How to Start a Fishing Charter Business
Do you love to fish in deep waters? If you’ve been fishing for a long time, you’ve probably become an expert at finding the best spots to catch the lunkers. Opening your own fishing charter business can be a great way to make money using your skills and do what you love every day. Whether you have the right type of boat or not, you may dream of being the captain of your own charter boat and of your own destiny. So, what does it take to make that dream come true?
A fishing charter business provides its customers with fishing experiences that they would otherwise not have access to, whether on a lake, river, or ocean. Customers generally get to keep the fish they catch if the fish are legal to keep. People pay for the full experience of boating and fishing and also the comradery of sharing the experience with others. They also need to feel safe, so a fishing charter business must portray and deliver a safe, quality experience.
According to Statista, since 2010, the charter fishing industry has been steady or growing. In 2020 the market size reached $411.9 million, up 1.7% from the previous year. The industry consists of large businesses which run multiple boats to small single boat operations that operate either full-time or part-time.
The industry is vulnerable to economic trends because fishing charter excursions are somewhat of a luxury purchase for tourists and locals, so when consumers have less disposable income, the industry suffers.
The charter fishing industry is highly dependent on tourism. In early 2020, early in the pandemic, charter fishing suffered in some areas because of this. As tourism rebounds, however, charter fishing will follow.
According to Fishing Booker, tourism decreased by 10% globally in the first 10 months of 2020. However, fishing charter trips increased 24% worldwide. In the U.S., fishing charter areas on the Gulf of Mexico and East Coast experienced growth, but on the West Coast, there was no growth and declines in Hawaii and Alaska due to their reliance on tourism.
Although local residents do book fishing charters, the largest target market is tourists. To be successful, a fishing charter business needs to operate in an area with active tourism, whether on a coast, large lake, or river.
Skills, Experience, and Education Useful in Running a Fishing Charter Business
A fishing charter business requires certain skills, and other skills are beneficial to have but not required.
- Diverse fishing experience. You probably can’t just be a casual fisherperson to start a fishing charter business. You need to be an expert in many types of fishing and have a detailed knowledge of the water where you will operate.
- Business knowledge and experience. You should have at least some basic knowledge of marketing, contracts, and finance/accounting.
- Knowledge of boats and maintenance. If you can perform the upkeep and general maintenance on your boat, you will save a lot of money.
- Networking. You will need to network with local businesses to promote your fishing charter.
- Customer service. You’ll need to be able to build rapport with your customers so that they have a great experience and so that you gain repeat business and referrals.
Checklist for Starting a Fishing Charter Business
If you’re thinking about starting a fishing charter business, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your fishing charter business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect fishing charter business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a fishing charter business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Choose a location that has a lot of tourist activity, and advertise your business at other local businesses.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
Licensing is typically needed in order to offer fishing charters with paying passengers and regulations will vary depending on whether you offer freshwater or saltwater excursions. For the most part, the Department of Natural Resources in each state will list the procedures to obtain licensing, though there are additional requirements from the United States Coast Guard (USCG) depending on if the activity will take place in federal waters. Each boat that is available for hire will also need a charter vessel license.
A state fishing charter license will normally require current first aid and CPR certification, random drug tests, along with proof of commercial liability insurance.
In addition to a fishing guide license, there will be general business licensing needed. Each state is different, but a few to look out for include a local business license, a sales tax license, and an Employer Identification Number if you are going to have employees.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a fishing charter business is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs. Startup costs for a fishing business are fairly significant unless you already have a boat.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A fishing charter business will need to set aside a budget to cover marketing costs on a continuous basis. Finding ways to stand out from competitors will be tough, but some common marketing techniques may include social media marketing on Facebook, Instagram, and Pinterest, in addition to online advertising, print advertising at local businesses, direct mail advertising, and coupons or special promotions.
You can also advertise on tourist sites for lodging or other local activities.
Every business is going to need a logo. Make a professional logo in no time with the free Canvaa logo maker!
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a fishing charter business. A few of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Property and casualty insurance protects you if your boat is damaged.
The cost to insure a fishing charter business will vary depending on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Finally, remember that you will be responsible for the safety of the people who are on your boat and liable if someone is injured. Charter boats are required to abide by Coast Guard safety regulations and can be inspected at any time.
Step 10: Hire Employees
You may need employees to help you run your fishing charter business as you grow.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your fishing charter business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a fishing charter business?
The costs to start a fishing charter business are significant. If you already have a boat, you are ahead of the game, but there are many other costs to consider.
– Boat of adequate size $40,000 +
– Fishing equipment $2,000 – $3,000
– Setting up a business name and corporation costs approximately $200.
– Business cards, brochures, postcards for marketing $200 – $300
– Website setup $100 – 200 for a basic, do it yourself website, $1,000 – $2,000 for a professional site
– Dockage fees $2,000 – $3,000
– Captain’s license (required by the U.S. Coast Guard – $200 +
– State commercial fishing license – $500 +
How much can a fishing charter business owner make?
A fishing charter booking costs $500 – 1000 per person for a half-day or full-day. As a fishing charter business owner, it will be up to you to market yourself to get clients and grow your business. If you make $500 per person, 10 people per day, 180 days of the year, that means potential annual revenue of $900,000.
However, the profit margin for a fishing charter is about 25% when accounting for fuel, bait, equipment, and boat repairs & maintenance, leaving a profit of $225,000.
Also, it’s important to budget for slow periods as demand for many fishing charter businesses will be somewhat seasonal, depending on where you are located. You will also be very weather dependent, so there will be a lot of days that you can’t work.
Are there grants to start a fishing charter business?
It’s extremely rare to find a grant to start a fishing charter business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a fishing charter business?
The NAICS code for a fishing charter business is 487210
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?