BUYING FROM LEISURE PRO vs. THE LOCAL DIVE SHOP

[mikehf]

I got back into diving this year because my children are older, and can either be left at home, college or come diving with me. After checking all my equipment that was now 18 years old, I needed a bunch of new stuff. Researching and buying is the fun part. I visited the three local dive shops, one was nice and two were disappointing, all had very little inventory, none made it easy. I finally typed a list of the equipment I found and researched online, and sent it to all of them. A week later after ZERO response from any LDSs, I bought it online. I was kind of disappointed being forced to buy it online and I had a tiny warranty issue with the internet merchant that I hope will end very nicely. Doing my warranty research led me to a lot of threads about LDS vs internet merchants.

I have had the fortune to work with over 500 medium size and some large businesses over the last 20 years. I (with a team) automated their business and had to learn thousands of business processes in a mission to automate “From Web to GL” I am not a LDS expert but I really understand business in general.
If your LDS is not doing as well as you want, here are a few tips you may want to consider vs. bitching about LeasurePro. I hope the items below do not offend you and if you know all this stuff then you are probably doing ok!

1. First impressions: (People buy from people they like or from websites that make e-commerce easy)
   1. Brush your teeth, put on fresh clothing, and don’t stink. I make up my mind if I am going to buy from you within the first 2-15 minutes.
   2. If someone walks into your LDS, smile, greet them, and ask engaging questions. There is an entire science and books about how to ask engaging questions. If you don’t have the gift of gab, buy the book. Ask questions that require a thoughtful response. If you ask me how I am, I will say “OK, how are you” If you ask me when I want to dive next or what type of diving I like the best, you will get a much longer response and you will start to learn about me.
   3. I deserve to not feel sorry for you when I walk into your store.
      1. Depreciation is an accounting concept that is a lot more than what you learn about in accounting 101. If you’re telling your friends that you are profitable before depreciation, you’re headed towards trouble. Without maintenance your store becomes 1/1800 more disgusting every day. After 3 years your store is ½ disgusting. Paint fades, furniture breaks things rust, hinges squeak, glass fronts becomes dirtier and dirtier each and every day. That cool looking lobster claw in the display case looks rotten 10 years later. Ever go to a food court and see faded pictures of meals that look all faded and green? That is how your store will look if you don’t understand depreciation and renew items consistently.
         
         I don’t want to give an accounting lesson here, but plan on replacing all your electronics every 5 years, plan on painting every 5 years. Plan on cleaning out each display and starting over every year. Every 10-15 years you will need to completely redo the entire store. You need to take the depreciation figure your accountant gives you and put that money in a savings account so you can do the above when the times comes.
      2. Clean your store. Your store looks like your mind. I can tell what kind of person you are. Vacuum the darn floor each and every day. Clean the bathroom. Don’t be proud of your filth.
   4. Did I mention don’t stink? I don’t care if you taught James Cameron everything he knows about diving, if I have to wear a scuba regular when we talk, I ain’t coming back.

1. The business:
   1. Are you a Business person or a Supreme Dive Master or both?
      1. Just because you are the best diver on the planet does not mean your store will do well. If you are not an entrepreneur and/or you don’t have great people and skills, don’t start a LDS without a partner. If there are 8 people telling you to start a dive shop and they will be your clients, you only have 400 more to go before you can start!
         
         Learn about how to run a business. There is absolutely no fun in having a struggling business. It’s like having a 300# person standing on your chest day and night and it will probably cost you your marriage and some health.
         
         ---but… if it’s all you can think about and you wake up dreaming about your dive shop and you go to bed thinking about it, then do it now and have fun. The sooner you start the sooner you will be in business ----

1. So I am telling you if you a tech dweeb, or lack a strong personality, or you’re friends tell you “you are a dick”, then you will need to partner with or hire talent that can drive business. Partnerships are like sexless marriages. You reeealllllllyyyy have to like that person and both people have to want to knock the ball over the same goal post. If you want to become rich and your partner wants to get out in 5 years with lot of free trips, then you have different goals. Never start a partnership without discussing exit strategy and goals. Always keep >50% ownership. 50/50 does not work and has killed many a business.

1. Hire slow, fire fast. Don’t think about firing someone for 4 months. If they don’t drive business, profit and references, fire them yesterday. Each person is a sales person to you. They sell your mission. Tell them that when you hire them.

