Starting a boat rental business start-up is a great way to take advantage of the growing experience economy. Nowadays, consumers are more interested in having picturesque, Instagram-worthy experiences over material possessions.
With the right knowledge, location, and marketing, boat rental companies can be highly lucrative and profitable in the long run. But, as with every business, there are many challenges and complexities you need to be aware of.
This in-depth guide aims to provide the groundwork needed if you’re interested in how to open a boat rental store.
How Does a Boat Rental Business Work?
Starting a boat rental business is much more than just purchasing a boat and putting up a few flyers. Boat rental business ideas involve managing a full-fledged operation and dealing with the challenges every business faces.
As such, boat rental companies generate revenue by renting out boats to customers, usually on an hourly basis.
What Is a Boat Rental Company’s Business Model?
A boat rental company’s business model involves several steps.
1. Finding the Right Market
Tapping into a prime market is the best way to start a strong boat rental company. You’ll need to find an area with a high population density or a large volume of tourists. This way, you’ll have enough potential customers to maintain a sustainable business.
It’s also important to research the water and weather conditions at your potential dock. In some parts of the world, wind conditions and currents can greatly impact the sailing experience.
2. Making the Most of Your Location
When it comes to choosing your location, there will likely be several competitors, so it’s important to understand what they’re offering and how your company can stand out. You’ll need to deliver a service that has more value than the already established competitors. Additionally, great locations can generate a lot of walk-in sales.
3. Obtaining Permits
The exact permits you need to acquire depend on the location you choose to start your boat rental company. As such, you’ll need a landlord contract in order to apply for a water permit. Water permits allow you to dock and operate your boats at the venue.
4. Acquiring Boats
Whether you want to rent out an existing boat or purchase a completely new one, you’ll need a fleet of boats consumers are interested in renting.
5. Hiring and Maintaining Employees
Unless you are interested in managing the entire boat rental company yourself, you’ll need to hire employees who have boating experience. These employees will be in charge of day-to-day operations, so they must prioritize friendliness and customer service.
6. Setting Up Your Dock and Facilities
Depending on the mooring solution at your venue, you may need to install your own dock. As such, some sort of docking is necessary to offer your customers a safe and reliable way of entering the boat.
7. Creating a Website and Online Booking System
Boat rental companies also need to create a website that allows customers to make reservations quickly. This process usually involves using comprehensive booking management software.
What are the Costs of Running a Boat Rental Business?
Since boats are expensive and require significant investment, starting a boat rental company is more costly than you’d think.
You’ll need to spend money maintaining the boat, refueling it, and installing equipment. Boats also vary widely in price, with sailboats starting at $10,000 and fishing boats costing up to $100,000. Furthermore, you’ll need to acquire the proper certifications and insurance, which can cost several thousands of dollars.
On top of that, boat rental companies will need to:
- Hire employees
- Lease space on a dock
- Pay monthly utility bills
- Create a website
- Run marketing campaigns
The size of your company and how many boats you have will determine how much it costs to run a boat rental business.
If you’re wondering, “are boat rentals a profitable business?” or “how much does a boat rental business make?” it depends. Each rental boat business has unique overhead costs and charges unique rates. Profitability will be determined by how many customers the rental business can average every week.
What Types of Boat Rentals Should I Provide?
The location you choose to start your boat rental business plan will also determine what type of boat rentals to rent. Boats come in a variety of different forms and are used for various activities.
Given this variety, you can learn how to start a pontoon boat rental business or a business that rents other boats such as:
- Fishing boats
- Dinghy boats
- Deck boats
- Motor yacht boats
- Cabin cruiser boats
Analyzing the competitors at your location is the best way to understand what boats to purchase for your boat rental company. It’s also recommended that you rent out boats that you have knowledge or expertise about. You can provide helpful advice to your customers and conduct efficient maintenance work.
How Can I Grow My Boat Rental Business?
Learning how to grow a boat rental business model consists of providing an unrivaled experience and taking advantage of modern marketing solutions. Nowadays, there are many ways to reach out to and connect with potential customers.
These marketing campaigns include:
- Paid ads: Instagram, Facebook, Twitter, Google Adwords, etc.
- SEO: Search engine optimization for organic traffic
- Conference partners
- Partnerships with local stakeholders
- Partnerships with hotels, resorts, and travel agencies
- PR and media posts
- Tourism platforms: Airbnb, Tripadvisor, etc.
- Email campaigns
- Affiliate and referral programs
By combining multiple marketing approaches, you can build knowledge about your business.
What KPIs Can I Use to Understand How Well My Boat Rental Business Performs?
When your boat rental company is up and running, there are a few KPIs, or key performance indicators, that allow you to monitor your company’s performance.
1. Time Utilization
Time utilization is calculated by days rented divided by days available. This will help you determine which boats are the most popular and which boats you may need to consider replacing.
It’s incredibly inefficient to keep a boat with low utilization rates as it won’t generate enough profit.
2. Rental Rate
The rental rate KPI is calculated by dividing the rental revenue by the number of contracts. This calculation allows you to track the average change in rental rates from period to period.
3. Washout Percentage
Washout percentage is a performance metric that is calculated by dividing total income by total expenses. This calculation allows you to measure the total boat rental profitability over the lifetime of a boat.
4. Maintenance-to-Income Ratio
The maintenance-to-income ratio calculates how much income a boat is generating compared to how much it costs to maintain it.
The Importance of Reservation and Inventory Management
In the online age we live in today, convenient online booking systems are a necessity for rental companies. These reservation systems allow customers to quickly book a reservation online without needing to call the boat rental company.
Furthermore, online systems reduce the need to track every reservation by hand and risk the loss of important documents. Moreover, boat rental companies need to have an inventory management system that keeps track of all of their boats.
This way, the boat rental company will know when the boat is being used, how many hours the boat has been rented, and when upcoming bookings are.
Start a Boat Rental Business Today
If you’re passionate about boating and want to start an entrepreneurial venture, a boat rental company is a great way to get started. In fact, Quipli makes learning how to run a boat rental business easy and convenient. We offer comprehensive reservation and inventory management software that allows you to run a sustainable business.
Contact Quipli Rental Software today to learn how we can take your rentals online.