Financing, insurance and starting a business

[Leighaa13]

Good evening, I have some questions. My husband and I are planning on selling everything and buying a 50-65 foot used motor yacht. We want to liveaboard and run a chart business off of it in Caribbean (USVI). I’m wondering what people think about the best company to finance through. We are looking at boats no more than $400k and we will have $250k to put down. Also wondering about who to go through for insurance. And any advice will be greatly appreciated. We have been researching this for 10 years and have been saving but with the pandemic and current economic issues in the world if anyone had any updated information on the best way to do this and companies to use. We plan on buying this summer and traveling from the us to the Caribbean ourselves. My husband is retiring and selling his business his marine repair business and has much experience in boats this size and has had a captain’s license in the past. We will be licensed in the next few months. Any advice is greatly appreciated.

[Montanan]

For clarity are you intending to start a yacht charter business?

If so, would that be a bareboat or a Captained / Crewed charter business?

Where would you desire to operate your charter business, country / port?

Each country will have its own laws and regulations, licenses, taxation, etc. regarding starting of a business.

There also is the matter of immigration and work permits as to residing in a country and operating a business there from.

If you supply details of your plan, there are likely persons in the CruisersForum that can provide expert guidance.

All the best.

[S/V Illusion]

Can’t help but ask - have you done the market research to assess whether chartering a power boat a viable business?

[PaulCrawhorn]

I would be very surprised if the business idea could be financed, but if so, of course your sources would want their collateral (your home?) to be local.

Have you got your commercial captain certifications?

This niche is super regulated, very complex challenging red tape in any jurisdiction

and sorry to say 95% sure to lose money

[mvweebles]

Since your husband is in the marine business, he's familiar with the old variation in a theme "best way to make a small fortune in boats is to start with a large fortune and know when to stop." I'd be interested in your business model - day charters or liveaboard charters. If liveaboard, unless some sort of adventure charter (diving), not sure how many people you'll attract with a 60-foot $400k boat.

20+ years ago, I used to use my Willard 36 trawler as a platform for day-long lessons in close quarter maneuvering and boat handling. I'd do a couple weekends a month in San Francisco. Even back then, insurance was very difficult. Looking back, I just wasn't big enough or active enough to defray the costs. It was a lot of work and a lot of fun but the only one making any money was the insurance company.

Also abiut 20-years ago, I joined some friends on a crewed charter sailboat in the BVI. Owner operator was a German couple on a 65-foot sailboat. He asked that he pick us up in the BVI instead of St Thomas due to restrictions either on his license or insurance, I don't remember which. Point being is the post upthread about varying jurisdictions is real.

As a devout trawler guy who has done a good 50k nms of coastal passagemaking aboard powerboats from Alaska to Florida, I always thought about a trawler version of John and Amanda Neal's Mahina training voyages. If my wife had been game to do it, I would have. Lot of work and a lot of responsibility, but rewarding.

As far as financing the boat/business, my guess is you already know the answer. You'll have to come up with the cash with some hard asset behind the loan.

Good luck. I'd be interested in hearing updates as your thinking evolves.

Peter

[SailSonoma]

Just sent a PM

[Stewie12]

I think that it would be wise find out if there is a demand for your type and location of charter. Contact charter brokers in the USVI, BVI and the US before you take on a financial commitment. In short, have your business plan in order before buying the boat.

[Mithril Bham]

I'm assuming that you are going to buy the boat anyway and the charter biz is a way to defray your costs.
We carried 1 mil in liability. That is a minimum. Depends on how much you are at risk. Hull insurance will be required by bank. Talk to lawyers and find out who pays rather than choosing cheapest price for insurance.
We normally considered 16 weeks of charter necessary to actually make a few bucks. You will never get rich but it can help as a tax write off and you can defray your boat costs. Craft your charter agreement carefully. Get all money in advance. You might go to the charter yacht show in the USVI or BVI and take their little course. Takes a couple of hours. You can probably find the manual for the rules governing booking a crewed charter which has some good info.
It can be fun but preparation is 90% of execution. Most guests are great but occasionally you run into a lemon thus a good charter agreement allowing you to drop them off at the closest port.

[captlloyd]

Keep in mind, depending on local regulations, your boat could be subject to rigid, expensive commercial standards also.

[Leighaa13]

Originally Posted by S/V Illusion

Can’t help but ask - have you done the market research to assess whether chartering a power boat a viable business?

We have done our research and connected with others on island who do the same type of work. We aren’t worried about starting the business as there is a demand for charters there. Just inquiring about people’s preferences on mortgage/loan and insurance companies that we’d have the best luck with. Thank you for asking.

[Leighaa13]

Originally Posted by mvweebles

Since your husband is in the marine business, he's familiar with the old variation in a theme "best way to make a small fortune in boats is to start with a large fortune and know when to stop." I'd be interested in your business model - day charters or liveaboard charters. If liveaboard, unless some sort of adventure charter (diving), not sure how many people you'll attract with a 60-foot $400k boat.