1. Focus. Your shop should be the best in your town on some aspect of diving. Either you have the best cave equipment, or you have the best training, or you have the best ______. You need to be the best at something and better than anyone else within 300 miles. One you are the best at than, then add another goal to the ”best list”.
2. Profit - You deserve it. It’s how you stay in business and it’s how you pay your employees and its, quite frankly lots of FUN!
   1. Understand your sales funnel.
   2. Build a list of people who walk thru your store. 90% of the people thru the front door are potential buyers, 20% of them are ready to spend money, 10% have it in their pocket and want something. This is called a sales funnel. You need to keep pouring people in the top for sales to come out of the bottom. Build that list, kindly capture their email and market to your list. Never stop marketing.
   3. Buy low, sell high, don’t be afraid of charging, but don’t rip people off. Always do what is best for the customer. It’s a very simple rule.
   4. Always introduce new products and services to your mix and get rid of ones that don’t make happy customers and/or profit. A business that is not growing is dying.
   5. Understand your overhead and try to minimize it.
   6. Re-negotiate all your contracts every year.
3. Have some inventory. This is the tough one. I realize you cannot have all of everything, but you should have s,m,l,xl,xxl of most stuff you carry. Have catalogs ready that you can show customers in case you are out of stock. Pretend you have a huge warehouse that you can replenish from overnight. Understand turnover. I’m not sure about your industry, but if you are constantly out of stock of Part# 12332, then order more and stock it, but if Part# 1235 is on the shelf for more than 2 months?, have a sale and get it off the shelf because it is costing you. There is a science to this. Lookup “Economic Order Quantity”
   Pit manufactures against each other. Ask for more margin or deals all the time.

1. Selling
   1. Learn to negotiate. Don’t let money leave the store. Don’t leave money on the table. When I come in and look at that new Suunoto console and want a discount, don’t say “No”, say “yes, but”. If you say no and look away, our conversation has nowhere left to go but me leaving the store. You have given me no options. If I leave the store and you don’t have my email, you lost. There are entire cultures of people that negotiate for everything, including their groceries. I personally have a difficult time paying list price for cars, homes and scuba equipment. I’m not the only one. I have worked for Manufactures that fix prices, and I’m not an expert in your industry, but there are many ways to discount without pissing off your product manufactures. Never discount without getting something in return. Some examples:
      1. “Ill can’t sell the Suunoto for less than $310 list, but if you buy it and send me a reference letter I will send you a $20 check or this scuba knife.
      2. I can’t sell this BC for LeasurePro’s price, but buy it for list and I will a) Include a warranty, 2) I’ll send you $40 when I get a reference letter from you or a positive post on my FaceBook page 3) Ill fit it to you at the local pool and test it all out with you, etc., etc., etc.
      3. Hey I’ll throw in a dive knife or a flashlight if you buy it for my price.
      4. Hey, I’ll sell it to you for 15% over LeasurePro’s non – warranty price
      5. Etc., etc., etc…

DON’T JUST SAY “NO” AND LOOK AWAY. THEY're NOT INSULTING YOUR STORE OR YOUR VALUE, ITS JUST THEIR RELIGION

1. Make commerce easy. Different people prefer different forms of shopping. In person, e-commerce, phone, fax, etc. Your entire catalog of products should be on the internet. If you have no idea how to do this pay/trade some kid to setup the catalogs online. Yahoo stores makes this pretty easy and surprisingly cheap. Everything in your store should be on your website. If you represent (fill in manufacture here) , then they should give you their catalog in a digital form that you can simply upload to a yahoo store. Share the expense with another scuba shop 500 miles away.
2. Learn how to compete with the big internet Dive Stores. You have many advantages, but none of them will come out if you get crappy with the person sitting in front of you that is hinting that they want a discount and they know how to use Google. You goal should be to explain to me all the advantages I have of buying Product X from your for $100 vs getting it for $85 from LeasurePro. Believe me, I don’t mind spending the $15 extra with you, you just have to talk me into it gently.
3. Make sure everyone who works at your store can sell me a widget and explain all the advantages in 60 seconds or less. PRACTICE IT. If they don’t have the technical knowledge for a product, they should admit it quickly and call you on your cell.
4. Competition. When I first started in businesses, I did all the dumb stuff that you do regarding competitors. My ego told me I was better and I let that out. Now that I am older and wiser, I work with my competitors to make the pie bigger vs cutting a bigger slice of a small pie. Nothing, I mean nothing makes a person more curious about something than when you bad mouth it. Learn your competitor’s strengths and weakness. This is difficult for many to understand, but become a friendly competitor. You can do more working together than you can tearing each other apart. You need to outwork and out-think your competitor, not badmouth them.
   
   It’s important to realize that when you make a sale, you learn little, but when you lose a sale to a competitor you can learn an awful lot.
5. Market, Market, Market. Its 400 times cheaper to market now then it was 20 years ago. Buy some google adwords, setup facebook, twitter and Pinterest or something like that. Use the hell out of them, or trade marketing for dive trips for some young energetic college kid.

I could keep going for days on this, but lets summarize: “Have a clean shop, don’t stink, suck less that your competitors, work your ass off, learn to ask the right questions and for god’s sake, learn to negotiate:”
Mike “I know nothing about the LDS business” Frye

 

[cb5150]

I like the cut of your jib.

 

[ams511]

Most dive shops owners are not good business people. There are several shops that have my email address and never send me anything. The online shops send me advertisements all the time. I wanted to take a course in equipment repair and emailed some shops that advertise it and no one would respond.

 

[yardpro]

olympus dive shop in morehead is great at marketing...
they send out an email if you even come in the store thanking you for your visit ( if they know who you are and have your email.

 

[redacted]

olympus dive shop in morehead is great at marketing...
they send out an email if you even come in the store thanking you for your visit ( if they know who you are and have your email.

So, how is their stockage and prices? Some folks may see such email as just another form of spam.

