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How to Start a Boat Rental Business

Written by:

Edited by:

Reviewed by: Daniel Javor

Published on March 4, 2022

Updated on October 6, 2022

How to Start a Boat Rental Business

Disclaimer: Step by Step Business’ content is for informational and educational purposes only. It’s not intended to be a substitute for professional legal or tax advice. All of our articles are thoroughly reviewed and fact-checked by our editorial team. Read our editorial guidelines for more details.

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Fast Facts

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

How to Start a Boat Rental Business

What’s more relaxing than being on a boat? Whether it’s fishing, skiing, tubing, cruising or just meandering, boating is always a good time. That’s why boat rentals are a $5 billion industry in the US. If you’re lucky enough to live near a sizable body of water, you could start a boat rental business, provide good times to locals and vacationers alike and make good money at the same time. And the best part of having a boat rental business is that it’s fun! You get to work by the water and take your boats out whenever you like.

Before you start riding the waves, though, you’ll need to know what you’re getting into. Fortunately, you’ll find all the information you need in this step-by-step guide designed to prepare you to launch and run a successful boat rental business.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a boat rental business has pros and cons to consider before deciding if it’s the right path for you.

Pros

  • Share Your Passion – Provide customers with great boating experiences
  • Good Money – Even small boats can bring in $100 an hour
  • Flexibility – Work on your time, play on your time

Cons

  • Pricey Maintenance – Boats need maintenance and repairs
  • Investment Required – Boats don’t come cheap

Boat rental industry trends

Industry size and growth

boat rental industry size and growth

Trends and challenges

Trends in the boat rental industry include:

  • The most popular reason for a boat rental is fishing. This presents a revenue opportunity for boat rental businesses to also rent fishing equipment.
  • New technologies offer additional safety features for boats, so a boat rental business with the latest boat technology can offer that as a selling point.

Challenges in the boat rental industry:

  • Rising fuel prices are cutting into the profit margins of boat rental businesses.
  • Accidents on boats are common, and if injuries result, boat rental businesses can face liability. For this reason, good insurance is crucial. 
boat rental industry Trends and Challenges

Demand hotspots

boat rental industry demand hotspots

What kind of people work in boat rentals?

boat rental industry demographics

How much does it cost to start a boat rental business?

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: 

  • Life jackets
  • Throwable flotation devices
  • Fire extinguishers
  • Signalling devices
Start-up CostsBallpark RangeAverage
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

How much can you earn from a boat rental business?

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 of the 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 6 hours on 200 days. With annual revenue of $360,000, you’d make a tidy profit of $216,000.

boat rental business earnings forecast

What barriers to entry are there?

There are a few barriers to entry for a boat rental business. Your biggest challenges will be:

  • Obtaining financing to make a boat down payment
  • Close proximity to a body of water required

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Step 2: Hone Your Idea

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. 

Why? Identify an opportunity

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 and 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. 

What? Determine your products or services

First, you need to decide what kind of boats you want to buy. You could choose to buy a:

  • Kayak
  • Personal watercraft like a jet ski
  • Pontoon boat
  • Bow-rider boat
  • Sailboat
  • Cabin cruiser
  • Fishing boat
  • Houseboat
  • Ski boat
  • You could even go crazy and buy a yacht!

In addition to boat rentals, you could offer the following:

  • Charter boat tours or fishing boat charters
  • Fishing gear rental
  • Snorkeling gear rental
  • Snack and beverage sales
  • Dinner cruises

How much should you charge for boat rentals?

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 this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target 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. 

Where? Choose your business premises

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:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed
boat rental business idea rating

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “boats” or “boat rentals”, boosts SEO
  • Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and 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. 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.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your offerings in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
  • Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
  • Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

what to include in a business plan

Step 5: Register Your Business

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! 

Choose where to register your company

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, as 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, it’s relatively easy to transfer your business to another state. 

Choose your business structure

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:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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 ZenBusiness’s 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. 

types of business structures

Step 6: Register for Taxes

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 or fax: visit the IRS website to learn more. Keep in mind, 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.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a boat rental business. 

Step 8: Apply for Licenses/Permits

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.

Step 9: Open a Business Bank Account

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. 

Step 10: Get Business Insurance

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:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.
types of business insurance

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

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  Alert, booqable, or Quipli, to manage your bookings, inventory, purchases, and payments.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Marketing

Some of your business will come from the casual passerby or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Book Now”. This can sharply increase purchases.
  • Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers. 

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

  • Signage – Put up eye-catching signage at your location and website. 
  • Post a video – Post a video about your boat rentals. Use humor and maybe it will go viral!
  • Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
  • Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
  • Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
  • Influencer marketing – Pay people with large social media followings to promote your boat rentals. You can find micro-influencers with smaller followings and lower rates.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, 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. 

You can create your own website using services like WordPress, Wix, or Squarespace. 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.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today 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: 

  • Discount full-day boat rentals – explore the whole lake!
  • Fishing boat rentals with all equipment provided
  • Evening dinner cruises – watch the sunset in the lap of luxury
unique selling proposition

Networking

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. 

Step 12: Build Your Team

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:

  • Boat Rental Clerks – make sales, prepare boats
  • General Manager – scheduling, staff management, accounting
  • Marketing Lead – SEO strategies, social media

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. 

Step 13: Start Making Money!

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. Boat rentals are a $5 billion industry, so why not be one of the entrepreneurs raking 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!

Boat Rental Business FAQs

How much does it cost to start a boat rental business?

You can start a small boat rental business with one boat for about $6,000. You just need a down payment for the boat, a website, a boat slip to rent, and insurance and you’re ready to launch.

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. But you’ll also need to deliver excellent service!

Which licenses do I need to start a boat rental business?

You’ll probably need a watercraft license from your state. You also may need various licenses and permits at the state and local levels. Check with your local governments for requirements or visit MyCorporation’s Business License Compliance page.

How much can I charge for boat rentals?

It depends on the types of boats you rent. A small bow-rider boat can rent for $100 per hour. Cabin cruisers can rent for $200 to $400 per hour, and speedboats can rent from $150 to $300 per hour.