New Charter Biz Idea

[Charlie]

I tend to error high on maintenance. Especially if the boat is being used by someone other than yourself. The $41.24 for maintenance is based on someone else doing the maintenance. I believe the 15% number comes from Caulder on what it costs to keep a boat in bristol condition over the longhaul. After a major refit probably excessive and the figure also includes upgrades. I had a boat in charter and planned on doing the maintenace myself. I lived three hours from the boat. Didn't work out. Couldn't pull myself away from work and they needed it done now. What about transporting the boat from BVI to Ches twice a year?

[Therapy]

Originally Posted by Tspringer

. If it really costs $50K a year to maintain a cruising boat.... nobody would be cruising.


Terry

You have a point there.


Do it with a cat.
If I don't have one by then I'll ride.

[pogo]

Once I argued a business idea with my father, until he grew weary of my opposing view to his. He said to copy this statement down and read it in 1 year, "If you do that you will lose money."
When I wanted to argue it on, he stopped me and told me to put a copy of what he said in my wallet, and read it back to him the following year.
I did. He was right. I lost money.
Why don't you copy this and put it away for a year. Email me and let me know next year, how it's working for you.
You could be right, I could be crazy.

Pogo

[xray ted]

Terry,
I run a charter boat buisness very similiar to what you want to do with the exception I am the captain and sole operator. In addition to offering day trips and training classes I also do a boat-n-breakfast. You'd be surprised at the number of people that don't care about sailing but just want to stay on a yacht at a marina. The boat-n-breakfast is almost 80% of my business during the colder parts of the winter here in Florida. (If you call 50 F cold). The FIRST thing you need to do before you even think about the boat or services is talk to a tax advisor. I recommend Mike Kimball yachtstaxadvisor.com. You may run into trouble trying to use the company to shelter other income taxes. If fact if you are not actively involved running it day-by-day more than likely the IRS will say you are leasing your boat which will exclude you from many deductions / depreciation. The last thing you want is that dreaded letter from the IRS. (been there done that). Mike has a book that you can buy online ($65) that takes you through the various tax options, I would recommend reading that first.
Xray Ted

[hellosailor]

Terry-
" If it really costs $50K a year to maintain a cruising boat.... "
If you have to say "if"...that means you aren't sure of what it will cost. You need to find that out FOR SURE before starting. Don't forget, you will need COMMERCIAL insurance, you will pay COMMERCIAL dockage...are you sure you have everything itemized, including the costs of that captain, hauling, bottom painting, being out of service while things like that are being done?

And as Ted says, speak to a tax accountant, preferably a CPA or EA (IRS Enrolled Agent) with some knowledge of vehicle leasing companies. The IRS's preferred way to make sure things are proper, is for you to set up an independently run company, with a broker and captain booking the vessel to the general public, and then for you to charter it on the same terms as everyone else.

If the company makes a profit, you get "your" money back. If it loses, you lose. If you lose for something like 3-in-5 years, the IRS is less likely to disallow everything as a hobby, if it was properly set up as a business in the first place. Whatever your options are, once you commingle business and pleasure, the IRS starts getting interested. Speak to the accountant first, and make sure to follow what the IRS accepts as proper, or they may take your shirt. Not to mention, the boat.

And if you speak to any charter company--they'll all tell you you can make big money in chartering a boat. Yeah, sure, that's why they are asking everyone ELSE to put up the money, instead of using their own. Uh-uh.

[jzk]

Do it with a Catamaran of the likes of a Leopard 45 or 47. 4 very SEPERATE cabins, which will strongly appeal to your paid guests.

[Tspringer]

Ted,

Thanks... excellent contact, I have ordered his book and will be in touch with him.

Hellosailor..... there is no such thing as knowing "FOR SURE" what maintenance costs are going to be on a boat. If I had a crystal ball or other means to telling the future I wouldn't bother with charter ideas, I would merely short all of next weeks big losers in the stock market and then retire.

I do have some faint understanding of the difference between commercial and pleasure use, and basic principals associated with starting and running a business, after all I have started and run more than one successful business and am successfully self employed now. In fact, thats what is partially driving my interest in giving this a try. I have had a relationship with an excellent CPA and tax attorney for over a decade.

I never said I was looking to make big money. In fact, if the boat merely covers expenses for a single year I would be happy. This concept.... like ALL charter businesses is about tax planning as much as anything else but its also something I think would be fun and what I learn may lead to bigger concepts later on.


Terry

[hellosailor]

Terry-
While you may not always be able to figure out the last penny of a budget, you should be able to come close. (Hey, someplace besides "horseshoes" where coming close counts!<G>)

If you figure $5000 and it runs 6 one year and 4 the next, that's still good enough, you know there always will be surprises. But if you are figuring $5000 and a dozen folks with similar boats have been writing checks for 10 or 15...that's not close enough. You can figure "for sure" on oil changes, fuel, sail and rigging and line replacement (pro rata), bottom paint and cleanings, zincs, batteries, insurance and docking quotes...a lot of things.

Fun? Maybe. Depends on whether the total investment is something you can afford to lose and walk away from or not, if you've made a mistake. Making money in any "people business" that relies 100% on marketing and people skills, is "for sure" an 80-90% losing proposition, simply based on the numbers of businesses that fail, year after year, within the first five years. A lot of people start businesses doing something they love, or something that will be fun--and get bitterly disappointed, because they haven't run the numbers first.

If you have to ask "if"...Well, an accountant is like a stock broker. Whether you win or lose, he's gonna expect to be paid, and he's going to make his money.