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Reed's Marine: The Art of Succession Planning

Thursday, July 28, 2016   (0 Comments)
Posted by: Jay Corn
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It all started when a pair of childhood friends had a simultaneous mid-life crisis and decided to buy a small marina in southeastern Wisconsin. Harold Johnson and Tom Shallcross grew up together in suburban Chicago, stayed in touch through the years and in 1971 leapt at the chance to ditch their 9-5 jobs for life on the lake.

Harold and Tom each had young sons at the time, and 19-year-old Tom Johnson and 18-year-old Keith Shallcross were promptly put to work hauling boats, performing routine maintenance and learning the new family business. Both boys would eventually inherit their fathers’ ownership stakes, have families of their own and spend their entire professional lives operating Reed’s Marine on the shores of Delavan Lake.

Nearly 50 years later, business at Reed’s Marine, as well as their growing service center a few miles away, is booming. Call it high tide — the best time for a captain to make an exit.

“My advice to dealers is that they plan to get in, plan to stay and plan to enjoy every single minute in the boat business — but to also realize there will come a day when they will want to get out,” Tom said. “I feel lucky because it’s very difficult to get out of the boat business. It’s certainly easy to get in, but it’s tough to get out.”

Tom went on to say his plan began to take shape at a 20 Group meeting in the early 2010. 

“I remember asking how many boat dealers have seen a dealer get out at the time they wanted to and in anywhere close to the way they wanted to,” he said. “We came up with very few examples of that happening.”

Figuring out whom Tom would pass his ownership stake to was the easy part. Jason Shallcross, the grandson of Tom’s original business partner, says he was “born into the business” and was identified early on as Tom’s likely successor.

That’s when planning became serious — and when Tom and Jason began exploring the succession process tools available through the Marine Industry Certified Dealership Program. All dealerships enrolled in the MICD Program are strongly urged to sketch a succession plan as part of their Certification journey, and Tom stressed the considerable efforts he, Keith and Jason invested in transitional planning were well worth the time.

“It’s a little bit of a strenuous process to come together when you have multiple people and lots of different concerns,” Tom said. “Even though we were a willing buyer and seller, it still took us over three years — and that’s in a friendly situation.”

Nuts & Bolts of Succession

Marine retailers who participate in the MICD Program closely examine each segment of their dealerships as part of their Certification process. An experienced MICD Consultant is assigned to each dealership upon enrollment in the program, and the successful ownership handoff at Reed’s Marine has helped craft a template for other dealerships to follow.

“The succession planning process at Reed’s Marine was one of the most enjoyable I’ve ever been a part of — it was a pleasure to watch Jason and Tom work together and arrive at a juncture they can both feel comfortable with,” Lead MICD Consultant Bob McCann said. “Some elements of the Certification process, succession planning in particular, can be challenging and at times uncomfortable to successfully navigate. That’s why planning and communication are so vital.”

A key cog of a smooth succession centers on properly preparing the incoming owner or GM for their new role. The MICD Program has helped map that learning process, and Jason says he recognizes the position requires constant demands.

“(Certification) forces you to do uncomfortable things, but it’s only to make you better as a person, as a dealership, as a GM or any position you can name throughout the dealership,” Jason said. “For me, it helped at least get closer to what Tom has attained through the many years he’s led this dealership.” 

With their service site two miles away from the marina, Jason says Certification has helped sync the Reed’s Marine team and streamlined workflow between the two locations.

“When you sit down and go through the Certification process and fill in those procedures and steps there is much more appreciation for what each operation has to go through,” Jason said. “You gain an appreciation for what the employees are doing and how difficult their job can be. “

The Proper Use of Cookies

Ask Jason and Tom how they architect the dealership’s CSI, and both will tell you that it’s all about the cookies at Reed’s Marine.

“We send cookies to everyone who buys a new boat,” Tom said. “It puts them in a good mood, and they never forget it.”

The cookies come with a customer feedback survey, and Jason says the response rate is phenomenal. 

One of the few North American retailers to be included on Boating Industry’s list of Top 100 Dealerships each year since the program’s inception, Reed’s Marine prioritizes the process of gathering post-sale customer feedback — a pillar of the MICD Program. 

Calling customers also plays an important role in the way Reed’s Marine gathers customer satisfaction feedback, and the dealership periodically outsources a call campaign to cast a wide survey of past customers.

“We don’t do it every year, but we hire a company that calls the customer and discusses in-depth their experience,” Jason said. “They can spend much more time talking about what was good and not so good. We’re given a detailed transcript of what was said during the call, and the feedback is extremely valuable.”

The cookies, feedback cards, personal phone calls and third-party surveying are of course in addition to the more informal customer feedback gathered by the team from foot traffic, emails and conversations in the frozen food aisle of the local grocery store. 

“When you live in an area like we do here, you know your customers and see them all the time,” Jason said. “That’s, in part, why we’re so serious about making sure our customers have a positive experience. They’re not just buying a boat or a life jacket, they are our neighbors and friends.” 

An MICD Founding Father

Tom’s trust and confidence in the MICD Program can be traced back to a small gathering of industry leaders and premier U.S. dealers that took place more than a decade ago. Their collective mission: to establish a standardized program that would help marine retailers improve business practices, enhance customer satisfaction and map overall operations — all while maximizing profit. 

“I was at the first meeting, and we were one of the first five dealers to sign up for the program way back at the beginning — I think we were third,” Tom said. “We saw the potential benefits right away and felt it was a great idea.”

Tom, who literally helped write the rules for Certification, went on to say Reed’s Marine enjoyed immediate results.

“We saw benefits right away, certainly with our interaction with other dealers, but primarily by having the outside training and program brought to us,” he said.

While the Certification program has gone through several evolutions since that first meeting, Tom insists the value and practicality of the MICD curriculum has played a pivotal role in his dealership’s ability to string together many successful, profitable years.

Letter of Recommendation

So is Certification status worth the required time, effort and monetary resources? Both Jason and Tom respond with an emphatic, “yes.”

“I think not only do the initial benefits of doing it and subscribing to all the processes and maps you go through help your dealership, but here we are talking about it and I just realized it’s helped me see aspects of what Tom does that I maybe never would have seen,” Jason said. “It does branch off into many different areas that you never would have guessed and makes you sit back and say, ‘oh yeah, it’s helped me through that and I never would have guessed it would have.’”

Tom adds the MICD Program made him a better owner, a better leader and a better salesman.

“What Certification does is force ownership to look at the overall job they’re doing, the job everyone else is doing, and realize that you as the owner don’t always know the best way or most profitable way to operate,” Tom said. “Yet because you’re under this constant pressure to be profitable it can be tough to say what should change — it can be tough to ask ‘where am I lacking?’ and ‘where could we be doing better?’ Certification forces you to look at your dealership overall instead of just putting out the fires of today.”