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Old 10-01-2008, 19:42   #1
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New Charter Biz Idea

Here is my basic concept. Tell me what you think:

I will buy a good, solid, blue water capable, 3 cabin, center cockpit cruising boat. A Stevens 47, Gulfstar 50, Endeavor 52…. The boat choice is still to be determined (and I am open to suggestion). The boat will be purchased for cash, no boat loan.

The boat will get a comprehensive refit with live aboard cruising in mind. This means a large battery bank, smart controllers, Inverter/Chargers, DC Genset, wind generator, solar panels, watermaker, radar, chart plotter/GPS, SSB, Autopilot, windvane, DC fridge and freezer, …. Basically, the boat will be refit using all current gear with everything really well integrated. The entire point is to have the boat perfectly setup for modern live aboard cruising. All systems would be new or near new, all would be chosen as part of an overall integrated system and the boat will be in excellent condition.

This doesn’t sound like a charter boat does it? That’s the point. I am looking at starting a different kind of charter boat operation. Rather than have newish, lighter built (built to a price) and very simple boats with minimal systems aimed at the cheap bareboat charter trade, I am targeting a different market. I am not looking to be just another vanilla charter boat for the party crowd looking to daysail drunk from anchorage to anchorage (not that I do not enjoy that!).

I would be offering the following:
  • Sailing School. Crewed by an experienced/professional Captain fully certified to instruct in all the coarses, week long liveaboard ASA certified school offering 101, 103, 104, 105 and other certifications. This would probably be offered in the BVI during the winter season and in New England during the summer.
  • Crewed Cruising Charter: A seasoned professional captain would take up to 6 guests on a week long vacation cruise. Guests would have the option to participate in operating the yacht as much as they wanted and to get as much hands on experience using all the gear and learning about all the systems from the qualified Captain as they want.
This last one is the real target and what I view as the best value proposition in this idea:

  • Crewed, Cruising Systems Instruction Charter:
This would be a week long training charter but with plenty of time built in to have it be a great vacation at the same time. It is assumed that the guests already have sailing experience and are giving serious consideration to live aboard cruising. The Captain will lead the charter guests through a structured, comprehensive system by system instructional/training coarse. Guests will learn about installation, maintenance and operating all systems such as a current tech integrated charter plotter/GPS/Radar/ Autopilot…… watermaker…. Electrical system (all of it, integrated: battery bank, chargers, Genset, solar, wind, inverter )…. Windvane, SSB and all the other gear.

The point to this is to provide hands on training relative how one should evaluate such gear, install it, maintain it (maintenance instruction on other systems such as the engine will also be included) and operate it. Charter guests would get instruction, hands on use and comprehensive study materials and documentation.


It seems to me that most of the charter operations and sailing schools out there do not cater to this market. Now, I understand that this is because the market my concept is aimed at is very small. There are FAR more folks who just want to charter a simple, new boat in the BVI and go to Foxys and get drunk. That’s great! But there are also already a ton of companies and thousands of boat competing for this biz.

I am not looking to keep 50 boats booked 30 weeks a year. I am looking to keep 1 boat booked maybe 15 weeks per year. That’s it. Remember… the boat will be paid for and this business does not have to provide me a living. If it all goes great…. Then I have ideas for how it could be expanded. Lots of ideas. Grand schemes in fact. But first things first.

It seems to me that this concept would appeal to people who are considering living aboard or long term cruising. IT would also appeal to people looking to refit or upgrade their own boat and looking to learn more about how to approach the entire project.

I also think this concept could appeal because the costs would be reasonable. I expect to be able to offer this kind of crewed charter for not much if any more than a bareboat charter from lots of the big players.

For one thing… I will have less $ in the boat. If I buy a $140K boat and spend $75K on a full refit (and I will do most of the work myself… I am capable/qualified to do so) I will still have FAR less invested than most similar sized new bareboats on offer.

So….. IS this stupid / crazy / doomed to failure? What should I consider? Anyone interested?



