Note that the rise of tourism has brought so much money into every tourism-targeted business. One of the biggest beneficiaries of this massive inflow of cash has been the boating industry.
In this modern age, starting and running a charter boat business is a very lucrative and exciting way to earn a living. However, to ensure you achieve success in this line of business, you will need to be committed, resourceful, and a bit creative. You need to be prepared and make sure that you know what you are getting into.
Steps on How to Start a Charter Boat Business
Conduct Market Research
To start this business, you will need to do some primary and secondary research about the market. Take your time to locate market gaps and always try to fill those gaps. A charter boat business is, without doubt, saturated and it will require innovation at different points. You must know the answer to these questions before you begin:
- What charter boat businesses currently operate in your area?
- Is the market saturated, or is there room for growth?
- Are the charter boat businesses running at full capacity?
- Are they turning a profit?
- What are the regulations?
- How much does it cost to keep a boat at the dock?
Note that the answers to these questions, as well as any additional research you do, will help guide your launch.
a. Who is your Target Market?
Right before you invest substantial resources into leasing or purchasing boats, it’s imperative you first decide what type of clientele you’re going to target. Will it be multinational companies that are looking to carry out corporate meetings or events in the middle of the storm-tossed ocean?
Or, would you prefer to cater to the needs of families who want to enjoy private whale-watching trips? Maybe you will prefer to target retirees who want a relaxing, yet exciting, deep sea fishing experience. Also, note that you don’t need to only target elite clientele like most charter boat businesses.
However, regardless of your target audience, you have to ensure you deliver a top-notch experience every time. You might choose to target customers who are only in for the fishing, therefore, you will want to make sure your boat features things like fishing rails, fish holding tanks, and other angling accouterments.
Always ensure you understand your customers’ needs and do everything possible to satisfy them. As long as you can do this, you will be creating lifelong fans that will be eager to come back.
b. Is Charter Boat Business a Profitable Business?
Yes. A charter boat business is profitable in more ways than one. Be it profit or pleasure, this boating business yields a lifetime of happiness.
c. Are There Existing Niches in the Industry?
- Day charters: These charters only go out for one day
- Term charters: Guest will stay on the boat from one night to two weeks or more
- Sailing charters: Any charter on a sailboat would fall in the category
- Fishing charters: This mainly focuses on fishing
- Diving charters: This is where SCUBA diving is done
- Instructional charters: There are numerous charter boast that is primarily for teaching
- All-inclusive: This will more or less include a two-person (or more) crew where all meals are prepared by the crew
- Captain only: Note that the only thing the price includes is the boat and a captain
- Bareboat charters: Cruisers rent or lease out a vessel for a certain period, with no crew or provisions provided.
d. Who are the Major Competitors?
- Horizon Yacht Charter
- Dream Yacht Charters
- Moorings
- Sunsail
- Footloose
- TMM Yacht Charters
- BVI Yacht Charters
- Catamaran Company
- Pro Valor
- CYOA
e. Are There County or State Regulations or Zoning Laws for Charter Boat Business?
Yes. There are federal and state regulations to consider when starting your charter boat business. Charter boats can be inspected by the coast guard at any time. If your charter boat carries more than 7 passengers, you will also have to be licensed with the coast guard.
You will also need to take the state-issued charter license, in some states. It will vary according to the state you live in. For instance, in the state of Florida, being a licensed saltwater guide is different from being a freshwater guide.
f. Is There a Franchise for Charter Boat Business?
- Invert Sports: $120,000 – $300,000
- Sea Tow: $125,000 – $275,000
- Cruisin’ Tikis: $44,900 – $47,000
- Freedom Boat Club: $181,000 – $487,500
- Nautical Boat Club: $541,400 – $876,800
- Sailtime / Powertime: $74,675 – $151,950
- Carefree Boat Club: $100,000 – $250,000
g. What Do You Need to Start a Charter Boat Business?
