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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on March 4, 2022
Investment range
$6,250 - $17,200
Revenue potential
$80,000 - $360,000 p.a.
Time to build
1 – 3 months
Profit potential
$48,000 - $216,000 p.a.
Industry trend
Growing
Commitment
Flexible
Here are the most important aspects to consider if you want to start a boat rental business:
You May Also Wonder:
How profitable can a boat rental business be?
Even small boats rent for $100 per hour, so there is definitely good money to be made. If you have several boats you can make thousands of dollars a day, so even if your area has an off-season, you’ll bring in a healthy income.
How can I differentiate my boat rental business from competitors in the area?
You can differentiate your boat rental business by offering outstanding customer service or lower prices than competitors. You could also rent fishing gear.
What are some tips for maintaining a positive online presence and reputation for my boat rental business?
First of all, you’ll need to offer a great customer experience so that people will not post negative things about your business online. You also should monitor the web, and respond in a positive way to negative comments.
What happens during a typical day at boat rental business?
As a boat rental business owner, you’ll speak with customers, provide them with safety guidelines, and have them sign rental agreements and liability waivers. You may also spend some of your days on marketing activities.
Can you start boat rental business on the side?
A boat rental business can be a great side hustle. You could just run it on the weekends or during the summer months.
Starting a boat rental business has pros and cons to consider before deciding if it’s the right path for you.
Trends
Challenges
Startup costs for a boat rental business range from $6,000 to $17,000. Costs include a down payment on your boat or boats, life jackets and equipment, a boat slip rental, and boat insurance.
You’ll need a handful of items to successfully launch your boat rental business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150–$200 | $175 |
| Business licenses and permits | $100–$300 | $200 |
| Insurance | $100–$300 | $200 |
| Business cards and brochures | $200–$300 | $250 |
| Website setup | $1,000–$3,000 | $2,000 |
| 1 - 3 boats - down payment | $3,000–$9,000 | $6,000 |
| Life jackets and other equipment | $1,000–$2,000 | $1,500 |
| Boat slip rental | $500–$1,500 | $1,000 |
| Boat insurance | $200–$600 | $400 |
| Total | $6,250–$17,200 | $11,725 |
You can rent a small boat for about $100 per hour or $600 to $700 for a full day. Your profit margin after maintenance, fuel, and other expenses should be about 60%.
In your first year or two, if you have one boat and rent it an average of four hours 200 days a year, you’ll bring in $80,000 in annual revenue. This would mean $48,000 in profit, assuming that 60% margin. As your business gains traction and you get referrals, you could add two more boats and rent them for six hours on 200 days. With annual revenue of $360,000, you’d make a tidy profit of $216,000.
There are a few barriers to entry for a boat rental business. Your biggest challenges will be:
Now that you know what’s involved in starting a boat rental business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research boat rental businesses in your area and online to examine their services, price points, and customer reviews, as well as what type of boats and services rent best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a family-focused boat rental business with skiing, tubing, and swimming outings.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as charter boat tours.
This could jumpstart your word-of-mouth marketing and attract clients right away.
First, you need to decide what kind of boats you want to buy. You could choose to buy a:
In addition to boat rentals, you could offer the following:
Your prices will depend on the type of boats that you have. Small boats rent for $100 an hour. Cabin cruiser boats rent for much more. Your ongoing costs will be fuel, maintenance, slip rental, and insurance. You should aim for a profit margin of about 60%.
Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be mainly locals and tourist visitors. You should spread out your marketing to include sites like TikTok, Instagram, and Facebook. You can also distribute brochures at local hotels, restaurants, and other tourist spots.
You really don’t need a space other than your boat slip unless you want to have a small rental office. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Discover over 250 unique boat rental business name ideas here. If you want your business name to include specific keywords, you can also use our boat rental name generator. Just type in a few keywords, hit Generate, and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. However, once you pick your company name and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere. Some states could offer real advantages when it comes to boat rental businesses.
If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your boat rental business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number or EIN. You can file for your EIN online, or by mail/fax. Visit the IRS website to learn more. Keep in mind that, if you’ve chosen to be a sole proprietorship, you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a boat rental business.
Starting a boat rental business requires obtaining a number of licenses and permits from local, state, and federal governments.
You’ll likely need a watercraft license. Check with your state for requirements.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your boat rental business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as booqable or Quipli, to manage your bookings, inventory, purchases, and payments.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.
However, people are unlikely to find your website unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today, customers are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your boat rental business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your boat rental business could be:
You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a boat rental business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in boats for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in boat rentals. You’ll probably generate new customers or find companies with which you could establish a partnership.
You may not need any employees at first, but as your business grows and you grow your fleet, you will likely need workers to fill various roles. Potential positions for a boat rental business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
As you can see, a boat rental business can bring in good money, even if your boats only rent for 200 days a year. You have a ton of options too, in terms of the types of boats you can rent and the services you offer. It takes a bit of an investment, but a boat rental business offers a great lifestyle as well as a great income. The boat rental industry is worth more than $5 billion, so why not be one of the entrepreneurs swimming in that cash?
You’re off to a great start with solid business knowledge in your tool bag, so put your plan together and get ready for launch!
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