Terry
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Old 11-01-2008, 04:46   #2
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Terry, sounds cool esp' if thats the style of boat you want for your own use. Remember most people are nice but on a weeklong charter when you got a weird one or seasickness it'l be a long week for the skipper & other guests- seven days is too long maybee six if you have two skippers & change over midway or run three days x 2 charters( more $), the boat & workers need some down time 'coz guests can suck the life out out of them & they gotta feel fresh to keep the people happy. Day trips are good, skippers can have a life + family & exposure to ~holes is shorter & bad ones can be dumped back on the wharf with their $, its a bit tougher to do on a long charter & you have to give skippers absolute discretion & backup on continuation of charters regarding weather/drunkeness/lewd behavior etc. All the best from Jeff.
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Old 11-01-2008, 06:03   #3
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Terry,

While this sounds like a good charter business, it's not new.

My wife and I did this a couple years ago on a Gulfstar 45 - just with different marketing and a different setup. People have been doing charters like this for a long LONG time. Probably since before I was born.

Don't try and convince yourself that your charter is any different from the others. You may be able to carve out a niche via marketing (we had our boat full up every single day our first season and had to turn away countless people), but in the end, you're still just chartering.

BTW: Be SURE you like strangers in your home before you try chartering. I didn't much care for drug users, violent drunks and such threatening me in my home while we chartered. Also, be sure your wife or sig other likes people in her home too... and remember your home is tiny. There is no escape from the guests no matter how big you think your v berth is.

With that said.... proceed! You will be successful... just be sure you like what you are getting into.
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Old 11-01-2008, 06:14   #4
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Terry,

The model is not unlike a lot of sailing schools very much except the scale of what and boats you propose. Many of the schools are going a slightly different direction in the high end of the market where the school runs as private lessons in smaller boats. Sailing schools are all about the high end. Except the summer camp and community park programs there is no lower end to this market. You are driving to the very height of the market. It might be lonesome.

We did a one week private school where we lived on a boat just the two of us. We had our own instructor that showed up each morning and we sailed till mid afternoon every day and lived on the boat by ourselves. It was a great concept. The boat was a new Hunter 28 so the boat side of the equation was pretty cheap. Had the boat been something really nice I doubt we would have been offered that experience. Having more students means you sail even less. In the end the course was great and we got to sail the boat a lot and work one on one with a great instructor as well as learn some things about cruising boats. As much as I currently can laugh at that Hunter 28 as a cruising boat (it was cramped and lightly fitted) it was a great school boat and was easy to sail led by a a fine instructor. The course was fantastic!

The idea of a real cruising experience with a real boat and instruction does have appeal (at least to me). The agenda however with a group of students is more like a an ASA 104 on steroids - won't be no time left for vacation in a week. ASA 104 is this course with half the content usually taught in almost the same time. Your course is really more like 3 weeks to do what you claim. Maybe a better course but not a week.

From a business point of view the capital for all this is going to be a lot. Refitting older boats will be "death by the calendar". Refitting a fleet of boats that each need something different and perhaps get refitted with different equipment is going to bury the maintenance operation of the fleet down the road. It makes every boat a one off with some jewels and some curses to be sure. The management of the refit projects alone is unthinkable. Doing one boat at a time seems to bury me.

The light weight, standard cheaper boats show up ready to go and are well standardized. You sell them off before they can bury you and you offer guests a new boat experience. If you look at it totally as "guest experience" then the boat does not matter. I think I would extend it to more things with sailing. Boats are the relatively unimportant parts of the game.

The model has been tried a lot with single boat and owner captains. No one gets rich because it's not the whole object of doing it. It works because doing the charters is in itself fun and it pays a little expense money and provides something to do that is and can be fun. Doing it on a large scale (more than one boat) just does not seem possible and removes the parts that make it appealing.

If someone wants to do this with their own cruising boat it becomes a owner / guest relationship. The world needs more of those not just with sailing. "Harry, are you still around?
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Old 11-01-2008, 06:39   #5
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Thanks for the replies! Let me better clarify a few things:

I would not be living aboard the boat. I would not be the one acting as the Captain. I have another business that provides a good living, I would not be depending on this business to make a living.... if the business covered the boats basic upkeep I would be thrilled. This charter business (like most) has as much to do with tax advantages as anything else.

