Starting a charter boat business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful charter boat business.
Importantly, a critical step in starting a charter boat business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
15 Steps To Start a Charter Boat Business:
- Choose the Name for Your Charter Boat Business
- Determine the Type of Charter Boat Business You Will Launch
- Develop Your Charter Boat Business Plan
- Choose the Legal Structure for Your Charter Boat Business
- Secure Startup Funding for Your Charter Boat Business (If Needed)
- Secure a Location for Your Business
- Register Your Charter Boat Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Charter Boat Business
- Buy or Lease the Right Charter Boat Business Equipment
- Develop Your Charter Boat Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Charter Boat Business
- Open for Business
1. Choose the Name for Your Charter Boat Business
The first step to starting a charter boat business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your charter boat business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your charter boat business.
2. Determine the Type of Charter Boat Business You Will Launch
The next step is to determine the type of charter boat business you will launch. The four main types of charter boat businesses are:
- Fishing Charters – Fishing charter businesses provide customers with the opportunity to go out into the open water and fish for a variety of game fish.
- Sailing Charters – These types of charters are typically longer-term sailing trips that take passengers on an extended journey.
- Cruising Charters – Cruising charters offer passengers the chance to explore different destinations and enjoy leisure activities on board the boat.
- Specialty Charters – Specialty charters can offer a range of services including whale watching, dolphin encounters, sightseeing, eco-tours and more.
3. Develop Your Charter Boat Business Plan
One of the most important steps in starting a charter boat business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your charter boat business.
- Company Overview – this section tells the reader about the history of your charter boat business and what type of charter boat business you operate. For example, are you a fishing charter business or a sailing charter business?
- Industry Analysis – here you will document key information about the charter boat industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your charter boat business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your charter boat business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
4. Choose the Legal Structure for Your Charter Boat Business
Next you need to choose a legal structure for your charter boat business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the charter boat business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a charter boat business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a charter boat business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a charter boat business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your charter boat business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
5. Secure Startup Funding for Your Charter Boat Business (If Needed)
In developing your charter boat business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a charter boat business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a charter boat business that they believe has high potential for growth.
6. Secure a Location for Your Business
Having the right space can be important for your charter boat business. You will need to research and consider the following factors when selecting a location:
- Proximity to water
- Availability of slip space for your boat
- Cost of rents/leases if applicable
- Local regulations and zoning laws
To find the right space, consider:
- Driving around to find the right areas while looking for “for lease” signs
- Contacting a commercial real estate agent
- Doing commercial real estate searches online
- Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space
7. Register Your Charter Boat Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
8. Open a Business Bank Account
It is important to establish a bank account in your charter boat business’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
9. Get a Business Credit Card
You should get a business credit card for your charter boat business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
10. Get the Required Business Licenses and Permits
Most states require businesses that offer charter boat services to have a license. There may be different licenses required depending on the type of charter boat services you offer.
In addition, you will likely need a permit from the Coast Guard to operate your charter boat business. The Coast Guard will typically inspect your boat and business premises to make sure you are in compliance with safety regulations.
Nearly all states, counties and/or cities may also require:
- General Business License: getting your Articles of Incorporation as discussed above
- Sales Tax License or Seller’s Permit: for selling products
- Zoning Approval: typically at the city or county level, this provides authorization for construction or use of a building or land for a particular purpose
- Food Service, Processing and/or Warehouse Licensing: to ensure safe food preparation
- Fire Department Approval: a process by which the local fire department reviews and approves the installation of a fire alarm system.
Depending on the type of charter boat business you launch, you will have to obtain the necessary state, county and/or city licenses.
11. Get Business Insurance for Your Charter Boat Business
There are a few types of insurance that you will likely need for your charter boat business. These include:
- Business Liability Insurance: This type of insurance provides coverage for legal expenses and judgments if your charter boat business is sued.
- Boat Insurance: Your charter boat business will need to have a policy that covers your boat in the event of an accident or damage.
- Workers’ Compensation Insurance: If you have employees, you will need to have workers’ compensation insurance to cover medical expenses and lost wages in the event that they are injured or killed while working for you.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
12. Buy or Lease the Right Charter Boat Business Equipment
When starting a charter boat business, you will need to purchase or lease certain types of equipment. This equipment includes:
1. A Boat
Obviously, your charter boat business will need a boat! You can either purchase or lease a boat, depending on your budget and needs.
2. Fishing Gear
If you plan to offer fishing charters, you will need to purchase or lease fishing gear. This includes rods, reels, tackle, and bait.
3. Safety Equipment
Your charter boat business must comply with all safety regulations set by the Coast Guard. This means you will need to have a variety of safety equipment on board, including life jackets, flares, and fire extinguishers.
4. Marketing Materials
You will also need to create marketing materials to promote your charter boat business. This may include a website, brochures, and business cards.
You can buy or lease used equipment in order to save money, but make sure it is up to date and compliant with safety regulations.