 

[The Laconic]

Mikehf, that was just... epic. That should be a sticky. Somewhere.

---------- Post added April 24th, 2014 at 08:18 PM ----------

Sure wish I could find one of these LDS people rave about. Where are they, Fantasy Island?

My local LDS, Underwater Safaris in Chicago, is walking distance from my house, and almost treats me like family. Maybe it's the Fantasy Island shops that suck.

 

[Mike126]

Mikehf - Very nice lesson in business management. Some shops I deal with understand the Internet competitor and deal with it by being open to negotiation and even start by pricing items on a more reasonable level for the basiscs (masks, fins etc). I went to one of my "go to" shops a few months ago to buy my son a mask. Nothing fancy, just a good fitting mask for him to wear snorkeling and hopefully to do his OW cert class. I paid $65 for it, no questions asked. When I got home, his twin brother decided he also liked the mask and wanted the same brand. So I went online to see what the prices were. After looking at LP and a few other sites I found the avg price was $40 with a low price of $30 from ScubaGearPlus. I was a little annoyed since while I was at my LDS I had also purchased a new computer for over $400 and had recently puchased about $1000 in gear a year ago. I would have thought that maybe a price cut would have been a nice gesture. I do realize that at the time of purchase I never even made any request for the price cut.

I will go back to my LDS for other gear and training. Overall they are a very nice shop and I do want to support them. But at the same time you are right, the brick and mortar shops need to realize and accept the fact that consumers are not just bound to buying local. Large price differences and/or bad customer service will drive customers away. And once a customer leaves your shop there is NO guarantee they will be back.

Its interesting that LDSs don't price the basic gear (mask, fins, snorkels) more reasonably to encourage new divers. The cost of just getting certified can be well over $500 with training and basic gear. It is a turnoff for most people.

My 2 cents....

 

[tech_diver]

Mikehf - Good stuff that so many dive shops need to hear.

I can understand that some dive shop operators may be new to business management and have lessons to learn about inventory control or profit/loss. But when you have to tell a business operator, "Brush your teeth and don't be a dick," it's just sad.

 

[ams511]

Mikehf - Good stuff that so many dive shops need to hear.

I can understand that some dive shop operators may be new to business management and have lessons to learn about inventory control or profit/loss. But when you have to tell a business operator, "Brush your teeth and don't be a dick," it's just sad.

Maybe they are a dick because they cannot afford toothpaste because MikeHF buys from LeisurePro. LOL

Seriously, every human being should practice good hygiene. However, many dive shops are one man or two man operations so if you come in while the person is eating or if they are in the back room fixing the compressor then you need to cut the person some slack.

As far as inventory goes, we all like to shop at a store that has every item made at the lowest price in a bright and cheery environment with low-pressure sales tactics. The problem is all this costs money and can only be justified if the location has a large amount of customers. Usually you are only going to see this in locations that are diving Meccas, like S. Florida, Hawaii and maybe parts of California. Scuba diving is such a low-volume activity that it is difficult to justify a "Bass Pro Shops" type atmosphere. Many large stores are finding out they are becoming nothing but a catalog show room for internet stores. You go to Best Buy to check out an item and then purchase it online at Amazon or another online vendor. Also scuba manufacturers require a certain amount of yearly sales to maintain a dealership, so in a low-volume area a shop cannot be a Scuba Pro or an Aqualung dealer because they don't have the yearly sales to justify it.

As far as accounting goes. Depreciation results from the matching principle of accounting where expenses should be matched against the revenues they generate. In other words, you divide the cost of a long-lived asset (such as a display case) over the periods used. The reason it subtracted by financial analysts (EBITDA = Earnings Before Income Taxes, Depreciation and Amortization) is because it is a non-cash expense (the money was already spent in a prior period when the item was purchased). Even if the dive shop puts the cash amount of the depreciation expense in a reserve, because of inflation they will be unable to replace the asset with the money in the account.

The real question is what drives customers, certain customers will shop at Saks because of the ambiance and others will shop at Walmart for price. However now may customers don't shop at either. They go to the store to see what they want, try it on, maybe even buy it and return it during the exchange period, and then buy it online.

 

[ozzydamo]

Part of your problem is just what you have to deal with when you go for Scubapro (or Aqualung) regulators. Both are excellent brands but there are many equally good options.

Your LDS is correct in that if you do not purchase your Scubapro regs from an authorized dealer, then the warranty and the parts-for-life program will probably not be honored by any authorized Scubapro USA dealer. Leisurepro advertises that thgey will match the mfgr warranty and I believe that includes the parts-for-life program, but then you must get all your service performed by LP. That may not be very convienient.

I suggest you look at other brands of gear that do not come burdened with such onerous restrictions. Take a look at scubatoys,com and divesports.com. They have great prices, a large selection of quality brands, and great reputations for service and customer satisfaction.

The parts price is inconsequential, the labour cost are the most of it anyhow, be 10% of cost the parts. Most of the time, you'll get a better, cheaper service from a service only operator, who works out their home and doesn't have all the overheads of a full blown retail store like rent and wages to make a PROFIT!