This concept came to be after my wife and I did a week long livaboard ASA school in the VI. We did this on an Island Packet 40, there were 5 of us including the Captain. The 4 paying guests each paid $1500 all in for the week. I would be looking to charge about the same.... maybe a bit less. The boat I would use would be larger and nicer. The Captain I have lined up for this is really great... tons of experience, great guy, certified as ASA instructor and he definitely knows how to show guests a great time.

This biz would be with just one boat. My family and I plan to leave for an extended cruise in 2.5 year. The boat would be used in this biz in the meantime. This has tax advantages to me relative to offsetting other income and capital gains, plus it would give me experience in how such an operation works that could be valuable when we are done with our cruise should I want to go into the charter biz thing on a larger scale.

My post may have given the impression that charter guests would be disassembling gear, getting greasy and dirty and doing a hard core highly structured class type thing. Thats not what I have in mind. Guests would learn about installation and maintenance but thats not to say on a level where things are all taken apart. I really do not see many folks wanting that level of detail. Folks will get some hands on with using all the gear. BUT... things would be flexible. If guests wanted to spend more time playing and sailing or bar hopping that would be their option. For example... if the wives want to go shopping while the men talk diesel thats ok.

The point that this concept is not new is actually a good thing. Having started several businesses... the first that failed painfully and two subsequent that have been successes.... I would much rather pursue a beaten path and than blaze a new trail. That said, having a niche that sets oneself apart from the biggest competition on that beaten path is more my goal.

I also agree that marketing would be key. In my mortgage biz I am pretty good at this.



Terry
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Old 11-01-2008, 10:34   #6
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Hi Terry:

Sounds like a good business to me. Idea is very similar to what Mahina Expeditionas does Mahina Expeditions conducts sailing and navigation training and expeditions in the South Pacific and offers offshore sailing seminars excet that on Mahina there is not a limited amount of area they cover. The teaching goes on wherever the boat is ging. I think you idea is sound and as long as the boat is paid for there is a profit potential. I see the mjor problem being the finding of a captain (or captains) that you could hire only 30 weeks a year.
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Old 12-01-2008, 23:03   #7
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[quote=Tspringer;124921]
This concept came to be after my wife and I did a week long livaboard ASA school in the VI. We did this on an Island Packet 40, there were 5 of us including the Captain. The 4 paying guests each paid $1500 all in for the week. I would be looking to charge about the same.... maybe a bit less. The boat I would use would be larger and nicer. The Captain I have lined up for this is really great... tons of experience, great guy, certified as ASA instructor and he definitely knows how to show guests a great time.

Terry, I dont quite follow the scheme to charge the same or a bit less, as if you got a nicer boat & great skipper with the people skills charge a bit more & then a bit more for great food & some extra cool stuff to take home (advert shirts, coldie holders etc) so you get more money for a superior product, if the service & quality experience is there the punters will pay, dont under value what you offer 'cos its the fat thats left after all the expenses that counts & I dunno what your tax laws are like but most likely hinge around the intention of making a profit. All the best from Jeff.
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Old 13-01-2008, 00:26   #8
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Island Packet 40, The 4 paying guests each paid $1500 all in for the week.

I would be looking to charge .... less. The boat I would use would be larger and nicer. .
So a boat larger and nicer than an Island Packet 40 and less than $1,500 pp per week. That, as Paul said, if the high end of the market with the boat and the middle of the market with the wallet Thats where it gets difficult.
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Old 13-01-2008, 18:59   #9
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Waikikin. There isn't much about business of any kind, that hasn't already been tried. Not to bust your bubble, but I suspect part of the reason 4 guests paid $1,500 each is an economical vacation.
You paid $1,500 for;
1st. learning to sail,
2nd. exotic location
3rd. waterfront accomodations (cheaper than a hotel room) for a week
4th the experience

When it is measured in that manner, it does have appeal.

A Captain Owner Teacher can make some cruisin money doing that. Can a profitable business be had with all the additional overhead, yes. But the pros who are already doing it are pretty well entrenched, and your competition will be tough in my opinion.