- Charter Boat
- Viable Market
- Industry Knowledge and Experience
- Adequate Capital
- Dock
- Adequate Licenses and Permits
- A Business Plan
Memorable Charter Boat Business Names
- Aquaking
- Premium Voyagers
- Sea Surf Boats
- Island Explorers
- Ocean Achilles
- Vacation Pride
- Ocean Green
- Nautical Dots
- Cleopatra of Seas
- IRIS
- North Compass
- Charter Boat Mart
- Clean Water Rides
- Bolt Ships
- Pride or Atlantis
- Ocean Rage
- Quantum Arrowhead
- Steady Sailings
- Valhalla Rides
- Hydra Boats
Register your Business
a. What Type of Business Structure is Best for Charter Boat Business?
A business structure simply means how a business is legally organized to operate. Note there are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Have it in mind that every structure has its pros and cons, such as liability exposure, costs, and administrative requirements.
You can register your charter boat business as a sole proprietorship since it is the simplest form of business classification. Howbeit, it is imperative to note that sole-proprietorships come with certain liabilities if you’re sued. But for added protection, consult a business lawyer or your accountant on how to register as an LLC.
b. Steps to Form an LLC
- Select a Name for Your LLC.
- File Articles of Organization.
- Pick a registered agent.
- Decide on member vs. manager management.
- Establish an LLC operating agreement.
- Adhere to other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Charter Boat Business?
While this will mostly depend on your target audience, here are basic licenses to consider;
- Captain’s license
- Charter/ Fishing license
- Boat registration
- Licensing requirements for each water jurisdiction you plan on traveling to
- An angler permit
- A salmon charter license if your passenger intends to fish salmon or albacore tuna
- A non-salmon charter license is required if you accept a fee to take a person fishing for shellfish and fish other than salmon or albacore tuna.
- A food fish guide license is required if you accept a fee to take a person fishing for salmon, sturgeon, or other food fish species in freshwater rivers and streams.
- Business license
d. What Type of Certification is Needed to Open a Charter Boat Business?
Top certifications to consider in this line of business include;
- Certified Fisheries Professional (FP-C)
- Associate Fisheries Professional (FP-A)
- Small Vessel Operator Proficiency (SVOP)
- Basic Safety Course (MED A1)
- Restricted Operator Course Maritime (ROC-M)
- Certified Tidal Angling Guide (CTAG)
- NauticEd Sailing License and Credentials
- Royal Yachting Association (RYA)International Certificate of Competence
- Bareboat Charter Master
- Yachtmaster certification
e. What Documents are Needed to Open a Charter Boat Business?
- Federal tax identification number
- Business plan
- Boat registration
- Business name registration certificate
- Insurance certificate
f. Do You Need a Trademark, Copyright, or Patent?
No. You may not need a patent, trademark, or copyright to protect the services you provide. However, your company name and the recognizable logo you use to create a visual representation of your brand may need protection. Since your brand name and logo are a very important aspect of your business, consider applying for registration of the copyright and trademark.
Do your Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Charter Boat Business?
Indeed, the cost of starting a charter boat business is high, it is in the $50,000+ range. However, the business can be profitable and afford you a rewarding lifestyle that money sometimes can’t buy.
b. What are the Costs Involved?
- New boat: $41,000
- Used boats: less than $30,000
- Dockage: $2,400
- Insurance: $2,500
- A fishing license: vary by state
- Utilities: $1,600
- Setting up a business name and corporation: $150 – $200
- Business licenses and permits: $100 – $300
- Business cards and brochures: $200 – $300
- Website setup: $1,000 – $3,000
- Life jackets and other equipment: $1,000 – $2,000
- Boat slip rental: $500 – $1,500
- Legal and management fees: $2,000
c. What Factors Determine the Cost of Opening a Charter Boat Business?
- Target Audience
- Services Offered
- Location
- Business Size
- License and Permits
- Branding, Promotion, and Marketing Plans
- Insurance
- Supplies and Ongoing Expenses
d. Do You Need to Build a Facility?
No, you do not need a facility to start a charter boat as your boats will need to dock in waters and not in a garage. However, you may want to rent an office front to make it easy for your clients to reach you. Consider renting an office space close to the water bodies where your boats are docking.
e. What are the Ongoing Expenses for Running a Charter Boat Business?
While this will surely vary from business to business, here are basic ongoing costs to consider;
- Captain’s fees
- Fuel and oil
- Bait and ice
- Tackle
- Dockage
- Business and fishing licenses
- Insurance
- Accounting
- Advertising
- Utilities
- Management and legal fees
- Boat maintenances
- Boat depreciation
f. What is the Average Salary of your Staff?
