Reflections
The Demise of Victoria Yachts
Updated 06/10/99
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Comments from Kemp Howland
 
A question from the forum on why cash flow may have been a problem at VY.
 
I don't believe the money was squandered. Bill was passionate about his designs, his employees and his company. He wanted Victoria Yachts to succeed.
 
But he was a very benevolent employer when he could least afford to be benevolent. He wanted all of his people to exceed their own goals and dreams. He would help anyone who asked for it. Thus, he provided corporate and personal assistance to people who needed it when he really should have been taking care of his own needs first.
 
I believe Bill was one of the least-selfish people I have ever met. He was genuinely interested in people. Not just the people who could help him financially, but anyone with whom he came into contact.
 
At worst, Bill and company may have exercised poor judgment.
 
I don't think anyone really saw the recession of 1980-84 coming. And, if they did, they could not have predicted the high interest rates and devastating effect it would have on the recreational boating industry.
 
The folks at Victoria Yachts spent money as if they would always have a revenue flow, and that the revenue flow would always be greater next month than this month. No thought was given to the possibility of an economic downturn. The business was expanding, the backers were confident and the boats were selling!
 
Why worry?
 
In typical entrepreneurial fashion, Bill tended to avoid the harbingers of doom and gloom in favor of those who predicted continued prosperity and growth.
 
The company was started on a shoestring and never really built enough cash reserves to see it through rough times. The investors meddled and provided their brand of business advice (and may have encouraged the dubious hull numbering practices.)
 
The dealer network consisted largely of Mom & Pop, storefront operations who were living from hand to mouth. Few dealers were in a position to sustain a six to twelve month sales slump.
 
By the time VY realized that the problem was both real and immediate, it was too late to take evasive measures. The lack of cash reserves tended to exacerbate the problem. Without a “plan b” VY yachts was left with a lot of unsold inventory, little cash for marketing or to purchase raw material, and a labor pool recognizing that although the ship might not be sinking, the water was definitely rising. It would have been difficult for anyone to keep things together faced with the obstacles VY was experiencing. I am surprised that they lasted as long as they did.
 
The responsibility for the demise of VY must be shared by the investors. They failed to keep a watchful eye during the prosperous times, and came to the table with too little too late when things got rough.
 
They knew Bill and they knew his strengths and weaknesses. They were professionals who had the wherewithal and the skill to overcome the problems that plagued VY. They are as much at fault in the demise of Victoria Yachts as anyone else.
 
 
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