Lets see....advertising costs, insurances, scheduled maintenance, legal fees, uncooperative weather, employees costs, cancellations, and there will be some real problem people to deal with.

If it is your dream, be prepared to spend a lot of personal energy, to make it work, you'll likley need it. But it is possible.

Good luck and let us know how you make out!!

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Old 13-01-2008, 20:31   #10
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Lets see....advertising costs, insurances, ......

Pogo
Hang on! you forgot the biggie: the cost of finance of the boat (Up front!) ask your account and he will want a 30% ROI (return on investment) of the money in the boat

Thats when you call it a business because you have to be able to buy a new boat every so many years or the charterers wont charter any more.
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Old 13-01-2008, 21:28   #11
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I am thinking that charterers who are looking for more of a "Cruising" type experience with a healthy dose of learning tossed in will not be so focused on how old the boat is.

It seems to me that a huge chunk of the folks who go cruising do so in an older boat that has probably been refit extensively. Lets face it... a brand new Hunter 49 is $400K before you add any gear to it at all. Toss in all the cruising goodies and its well over $450K. Thats for a Hunter. Want a loaded up and ready to go IP 465? OUCH! $$$$ Hallberg-Rassy 45 foot more your speed? SUPER OUCH

OR.... buy an early '90s Hylas 47 for $200K and spend $75K on a refit. Now you have half the money in the boat. But what about that refit? What should go into it? What should be considered? What can you do yourself and what must a yard do? What are the options, how does it all tie in together, and is this idea really all that viable?

THAT guy is the target market I am thinking of. The folks giving cruising some serious thought but still fundamentally dreamers. They know the basics on how to sail and may have done some traditional chartering. Now, rather than just another vanilla bare boat week, they may want to try something closer to a real "cruising" type of experience. That means on an older boat, but one that has been fully refit with modern gear and with a skipper on board to shepard them through a loosly structured learning live aboard week..... but one for which plenty of time is still set aside for sailing and fun.

A couple of things that could help make this concept viable: The biz would have no debt. The boat would be owned free and clear.... no loan. The business does not have to kick off a big profit. In fact... if it simply covers the boats basic expenses and shows a tiny pre-depreciation profit then all is good.

The sailing school my wife and I did 2 years ago was on an older IP40. Definitely a "working boat"... she was rode hard and put up wet, far from a show piece. This was with a very well known and advertised sailing school. It was in the BVI. There were 5 of us living aboard for a week... 4 guests/students and the captain. We all helped cook meals. 8 hours per day was "school". It was fun, we got bareboat certified and I felt that at $1500 it was a good deal.

BUT... while we learned a fair amount about the basics of sailing (my wife learned a ton, I less so having grown up on boats and sailing but still it was fun) the time spent on technical aspects of the boat were minimal at best.

Chartering a bareboat from Moorings or Sunsail is going to get you a very basic and minimally equiped boat. Great fun for a weeks vacaton.... but unlikely to do anything as far as really giving a taste of living aboard a real "cruising boat". But thats fine as I am sure 90% of the bareboat charterers could care less.

But that other 10%... thats where I want to be. Now I get that targeting a small segment such as that is not a recipe for growing a dynasty. But thats not my purpose. I already own and run a successful business that sucks my time and pumps my bank account. I need a tax excuse to own a boat and a small business that will make me smile while helping me to learn and possibly lay the foundations for something more later.

So.... figuring the boat would be in the VI between late November and Mid May (probably based out of St. Thomas but perhaps out of eastern PR) and then in either Maine or the Chesapeake for the summer I would be hoping to sell at most 10, maybe 12 weeks of this kind of crewed charter school/vacation per year. The boat would have 2 cabins for guests plus the salon.... up to 6 guests.

I am rough estimating that charterers would probably have to pay in the region of $1500 - $1700 for the full week, excluding alcohol and meals ashore plus airfare and such. The boat would be older.... something like a mid 1980's Stevens 47 but refit to very nice condition.