- Boat Captain: $66,260
- Lodging Manager: $56,670
- Company Cashier: $42,860
- Deckhand/Stewardess: $35,880
- Maintenance staff: $29,164
- Store clerk/Front desk officer: $23,490
g. How Do You Get Funding to Start a Charter Boat Business?
Owing to the high cost of starting this business, you probably don’t have sufficient funds to bankroll your fledgling charter business. Therefore, you may need to source external financing to fund your venture. Here are some ways to secure funding:
- Bootstrapping
- Friends and family
- Crowdfunding
- Business loan
a. Executive Summary
Yacht charter services are known to be quite popular among wealthy individuals who are looking to experience the ocean. Owing to this growing demand, Island Explorers will offer charter and arrange yacht trips on behalf of her clients. At Island Explorers, we intend to work with travel agents to ensure that wealthy travelers can easily book trips daily. We believe this is one of the best ways to market our new yacht charter service.
b. Services we Offer
- Renting out the yacht
- Providing basic maintenance and upkeep of the yacht for wealthy owners
- Providing insurance and proper licensing to yacht owners
- Scheduling commercial vehicle inspections as required by the state
- Providing moorage for the yacht
c. Mission Statement
Our mission at Island Explorers is to establish a business that offers customers an easy and convenient way of getting private yacht trips to many destinations in the world. We will always strive to provide seamless operations that will provide clients with their needed yacht charters.
d. Vision Statement
Our vision at Island Explorers is to aggressively expand during our first three years of operation. We intend to achieve this by integrating e-commerce functionality so that individuals can easily place reservations directly on the website without having to directly contact the business.
e. Goals and Objectives
- Offer seasonal pricing to encourage year-round utilization of the yacht
- Steadily increase revenues each year
- Attain a 50% retention rate of customers from year 2 to year 3
f. Organizational Structure
- Chief Executive Officer
- Boat Captain
- Lodging Manager
- Company Cashier
- Deckhand/Stewardess
- Maintenance staff
- Store clerk/Front desk officer
Marketing Plan
a. SWOT Analysis
Strengths
- Top-notch customer service
- Remain profitable given that their clientele is less swayed by negative changes in the economy
- Experienced workers
- Well detailed marketing plans
Weaknesses
- Lack of adequate capital
- Required to comply with several different licensing agencies
- High ongoing operating expenses
Opportunities
- Marketing plans that will attract clients
- Additional vessels to boost week to week and month-to-month revenue
- E-commerce functionality
Threats
- Government regulations
- Negative economic downturn
- Cost to charter a yacht on a daily basis
b. How Do Charter Boat Businesses Make Money?
Generally, charter boat rates are calculated and charged on a per-person basis, and the rate will vary depending on the type of boat charter business and the services or activities that are being offered. Here are the top five ways charter boat businesses make money;
- Peer-to-Peer Rentals
- Charter Fishing
- Vending from the Vessel
- Operating Sight-Seeing Tours
- Special Business Opportunities
- Parasailing services
- Dinner cruises
- Scuba diving and snorkeling excursions;
- Whale-watching
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via mobile money transfer
d. Sales & Advertising Strategies
- A professional website with 24/7 online reservation capabilities
- An effective guest management solution
- Reseller relationships with local travel agents and popular online travel agencies (OTAs) such as TripAdvisor, RedBalloon, and Adrenaline
- Social media and website updates to grow organic engagement with followers
- Marketing across channels such as social media paid search, radio, and print
- Follow-up marketing after guest experience
- Offer new or exclusive destinations
- Create local fishing guides online to establish yourself as a fishing authority
- Offer discounts for repeat bookings
- Add a barbecue experience so guests can eat fresh fish aboard charter fishing trips
- Add historical or cultural aspects to your charter boat fishing experiences
Financial Projection
a. How Much Should You Charge for your Service?
What you charge will most often depend on your location and the sort of services the business offers. For instance, a fishing charter in Destin, Florida charges around $165 and $200 per hour for up to six people. Meanwhile, a charter in Milwaukee, Wisconsin will charge $750 for an 8-hour charter with up to six people, which averages out to under $100 per hour.