20+ years ago, I used to use my Willard 36 trawler as a platform for day-long lessons in close quarter maneuvering and boat handling. I'd do a couple weekends a month in San Francisco. Even back then, insurance was very difficult. Looking back, I just wasn't big enough or active enough to defray the costs. It was a lot of work and a lot of fun but the only one making any money was the insurance company.

Also abiut 20-years ago, I joined some friends on a crewed charter sailboat in the BVI. Owner operator was a German couple on a 65-foot sailboat. He asked that he pick us up in the BVI instead of St Thomas due to restrictions either on his license or insurance, I don't remember which. Point being is the post upthread about varying jurisdictions is real.

As a devout trawler guy who has done a good 50k nms of coastal passagemaking aboard powerboats from Alaska to Florida, I always thought about a trawler version of John and Amanda Neal's Mahina training voyages. If my wife had been game to do it, I would have. Lot of work and a lot of responsibility, but rewarding.

As far as financing the boat/business, my guess is you already know the answer. You'll have to come up with the cash with some hard asset behind the loan.

Good luck. I'd be interested in hearing updates as your thinking evolves.

Peter

Thank you for sharing your experiences. We plan on living aboard and doing day charters. We have been researching this for many years. We are confident in our business model. We have cash for equity. Just looking for opinions of companies people have worked with so we can decide who we have the best shot with. We don’t want to apply to companies that we don’t have a shot with.

[Leighaa13]

Originally Posted by Mithril Bham

I'm assuming that you are going to buy the boat anyway and the charter biz is a way to defray your costs.
We carried 1 mil in liability. That is a minimum. Depends on how much you are at risk. Hull insurance will be required by bank. Talk to lawyers and find out who pays rather than choosing cheapest price for insurance.
We normally considered 16 weeks of charter necessary to actually make a few bucks. You will never get rich but it can help as a tax write off and you can defray your boat costs. Craft your charter agreement carefully. Get all money in advance. You might go to the charter yacht show in the USVI or BVI and take their little course. Takes a couple of hours. You can probably find the manual for the rules governing booking a crewed charter which has some good info.
It can be fun but preparation is 90% of execution. Most guests are great but occasionally you run into a lemon thus a good charter agreement allowing you to drop them off at the closest port.

Thank you very much for sharing. It’s helpful to hear as much as we can. We will be captain/crew and plan on doing day charters with the occasional overnight depending on schedules. Also planning on working year round with some time off here and there. Mostly September.

[TrentePieds]

Leighaa13 said: "We have been researching this for 10 years... "

One is compelled to ask: If you've been researching this for a decade, why are you asking strangers to give advice on the very fundamentals of starting such a business? Why not put a fully developed business plan before us and ask us to critique it?

Well, don't answer that — obviously someone might nick it. And competition is intolerable under "free ennerprize" conditions :-)!

Nevertheless, you need a business plan, and only you can develop a coherent, cogent one. If you are not the one that's slogged through developing it, you wouldn't understand it "in your guts". Which you must do to be successful.

I'm sure that in your location there must be night school classes where you can learn how to do it. If you don't know how to develop and implement a business plan, you can't run a business of ANY kind, let alone something so nebulous as a charter business operating in multiple legal jurisdictions.

Bonne chance!

TrentePieds

[mvweebles]

Originally Posted by Leighaa13

Thank you for sharing your experiences. We plan on living aboard and doing day charters. We have been researching this for many years. We are confident in our business model. We have cash for equity. Just looking for opinions of companies people have worked with so we can decide who we have the best shot with. We don’t want to apply to companies that we don’t have a shot with.

When I did my training aboard my boat, I used a local (SF Bay) marine insurance agent who was very helpful. Doubt I'm telling you anything you don't already know, but given the Caribbean is one of the world's top charter destinations, I would think there would be some top-flight insurance agents in the area (and likely some dogs too) who could represent you faithfully to an underwriter. When I was active, my insurance agent was part of my professional services team (accountant, attorney, and insurance).



Good luck!!!


Peter

[Leighaa13]

Originally Posted by TrentePieds

Leighaa13 said: "We have been researching this for 10 years... "

One is compelled to ask: If you've been researching this for a decade, why are you asking strangers to give advice on the very fundamentals of starting such a business? Why not put a fully developed business plan before us and ask us to critique it?

Well, don't answer that — obviously someone might nick it. And competition is intolerable under "free ennerprize" conditions :-)!

Nevertheless, you need a business plan, and only you can develop a coherent, cogent one. If you are not the one that's slogged through developing it, you wouldn't understand it "in your guts". Which you must do to be successful.

I'm sure that in your location there must be night school classes where you can learn how to do it. If you don't know how to develop and implement a business plan, you can't run a business of ANY kind, let alone something so nebulous as a charter business operating in multiple legal jurisdictions.

Bonne chance!

TrentePieds

We have a business plan. Just really looking for advice on best financing companies and insurance companies so we don’t waste our time. I know of some. We already own a successful business but I really was just looking for opinions on financing and insurance not our plan (only gave that for background on what we are looking to do)