order. Years ago it wasn’t that way. You might have to wait a little bit to get an order shipped to you but not nearly as long as it is now.”
Tyler went on to say, “On the other hand, manufacturers have the same problem as dealers. This whole economy is hurting them, too.”
I asked, “Jim, what happened to Tyler Boats when this economic crash started?
Tyler said, “Well, I had too much inventory and it wasn’t moving. When inventory doesn’t move, the interest bill still keeps coming every month, whether you sell anything or not.”
“So I got rid of my floor plans and cut as much overhead as I could. This resulted in about $10,000 a month on my overhead expenses. For example, my interest payments were running about $6,000 or more a month. And I know dealers who had twice that amount of monthly interest to pay, or even more. I laid people off. Before the crash I had eight or nine full time employees. Now I am down to half that number. That means all of us at the dealership now have to multitask. As an example of multitasking, I now run the parts department myself, I handle most of the sales, and do all the ordering. I am just operating on a much smaller scale right now.”
I said, “Jim, I remember when that is how the majority of dealers operated 30 years ago.”
He replied, “Well, I sure remember that we operated like that 30 years ago. So I know how to do it that way. Unfortunately, a lot of the newer dealers don’t know how to operate that way.”
Tyler added, “Right now I have cut overhead as much as I can and still keep the doors open and make a profit. You know sometimes you can make more profit doing $1 million in sales with lower overhead than doing $5 million with a much higher overhead.”
I asked Tyler, “What would your advice be to dealers who are struggling in this economy?”
“Dealers have to cut inventory and overhead for starters,” Tyler said. “To keep up with the big floor plans, you have to move product…and have a high turnover and most dealers just can’t do that right now in this economy. I also think some dealers have more employees than they need, especially in this tough market with sales down so much. And the employees that they keep have to be able to do more than one task. And the dealer principal has to be involved in the business every day.”
Tyler went on, “A lot of dealers also try to handle too many boat brands and too many types of boats. If you have too many boat lines, you don’t do any of them justice. I got into that situation. I had nine brands of boats. As a result, the volume wasn’t there to get the maximum deals from each builder because I had too many brands. So I am going to cut back to maybe two or three brands and will focus on niche markets where I don’t have as much competition. I don’t plan on building my dealership back up as big as it was, but I think I will be a whole lot more profitable with fewer headaches.
I said, “One dealer suggested that after reducing staff to cut overhead that dealers should consider hiring some retired people part time who know a bit about sales and boating.”
Tyler replied, “I haven’t done that yet, but looking out in the future I might consider something like that.”
He said, “I am working on increasing my service productivity, which will help my business and profits. And I have three 6000-square-foot buildings that I have converted over to boat storage. I am also focusing more on winterizing and storage than I have in the past.”
We all know it is a very tough market out there for boat dealers, as well as other small businesses. But I think Jim Tyler is doing a lot of the right things to survive this downturn. He has built an excellent reputation over the years, and Tyler Boats customers love him and are loyal to his dealership. Tyler Boats offers quality service and treats its customers fairly, and I am convinced Jim Tyler’s dealership will be around and making money for years to come after the economy recovers. Visit Tyler Boats on the web at tylerboats.net.