Have it in mind that most charters have a flat rate for up to six people; however, the number of people on a trip won’t affect how much the trip costs the business. Charters that are licensed to take more than six people often add on a fee for each additional person.
b. How Much Profit Do Charter Boat Business Owners Make a Year?
Have it in mind that a well-managed charter boat business should earn about 25percent profit. Using the cost of services noted above as a benchmark, and the boat being out 200 days a year, a business owner will make an annual profit of around $34,300 (after the captain has been paid).
c. What Factors Determine the Amount of Profit to Be Made?
- Size of business and number of boats
- Season
- Business management style
- Marketing and advertising plans
- Branding and credibility
d. What is the Profit Margin of a Charter Boat Business?
According to industry reports, the profit margin of a charter boat business is about 25%.
e. What is the Sales Forecast?
- First Fiscal Year: $1,590,000
- Second Fiscal Year: $3,340,000
- Third Fiscal Year: $5,560,000
Set Up your Office
a. How Do You Choose a Perfect Location for Charter Boat Business
To be successful, a charter boat business needs to operate in a location with vibrant tourism, whether on a coast, large lake, or river. Once you have invested in acquiring boats and registering your business, you will want to select a dock where you can keep your boat and pick up passengers.
However, to ensure that you’re able to attract as many customers as possible, you must choose a dock that will attract tourists. This might entail paying a little bit more but the extra money might be worth the investment. Also, note that some docks will offer discounted rates if you lease long-term as against renting month to month.
b. What State and City are Best to Open a Charter Boat Business?
- Annapolis, Maryland
- Miami, Florida
- Minneapolis, Minnesota
- Lauderdale, Florida
- Chicago, Illinois
- Austin, Texas
- Seattle, Washington
- Tampa, Florida
- Providence, Rhode Island
- Long Island, New York
c. What Equipment is Needed to Operate?
- Boats
- Website
- Booking systems or software
- Maintenance tools
- Life jackets and wearable personal flotation devices (PFDs)
- Throwable flotation devices
- Fire extinguishers
- Visual signaling devices
- Sound signaling devices
Hire Employees
To succeed in this business, you need to find people you are comfortable with being on your boat and will take care of it. These people also need to represent your charter business to brokers and guests in the best light possible. It is also necessary you seek a crew that will stick around because the average crew only lasts in the industry for three years.
Have it in mind that charters coming from brokers will often specify who the crew will be. If you switch crew after the contract is signed, you may lose the charter and still have to pay the brokerage fee. Always strive to hire a qualified and experienced crew and treat them well because a good team can mean the difference between your charter business being a resounding success or a miserable failure.
Launch the Business Proper
While you may not always need to host a launch party for this sort of business, you must assess the water traffic situation in the area where you hope to moor your vessel. Aside from marketing your business and working with travel agents, have it in mind that high traffic areas can be significant collision risks.
In addition, lots of water congestion also entails it will take longer to set sail. In this line of business, note that this could mess up your departure times, and make your customers unhappy.
a. What Makes a Charter Boat Business Successful?
To guarantee success, you must invest in insurance and maintenance every year. You should also make sure that each of your boats has pumped so you can have a much safer trip at sea. Other strategies to consider include;
- Optimize your charter business booking process
- Build strong partnerships
- Work to understand your target audience
- Create and refine your charter business marketing campaigns
- Expand your offerings
b. What Happens During a Typical Day at a Charter Boat Business?
Truth be told, this will depend on your target market and the services you offer. For instance, as the owner of a fishing charter boat business, your day will start with you sourcing fuel, ice, and bait. While getting these supplies, your captains will have to analyze the current weather or even discuss fishing conditions with other charter captains and the marina owner.
Note that clients will most often meet the captain at the marina. Everyone boards the boat, and the captain provides necessary safety information and the day’s plan. While fishing, the captain can help customers bait their lines, leverage proper technique, and reel in fish. Immediately they get back to the dock, the fishes are cleaned and the boat is wiped down for the next day. This may be done by the captain or an employee.
c. What Skills and Experience Do You Need to Build a Charter Boat Business?
- Diverse boating experience
- Business knowledge and experience
- Knowledge of boats and maintenance
- Networking
- Management experience
- Customer service skills
- Awareness of industry trends