BUSINESS PLAN

Business Plan



Business Plan

Industry Analysis

Operators within the Boat Dealership and Repair industry have struggled to remain afloat throughout the recession, yielding an average annual decline of 5.4% over the five years to 2012. As boats are a luxury and, thus, a discretionary purchase, consumers were reluctant to buy new boats throughout the recession as consumer sentiment fell, unemployment levels rose and per capita disposable incomes weakened. Difficulty in obtaining credit further strained already-weak consumer demand for new boats. Though the recession had leveled off, demand continued to fall in 2010, albeit at a slower rate, declining an additional 6.4%. As a sign of clear waters ahead, IBISWorld expects a significant recovery for the industry in 2012, driven by spikes in consumer sentiment and steadily recovering disposable income. As such, industry revenue is expected to grow 7.9% to £14.9 billion over the year (Thomas, 1964, pp. 23).

Boating participation rose prior to the Great Recession. But even this pre-recession growth was constrained as industry sales were weakened by the perceived hassles of boat ownership and aggressive competition from other leisure activities. According to the National Sporting Goods Association, the most popular sporting activities include exercise walking, exercise on equipment and swimming. By contrast, fishing, which often involves boat use, ranked as the seventh most popular sporting activity. Faced with recession-weakened consumer demand and stiff competition from other forms of recreation, many operators have experienced falling profit margins. To this end, IBISWorld estimates margins will fall from 2.5% of revenue in 2007 to an estimated 1.8% in 2012. Declining margins have caused underperforming dealerships to exit the industry at an average annual rate of 3.1% to 38,718 over the five years to 2012 (Gray, 1972, pp. 5).

Over the five years to 2017, industry margins will remain tight despite the economic recovery. As ...