I honestly do not know if this is a good idea or not. But hey... if the "business" fails, then I shut it down in 2 years or so. If it does great.... its likely to still get shut down as we will eventually move aboard and shove off on our own cruise. But in the meantime I get tax advantages... learn a ton and maybe even make a buck.


Terry
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Old 14-01-2008, 11:17   #12
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Tspringer,

I do think that some folk (who intend / dream of sailing off into the WBY) would find this very useful for the reasons you describe - especially those with non sailing Partners (of course "marketing" involves convincing them this is true - but always useful when marketing to have a product that is actually useful!). And being based somewhere "Neutral" / a likely / dreamed of cruising ground like the BVI would be useful in marketing into Europe as well to peeps from the US.

Whether their are enough of these folks who are willing to put their hands into pockets to make this a worthwhile business proposition is another thing......I would have thought you would need to factor in a lot of "downtime" for the proffesional captain, at least initially - and with a captain / crew onboard what makes things a success is not just their competence, ability to teach.....it's their ability to play the genial Host. Even on bad days.

Not familiar with the actual boats in question, but I would figure on you need to decide in advance whether your punters are guests aboard someone else's boat, have their own Pet Captain / Instructor or somewhere in between....with accodamation to match - can't say I would pay money to feel like I am intruding in someone else's home (or paying for someone else's leisure time?) - which is perhaps more of a problem for a non-pro Captain to get over and to treat the punters accordingly.

IMO already having an exist strategy / planning the downside is also a good idea.
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Old 14-01-2008, 14:48   #13
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So….. IS this stupid / crazy / doomed to failure? What should I consider? Anyone interested?



Terry
Not stupid or crazy.

For me, you ask.

I would want a cat. It is going that way you know.

If it was on a mono the way you list 2 cabins and a salon for a total of 6 - forget it. I am not hot-bunking even for a learning vacation.
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Old 14-01-2008, 17:24   #14
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Does that mean two cabins total on the boat or two cabins for guests and another for the captain? I like the idea. I think it is sound. I don't know if there is a market for it but looking at the number of people who come on to this site on a monthly basis asking questions like What kind of boat should I buy? or Is this realistic? or other questions there seem to be a fair few people who would be willing to spend a little dough to find out if there was any reality in their dreams. Well here's a sniff test -- $1500(avg. cost of 1 week package more for cabins less for people in the bunks) x 10 weeks = $90k starts to look like real money. Costs15% of boat value for maintenance = $41.25k Costs of docking and insurance (at $500 a month for docking and $300 a month for insurance) = $9.6k + delivery charge to get boat from BVI to Ches twice = $4k (?? ) Then there is Captain's cost $300 a day x 70 days = $21k and marketing $5k (??) etc. That would return $13.15k. A little skinny for a $300k investment. Sems like you would need to stretch your season a little longer. Perhaps 12 weeks ($27.3k) or 14 weeks ($41k) PM me and we can talk about it.
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Old 14-01-2008, 17:39   #15
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Boat would be 3 cabins.... two for guests and one for the captain. The Captain would get the small over/under.

I would base projections on 4 guests per charter week. Sometimes there would be more. Sometimes a family would want to charter the entire boat. All that can be worked out.

I figure the charters bring in $6K gross per week. Costs for the week are $1500 for the Captain and his transportation (less probably as charters would often run back to back in season), $750 for provisions, $250 for moorings, $250 for clearances and fees, $100 for fuel and another $250 for "stuff" (minor maintenance...). So costs may run $2,850 per week. So for each week chartered, the boat generates $3100 in adjusted gross.

Figure 10 such weeks... $31K. Dockage and insurance at $850 per month is $10,200. I would also figure an additional $15K for maintenance. So additional costs may run $25K. In this scenario the boat may turn $6K or so in profit. Fine for my purposes.

Maintenance at $15K and not $50K? YES. The boat will get a detailed refit before this starts and I would work to do most maintenance myself. If it really costs $50K a year to maintain a cruising boat.... nobody would be cruising.

Maybe the boat could be chartered for more weeks. If so, great. But I figure a biz plan should be pessimistic. What if the boat only charters out for 4 weeks? Oh well.... then the business didnt do so hot. Thats fine too.... the attempt has advantages.



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