Need Advice for Day Sail Charter Business

[M012916]

Does anyone have any advise or related experience for a Day Sail Charter Business in the USVI? I am looking at buying an existing Day Sail Charter business in the USVI and would appreciate any insight. Especially:

How do you evaluate the business? Of course it is worth the value of it's assets: boat, equipment, dingy, ect? But, assuming the the captain is making $75,000 a year (net profit, take home pay), what is the value of that? Most charter boats I see for sale, sell for approx. fair market value and include the exisitng charter business. Have you seen them sell for more that that?

How as the tourism industry done since the recession in the USVI?

Is the Day Sail Charter Business a flooded or cut-throat business in the USVI?

Any other advise is much appreciated. Thanks.

[GordMay]

Greetings and welcome aboard the CF, M012916.

➥ http://lmgtfy.com/?q=Business+valuation+

[zudnic]

Actually this could be a good topic for discussion. Considering we all boats or aspiring to have one, etcetera.

1.) I owned a used car dealership in Toronto. A simular business up the street and became friends of mine. Well they bought an established used lot from someone else. They laid out more money to buy an existing business over mine started from scratch. The old owner had a semi bad rep and had business practices that most associate with used car dealers. They had to change their name and move locations. Start from scratch. Most private business are priced low because most times its less expensive to just start your own. A girl I dated recently. She got a job at an espresso place. Learned what the business entailed. Then went out on her own and started from scratch. At 19. People buy existing business because they think all the right buttons to success are all ready in place. If you can't create your own buttons--how can you run a business? Really your buying training that can be less expensive getting a job in the industry to learn the ropes.

Would it cost less to start on your own? Is the seller selling because he has a bad rep? In other words the real value is existing customers. That part is near impossible to determine. Hence why a franchise has better value most times over other private business. Buy a bad one and your going to need to attract new customers and clense yourselves of past bad word of mouth experiences created by someone else. Again easier to create from scratch and build your own.

2.) Another car dealer that I borrowed cars from to resell. He had high end cars that he collected and sold. Things like Rolls Royce's. A very wealthy individual. Once he said that the car business was tough--my son lost half a million of my money. No his son lost that money for your company I said. Puzzled he wanted an explanation. Did his business still cover expenses and pay the owners salary? Yes, he still had a salary and paid all the operating expenses. Even though his son wasted half a million of business capital--he just did not generate a bonus or a return of capital.

3.) over crowded markets. Car dealers are a dime per dozen. I semi specialized and carved out a niche market. Would tend to specialize in cars that other dealers didn't bother with. Like exotic used dealers mostly buy lease returns that are a few years old. Off lease 3 year old BMW', Mercedes, Jaguars, Porsches, etcetera. Id buy the older yet still popular models. Carved out a niche including 1970's Rolls Royce Silver Shadows, etcetera.

[asteffensen]

Holy. I have no idea what this thread is talking about. At all

[sarafina]

Business valuation is more smoke and mirrors than a carnival fun house after a fire...

Most small businesses have their worth wrapped up hugely in the persona of the founder of the business.

That captain selling the charter? His clients are repeat clients or send their friends because of him; because he showed them a good time.

You are not he, and as such will have to be able to fill the role he had with his clients.

That can be a tall order.

Make SURE you pay under market value for any solid asset, and I would not pay a penny for good will or assumed future business.

And make sure that you can maintain the personal experience he offered his clients... Because that's what has made his business a success, and he can't sell that to you even if he wanted to...

[harryrezz]

Yes - what safarina said!
I've done term charters in the southern Caribbean for 8 seasons (1 couple for 1 week), but intentionally only did a few each season as I was not trying to make a living, only augment income. All my business came from my own website, and although I always got favorable references, I never had a repeat customer. My boat is currently for sale, but I would not even think of representing what I had as a viable business to sell to someone else.
Day charters are much easier than term charters, but you have to do 6 or 7 of them to make what you can make on one term charter. (However, at the end of the day the clients are gone and you have your boat to yourself!)
It is my understanding that tourism in both the US and BVI has been way off, but it seems to be slowly recovering.
IMHO,buy the boat if its what you want, but certainly don't pay more than fair market value for it because that "existing business" is like buying a smoke ring.

[Sand crab]

And put a no-competition clause in the contract that would prohibit the seller from simply opening up a new charter business next door (in your area). If he has a good rep then you don't need the competition. BOB