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Charter Business Help - Young Entrepreneur

Discussion in 'General Yachting Discussion' started by Vinn, Jan 26, 2016.

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  1. olderboater

    olderboater Senior Member

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    Well, first it's not 30' as you indicated. Second, based on what would you not consider it old or beat up? Based on an ebay advertisement of a first time ebay seller? An I/O used 12 years in saltwater? There are hundreds of similar boats for rent in South Florida. And, yes, in the boat rental business, 12 years old is considered old. 5 to 7 years is about as old as the boat rental companies like to go.
  2. Vinn

    Vinn New Member

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    How will it fail miserably? Maybe if we can get past that idea, you guys can make yourself useful and provide some actual insight about boating.

    I know it will work, and I know how to make it work.

    I am not on a boating website asking for accounting and financial advice, I am asking for boating and industry advice/resources.
  3. Vinn

    Vinn New Member

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    Ok thanks. I'll post more specific questions in the future.
  4. olderboater

    olderboater Senior Member

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    If one was going to attempt to rent a small boat, then the market is for outboard powered center consoles or deck boats. You can buy a 22', 2009 model Boston Whaler for $40-45k. A 2009 20' Hurricane with a 150 hp outboard would be in your price range.

    Oh, and as to your ebay 12 year old runabout. Financing would be hard to find on that. Boats in that range, most banks stop at 10 years or so.
  5. CaptNeil

    CaptNeil Member

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    The boating industry is filled with wild eyed dreamers who buy a boat and then try and charter it. A majority end up giving up a few years in when the finally realize the real cost of boat ownership. All comments given are real world experience. I'd suggest you take your $30,000 and invest it into a marketing company. If you have the skills and want a side business that would be profitable. Take your superior knowledge in the marketing field that would push a charter business into profitability in the first year and go sell it to existing charter operations. You would be working in the field that you know a lot about and crossing over and dealing directly with charter operators. Once that business takes off and flourishes you could then have the funds to buy your own boat and operate it on your own terms and time.
  6. Vinn

    Vinn New Member

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    Those boats are possibilities, but ideally I would like a boat with a mid-cabin for more privacy/shade. The boat most likely will not allow for fishing either. But thanks, I know you're a smart guy so hopefully you will help in the future when I ask more specific questions.
  7. Vinn

    Vinn New Member

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    Thank you, I am definitely aware and familiar with countless businesses and owners who fail due to improper planning. My goal here is not to become rich off of this, but to enjoy a hobby that doesn't cost me too much out of pocket, and also give me experience with running a business, potentially with the opportunity to expand the fleet and business.

    If at the end of 3 years I lose a total of $5,000 out of my pocket for poor budgeting for whatever reason, I will still be a boat owner, gain business ownership experience, and many happy customers, etc and life will move on.

    I don't see this as a "you will fail and fail miserably, I told you so" type of scenario, which is what I am having trouble understanding this attitude from the forum.

    It is win-win to me really.
  8. CaptNeil

    CaptNeil Member

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    This is the exact attitude that most guys have going into the charter business. When they get into it they realize fairly quickly that they are bleeding cash like a slash to the jugular. This is why there are a million boats for sale at any given time. A $30,000 boat put into charter service will nickle and dime you to death. Charter guest break things, throw up on the boat, and even stuff chicken bones down into the seat cushions. It all looks rosey from the outside but once you are in it you will quickly realize that it is not all sunny skies and smooth seas.

    Like I suggested take your marketing expertise and sell it to charter operators. You will then have a few years walking the docks talking to the guys that are in it on a daily basis. You will gain a good perspective on the business. If after a couple years talking to these Captains and operators you still want to jump in then by all means go for it. Good luck!
  9. Vinn

    Vinn New Member

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    That is unfortunately their mistake. Cash management - one of the few areas where my experience as an accountant and my plan for marketing comes in.

    I understand there are barriers to entering the business (as there are with many types of businesses), but I see a good opportunity in front of me. Of course it does not come free of concern, but a rewarding experience nonetheless.

    Even just crunching numbers...let's say $30,000 for the boat and another $30,000 in annual operating expenses. That is $60,000 a year. Divide by $400 per ride, we are looking at 150 full-day rentals to break even.

    150 full day rentals for a single boat within a year is probably unlikely
    ...So I could additionally offer half day rentals at a fraction of the price
    ...Or I could additionally offer multi-day and overnight rentals at a premium

    The ideas are endless, but even just going off of 75 full day rentals over the course of a year, that will generate $30,000 of revenue, thus essentially covering the cost of the boat.

