Marine Battery Firm Finds It Needs More Juice

When Norman Conwill and his two partners took over an ailing maker of marine power panels, they had no illusions about wresting lost market share from bigger competitors or rebuilding the company into a power panel powerhouse.

They did hope the tiny Orange County firm might jump-start their efforts to launch a new high-tech battery charger by providing an existing infrastructure and an inside track to the marine industry, a big user of batteries and chargers.

It turned out to be a more expensive proposition than they thought, even though they acquired 90% of 30-year-old Marinetics Corp. for only a promise to pay the founder a share of future profits, if any.

Work on charger prototypes by an outside engineering firm took twice as long as expected, delaying potential revenue and putting a strain on the partners’ capital. And they’ve had to invest additional resources to ramp up sales of the power panels--the Costa Mesa company didn’t have a sales force--to provide needed cash.

Sales of the panels are on track to increase 30% this year to about $200,000, according to Conwill, a veteran entrepreneur who acquired the company with his partners two years ago. Sales of a charger programmed for two-way mobile radios are underway, and Marinetics has sold a few pre-production versions of its first charger designed for the recreation market. All told, Conwill expects sales to reach $500,000 by the end of the year.

Nevertheless, Marinetics remains in the red. That’s not unusual for a start-up company, and Conwill and his partners are actively courting equity investors. The partners, all in their 60s, don’t expect to run day-to-day operations long-term.

“I have no business running a company, and that is one of our challenges,” said Conwill, who acquired a license from Advanced Charger Technology of Atlanta to develop chargers using a special type of pulse technology. The license covers specific markets, including marine and recreation.

Management consultant Carlos Canejo, who was asked to evaluate Marinetics, was impressed with the new battery technology. The product is said to charge an electric vehicle in 15 minutes, prolong battery life and eliminate the memory problem that plagues the traditional recharging process.

“The uses of it span all kinds of different markets, from golf carts to fishing boats to [the] medical” field, said Canejo, an analyst in sales and product management for health-care and insurance companies.

The newness of the technology, though, could present problems in selling it. Now that the company has begun a limited production run of about 300 chargers, it needs to collect customer testimonials and reliability records, Canejo said. Potential customers will want to know if it has a track record.

Although the product is new, the company is established. “That in itself lends credibility to them setting up a sales and marketing organization,” said Canejo, who is based in Thousand Oaks. “They can go back to existing clients with this new technology and immediately garner some sales.”

Money may be too tight now to create the full-fledged marketing program called for in the business plan, Canejo said. But there’s no reason to delay implementing a professional sales program, no matter how small the scale, he said. Organized market research, a multiyear marketing plan and sales incentives and performance reviews are the backbone of any effective effort.

Once the capital is available, Canejo said, the company should act on its plans to hire a chief executive to guide marketing efforts.

“That’s a weakness right now,” he said. “There is no captain at the helm.”

Marinetics needs a marketing plan that covers one-, three- and five-year periods, Canejo said. In addition to sales projections, the document should include contingency plans--what steps Marinetics would take under several scenarios in which sales declined. A damage control plan to cover potential production snags or other problems should also be thought out and written down, he said.

Whether Marinetics’ sales force remains at two or balloons to 100, Canejo, a veteran of several sales organizations, has specific ideas about how Conwill, or any small-business owner, should organize a professional sales team, including effective salary and incentive levels.

“I would give them a base salary probably in the neighborhood of the low to mid-40s, no higher than that,” he said. “In fact, I might even make it $35,000.”

Over about six months, the base salary could be decreased to $25,000, Canejo said. At that point Marinetics’ sales should be in full swing and the salesperson should be able to rely on commissions for a larger share of total compensation, he said.

“You don’t get incentives unless you have at least 70% results, because why reward mediocre results?” Canejo said. Incentives should be increased until the salesperson meets the quota, and “then you just want to throw money at them.” Review incentive levels at least once a year, he said.

Marinetics’ marketing chief should measure results monthly and quarterly, Canejo said. And the company should get tough if performance lags.

Aside from allowing for vacations, “if they don’t meet quota two months in a row, or two months throughout the year, they get put on probation,” he said. If coaching and counseling don’t resolve the problem, “then you know you have to terminate them,” he said.

He also recommended that Conwill hire a third, part-time person to handle sales support and public relations, freeing the salespeople to concentrate on selling. The job would include creating sales brochures and one-page product specification sheets, researching trade journals and writing articles about the company’s products.

A manufacturer’s rep firm could also leverage Marinetics’ sales efforts, Canejo said. Rep firms, outside sales organizations that represent several manufacturers, can save a company money. Marinetics could also benefit by tapping into a rep firm’s knowledge about industry decision makers, distribution avenues and influential trade journals.

It’s important to screen firms, and to ask about incentives, other products being sold and what controls you have. “Are you able to audit their books,” he said, “so you know you are actually capturing the sales they say they are making?” Commissions to sales staff range from 3% to 10%, but commissions on sales handled by a rep firm average 5% to 6%, he said.

Once Marinetics puts a professional sales structure in place, Conwill will be in a better position to build market share and attract investors, Canejo said.

That fits with Conwill’s plans.

“It’s not do or die, but the sooner we can make it [outside investment] happen, the better off we’ll be . . . and the sooner we can get our full-fledged marketing program underway,” he said.

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This Week’s Company

Make-Over

* Name: Marinetics Corp.

* Headquarters: Costa Mesa

* Type of business: Battery chargers, marine power panels

* Status: Private corporation

* Co-owner: Norman Conwill

* Founded:1967; ownership change in March 1996

* Start-up financing: $300,000 in savings

* 1997 sales: $150,000

* Employees: 7

* Customers/clients: Boeing; Universal Studios; FBI; New York, Chicago, Miami and Detroit police departments; Harris Corp.; Alumolex; Duffy Electric Boats; San Diego Port Authority; Los Angeles County Transit Authority

*

Main Business Problem

Need to expand operations of ailing, 30-year-old maker of marine power panels to include new line of high-tech battery chargers.

*

Goal

Build a sizable Southern California corporation to provide high-tech chargers to a number of industries, including marine, transportation and recreation.

*

Recommendations

* Gather reliability records and testimonials about new battery-charging technology from customers.

* Hire president/chief executive to drive sales and marketing strategies and make connections with bigger companies.

* Conduct additional market research.

* Create a multiyear marketing program, including sales projections, a contingency plan and damage-control strategies.

* Set up a professional in-house sales program.

* Hire a part-time sales support/public relations person.

* Consider using an outside sales force--i.e., a manufacturer’s representative firm.

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Meet the Consultant

Carlos Canejo, based in Thousand Oaks, spent eight years in sales and product management at health-care and insurance companies in Southern California.