13. Develop Your Charter Boat Business Marketing Materials
Marketing materials will be required to attract and retain customers to your charter boat business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your charter boat business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional charter boat business website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your charter boat business.
14. Purchase and Setup the Software Needed to Run Your Charter Boat Business
There are a few different types of software that you may need for your charter boat business. The most important type of software is accounting software, which will help you track your business finances. Other types of software that may be useful include:
- Customer Relationship Management (CRM) Software: CRM software helps you manage customer data, communications, and interactions. This type of software can be very helpful for small businesses, as it allows you to keep track of customer history and preferences.
- Business Planning Software: This type of software helps you create and track business goals, objectives, and strategies. It can be helpful in organizing your thoughts and planning for the future of your charter boat business.
- Inventory Management Software: If you sell products or services related to your charter boat business, then you will need inventory management software. This software will help you track stock levels, pricing information, and order history.
Research the software that best suits your needs, purchase it, and set it up.
15. Open for Business
You are now ready to open your charter boat business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Charter Boat Business FAQs
Is it hard to start a charter boat business?
No, it's not hard to start a charter boat business.
If you follow the steps above, you should be able to start your charter boat business without too much difficulty.
How can I start a charter boat business with no experience?
If you're starting a charter boat business with no experience, it's important to do your research and learn as much as you can about the industry. There are many resources available, including books, articles, and online courses.
Another option is to attend a trade show or conference related to charter boats. This will allow you to meet other business owners in the industry, learn from their experiences, and ask questions.
Finally, consider seeking out advice from experienced charter boat business owners. Many of them will be happy to share their insights and offer help.
What type of charter boat business is most profitable?
Fishing charters are usually the most profitable type of charter boat business. Fishing charters allow you to take customers out on the water and teach them how to fish, as well as how to identify different types of fish.
Additionally, fishing charters are a great opportunity for businesses to create an immersive experience for their customers. If you provide quality instruction and services, customers will come back again and again.
Other types of charter businesses, such as sightseeing tours or party cruises, can also be profitable but usually require more marketing.
How much does it cost to start a charter boat business?
The cost of starting a charter boat business can vary significantly, depending on the type of business, the size of the vessel, and the location. The start up costs for a charter boat business range depending on the type of charter boat business you are starting.
In addition to the cost of the boat itself, other costs include insurance, fuel, maintenance supplies, mooring fees and licensing. Additionally, some businesses may require additional equipment or staff.
What are the ongoing expenses for a charter boat business?
The ongoing expenses for a charter boat business can vary depending on the size and type of business. The average ongoing expenses range between $3,000 and $7,000 per month.
These expenses include fuel costs, mooring fees, insurance premiums, maintenance supplies and staff salaries. Additionally, some businesses may need to hire additional staff or purchase equipment in order to meet the needs of their customers.
How does a charter boat business make money?
A charter boat business can make money in a variety of ways. The most common methods are by charging a fee for services, renting out the boat for special events, or selling merchandise or food.
Charging a fee for services is the most common way to make money from a charter boat business. This involves taking customers out on trips and charging them a predetermined price.
Renting out the boat for special events is another way to make money. This usually involves renting out the boat for weddings, corporate events, or other special occasions.
Finally, selling merchandise or food is another way to make money from a charter boat business. This involves selling items such as hats, T-shirts, food, or drinks to customers on board the boat.
Is owning a charter boat business profitable?
Yes, owning a charter boat business can be very profitable.
The answer to this question is yes - owning a charter boat business can be profitable. This is because there are a number of ways to make money from a charter boat business, including charging a fee for services, renting out the boat for special events, and selling merchandise or food.
Some of the key things you can do to make your charter boat business more profitable include:
- Offering a variety of services to make your charter boat business more profitable
- Marketing and advertising your business in order to attract customers
- Investing in quality equipment to provide good service
- Hiring qualified staff to ensure customer satisfaction
- Optimizing your website for SEO to increase online visibility
Why do charter boat businesses fail?
Charter boat businesses can fail for a number of reasons, such as a lack of planning, poor marketing, and an inability to attract customers.
Who are key players in the charter boat market?
The charter boat market is made up of a variety of different players, including small businesses, large enterprises, and even individuals.
Some of the key players in the market include:
- Fraser Yachts
- Nautilus Yacht Charters
- Dream Yacht Charter
- Sunseeker International
- Maritime Charters
However, there are many other players in your specific target market, and it is important to research the market to identify the key players that may have the most direct influence on the success of your business.
How much should I charge for my charter boat services?
Charter boat fees can vary depending on the type of charter boat services being offered, as well as the size and scope of the project.
However, some common charter boat fees include:
- Day charter fee: $200 to $400
- Half-day charter fee: $150 to $250
- Full-week charter fee: $1,500 to $3,000
The best way to determine the right fee for your charter boat services is to research the rates of similar businesses in your industry, and to also consider the value that you will be providing to the client.