    Over the course of another 1-2 years, if business continued at the same or growing rate, any income generating would be applied to operating costs, or invested in the business, or paid to me or employees in the form of salary/bonus.

    I could easily play with these numbers guys. I can get a boat for $20,000. Run $500 full day rentals. It would take 40 full day rentals to break even on the boat. And of course there are the other operating expenses.

    Are these numbers really unimaginably far fetched guys? I'm pretty certain I can get 40 people to give me $500 for a full day boat rental over the course of a year...
    Last edited: Jan 26, 2016
  10. olderboater

    olderboater Senior Member

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    Yes, they are.

    First year fixed costs. $6k downpayment on boat and $4.2k payments plus $7k dockage plus $5k for insurance, corporate or LLC filings, preparation of rental contracts etc. Total fixed negative cash flow $27k. Rental variable expenses will run about 50% of revenues. You have repairs and maintenance, recovering the boat when it's left somewhere else because it stopped, credit card fees, chargebacks, and someone needs to be there when it leaves the dock, when it's returned and needs to clean it between all uses. So let's say the first year you get 40 full days of rental between halves and full, at $400 per day (at $500 they'll go to a rental business rather than you as an individual), thats $16k and a net margin after variable expenses of $8k. Net cash out in year one $19k.

    Taking your magic 75 days of rental and amortizing the down payment over 5 years then here's a year. Total fixed expenses of $17k. Revenues $30k. Variable expenses $15k. Net loss $2k. Just one problem with that. Having a single boat to rent you will never hit 75 days a year. Rental companies with established locations at resort marinas may hit that. 40 is more in line with an optimistic individual. First thing is for you to figure out where you'd even keep this boat and run the business out of. People renting docks behind homes won't let you. Marinas generally won't allow you to do so and some even have restrictive agreements with rental companies. Then will you deliver the boat to the person or will they have to come to your location?
  11. olderboater

    olderboater Senior Member

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    No one in South Florida is going to rent a $20k boat when there are so many $40-50k boats to rent. The $20k boat will rent in other countries.
  12. Vinn

    Vinn New Member

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    I see you are from Fort Lauderdale. The New River Downtown marina offers dock space for private charters and owners who rent out their boats. At least that's what I was told when I spoke with someone there. I think it would cost about $800 a month for dock space there.

    "Having a single boat to rent you will never hit 75 days a year. Rental companies with established locations at resort marinas may hit that. 40 is more in line with an optimistic individual."

    This is good information that I am hoping to learn more about from others in the industry somehow. I don't know how unattainable 75 is in reality, but I am expecting with my marketing plan and commission program, it is possible.

    I am not familiar with the durability and specific maintenance or potential major repairs of any kind of boat that I could come across, but I plan to budget for these expenses as well and take into consideration chargebacks and dates the boat is out of operation. I have taken this all into consideration.

    From what I have seen, there are many boat clubs and yacht management companies that are mobile and will travel to upkeep the boat. I think the last company I researched offers a package that includes weekly washes/detailing, towing, and changing of oil/filters, etc. for $3,000 a year.
  13. Vinn

    Vinn New Member

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    My main concern really is since it is the only boat in the fleet, could it really last a year of daily rentals? Of course insurance would cover any liabilities, but the boat could be out for repairs for...a week...a few weeks...a month? If this happens, many of the clients would have to reschedule or want a refund.


    That is my biggest concern, but it is not a deal breaker.
  14. Pascal

    Pascal Senior Member

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    A small cuddy like that is the wrong boat. Nobody will want to use that small cabin so its a waste of space

    Instead look for an older centerconsole with a pair of Yamahas 4 strokes and a large tee top / bimini (or make one)

    A lot more room and more flexible usage

    The big hurdle is having a licensed captain. Since you have no expedited you can't get one so you re going to have to pay a captain. And even a newly licensed captain desperate for work is going to charge you at least 200/250 a day which leaves you $250 to pay the fuel, maintenance, dockage, insurance and interest /depreciation.

    Even if your marketing skills are such that you get 100 days a year, at the most after you pay th captain you will have $20k to cover all the expenses.

    Ain't gonna happen

    Now if you could drive the boat, you may be able to cover your expenses and make a few bucks on the side
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