The boat rental industry creates an environment where boat owners and periodic boat users could trade picturesque worthy experiences for financial compensation.
The boat rental industry is categorized by boat type (sailing boat, motorboat, yacht, catamaran, and other boats), activity type (sailing, fishing, and other activities), power source (IC engine and Electric), and geography.
The boat rental industry is moderately fragmented, and this means there's an opportunity for small businesses to grow by providing innovative and differentiated offerings. So if you’re interested in acquiring a boat rental business, or you’re looking for ways to improve your own, follow some of the tips in this guide on how to grow your company.
Innovative Ways to Improve Customer Experience
As a small business trying to find its way in a fragmented market, the best way to go about it is to improve your value proposition. This way, you gain access to more target clients and boost your revenue generation.
Though the immediate product of the boat rental industry is a boat, it is also profoundly connected to the Experience economy. Therefore, you should ensure to map out touristy routes that are sure to give your customers the best experience. This is an excellent way to guarantee that priceless word-of-mouth form of advertisement that is sure to help your business grow.
Things to consider when choosing a route:
- Avoid routes with shallow water, heavy traffic, and narrow passages
- Prioritize areas with scenic artifacts, nature routes, and toilet facilities
- Be cautious of tide functions and local sailing routes
Additionally, depending on the type of activities your clients are renting your boats for, you could expand your services by including boating accessories such as ski, tubbing, fishing equipment, or kayak coolers into your rental options. This way, you can have different rental packages with varying price ranges.
Another way to boost your value proposition is by offering to teach people how to sail a boat. This way, people who want a more personalized cruise without a captain or crew would jump at the opportunity to learn. More clients paying more for sailing lessons and boat rentals would significantly increase your bottom line.
Re-evaluating Your Target Market
Your positioning is critical in the boat rental industry as it determines your access to potential clients. Settling in a sparsely populated region would streamline your target audience and reduce competition. However, it is easier to attract more customers in a highly-populated area.
The most typical clients for boat rentals are usually vacationers, fishermen, and locals who enjoy water sports. Therefore, in evaluating your target market, it's imperative to know if you'd be offering your services to locals, tourists, or even both.
If your target audience is fishermen, you might want to set up a harbor for boats in areas with easy accessibility, high fish traffic, and no fishing restrictions. Also, if your target market is tourist-based, you might want to consider places with a high tourist population. States like California, Florida, New York, Hawaii, and New Jersey attract the most marine tourism in the United States.
External Factors That Might be a Threat
Terrible weather conditions could pose a threat to your boat rental business as nobody wants to risk their lives to go on a boat cruise. Therefore, basic knowledge of navigation, maps, and tide functions will help you plan your trips around water tides and prevent you from setting out when it's unsafe.
Additionally, it would be best if you were vigilant and wary of secluded and quieter routes, as these places are prone to threats such as kidnapping and plundering by unscrupulous characters. The last thing you want is such stigma attached to your growing business.
Necessary Permits
Running a waterway business requires specific permits. This ensures that the passenger's safety and security can be guaranteed.
Requirements vary based on the city. In some cities, you need permits for operating, and in others, all that's required is a place to put the boats. In most cities, you're required to have a commercial business license to run your boat rental business. You might also need to rent the area on the water you'll be operating from.
Procuring permits can be challenging, but so is sustaining them because permits are not permanent. Therefore, it is imperative that you not only know the requirements for obtaining permits in your specific city but that you also know what not to do to prevent the rescinding of your permits.
List of possible permits that may be required:
- General business licenses
- Anchoring or Mooring permits
- Commercial passenger licensing
- Water access permits
- Vessel servicing and fuel delivery permits
Conducting Market Research Analysis
In-depth market analysis helps you identify the emergence of new startups (or large competitors) in the industry, track their activities, and how it impacts your business. Effective market research also gives you an insight into the mode of operation of the major players in the industry on things like how they secure investments and affiliations.
For example, GetMyBoat, a significant player in the industry, secured up to $10 million from Yanmar Group in 2018.
In your case, as a small business, you could decide to affiliate yourself with key players such as Nautal, Sailo Inc, and Boatsetter.
You also need to identify your direct and indirect competitors. Providing answers to these questions will make your research easier:
- Who offers the same boats, equipment, trips, and services as you?
- Who offers similar pricing as you?
- Is the company near you, or do you even share the same harbor?
- Do you go after the same target customers?
Growth Potential for a Boat Rental Business
With a current market size of $5 billion, the boat rental industry is expected to increase at a CAGR of 5% through 2020-2030. Also, due to the emergence of dynamic insurance packages in the boat rental industry, more clients are convinced of safe voyages. This new trend factors into the estimation that the boat rental industry would exceed a market cap of $19 billion by 2030.
Interesting Facts about the Boat Rental Industry
- There are about 17,566 boat rental businesses in the United States.
- In 2020, US boat sales reached a 13 year high, According to the National Marine Manufacturers Association.
- The Internet and digitization have revolutionized the renting and chartering process of boats. And this has led to a significant increase in demand.
Marketing Ideas
Even after positioning your business next to tourist hotspots with a large population of fun-loving prospects, the importance of your marketing strategy cannot be overemphasized.
Here are some marketing ideas you could take advantage of:
Flyers and banners
Tourists are always looking for exciting and thrilling activities to indulge in. An effective way of focusing their attention on your business is by setting catchy banners and flyers at strategic places around your city.
Social media platforms
Social media marketing is very effective when it comes to engaging a more significant part of the population. Social media platforms like Facebook, Instagram, and Youtube allow you to share engaging content such as videos and images of people having fun on boat cruises with the general public.
You could also use social media analytic tools to get valuable data such as the age group, relationship status, and location of people more likely to take vacations or enjoy marine-related activities.
An official website
Create a website that has been search engine optimized for keywords relating to boat rentals, so people find you easily online. Also, make it easy for people to make orders online by including your list of services, pricing, and call to action.
Getting Funding for Your Boat Rental Business
Securing funds for your boat business is how you finance your dream of expansion and buy new boats plus other necessary equipment.
Here are some options available for your growing business:
Marketplace lending or Peer-to-Peer
P2P lending introduces borrowers to lenders through the internet. According to the SBA, P2P can be a reliable financing option for small businesses. However, marketplace lending is limited because it's available to investors in certain states only.
SBA Loans
The US Small Business Administration guarantees loans for small businesses from lenders (mostly traditional banks). Though they've stringent requirements, SBA loans come with favorable rates.
Angel Investors
These are wealthy individuals looking to invest in up-and-coming businesses for some agreed-upon form of compensation. You can find such investors by networking with accountants and lawyers who work with small businesses.
Planning Your Exit Strategy
Depending on your end goal, selling your business or transferring ownership, your exit strategy could be a vital driving force for your business.
Therefore in planning your exit strategy, you need to be pragmatic to know how and when exactly to leave your business.
Ask yourself questions like:
- Who will take over my business?
- What are my financial goals for my business?
- When will I be ready to retire?
- Who are you going to seek guidance from?