Notes From The Editor

Editor’s Note: The Secret to Success

Ensuring there is sufficient cash flow in any business is crucial to its health and success. However, in an industry where projects are usually at the mercy of a single individual, it is no surprise that smaller businesses in yachting are often the most effected when a project stops.

This is particularly true for design studios and naval architects where big projects will demand a lot of man-hours but once complete will often lead to redundancies.

The financial crisis of 2008 was an event that led to many projects coming to an abrupt end. It was an experience shared globally including Greg Marshall, CEO and founder of Gregory C Marshall Naval Architect and the focus of this week’s Decades of Design feature. The studio had been working on a 55m project when the owner applied the breaks after being adversely impacted by the financial event. While this was not an isolated case, Marshall was able to weather the storm and avoided any layoffs. In fact the Canadian’s staff turnover is extremely low.

“We have had an extremely stable studio with a lot of our team having been with us for 15 to 20 years,” explains Marshall. “I would say that 95 per cent of our crew has been with us for more than 10 years now. So what we’ve done in order to continue to do the things we like doing and to retain our team is to try and stablise our cash flow.”

Like most projects, winning new work is often as much about the work presented as it is to be in the right place at the right time. It is why many firms within the yacht sector, particularly design and naval architect studios, experience fluctuations in staff numbers to accommodate the highs and lows in work load but for those able to secure a regular cash flow, this instability can be avoided. For Marshall, the answer has been to read his local market and spread risk.

“We manage to do this by doing an on going series of production boats where we get a licencing fee for them,” reveals the naval architect in response to how he manages to ensure a steady cash flow. “So we invest in a project in the beginning by doing the design upfront in exchange for royalties down the line. Those pay a significant portion of our daily cash flow and stabilise the office so that we don’t have to turn left and right dramatically all the time.”

Alongside production projects, the studio works on local commercial projects, producing 20 boats a year in the eight-metre size range. Not only are these relatively straight forward projects, they can be completed within one to two weeks, which avoids tying up members of his team for long periods. The two avenues combined provide a secondary benefit, as Marshall explains, “All those things allow us to do large yachts but on our terms. We’re not particularly keen on the really giant yachts because they are a logistical exercise. They are probably five to eight per cent of real creative design and the rest is crunching man-hours.”

However, it is not only about where you secure work but also knowing what projects to turn down in the interests of the business. Having a defined marker is just as important as winning contracts. It is a point Marshall is acutely aware of. “We have a large project on the go at the moment, which for us is very large,” he says. “We lucked out with this one by hitting the design on the head. However, for the most part we are perfectly suited for projects up to 200ft but beyond that we don’t have the horsepower.”

While there is nothing new about Marshall’s approach, he has successfully executed a business model that ensures the longevity of his studio and staff. The Canadian is not the only one, with some of the most successful studios offering services in other sectors of the market if not exclusively in the marine sector. Other examples include Winch Design, Terence Disdale Design, BMT Nigel Gee and Alberto Pinto.

I would say that 95 per cent of our crew has been with us for more than 10 years now. So what we’ve done in order to continue to do the things we like doing and to retain our team is to try and stablise our cash flow.
Greg Marshall