New to watersport business? Begin exploring the industry by learning 5 things you need to know before starting your watersport company!
New to watersport business? Begin exploring the industry by learning 5 things you need to know before starting your watersport company!
Hey everyone, thanks for dropping in for this week’s episode of the weekly wave presented by WaveRez. My name is Greg Fisher and today we’ll be talking about 5 things you need to know before starting your own watersports business.
Now before we begin, there are many things to consider beyond the handful of items we’ll talk about today, so I highly recommend taking your time with this process. When I started my first watersport business, we spent about 6 months in planning before we opened. It allowed us to have a very successful first year and put us in a position to be profitable sooner than expected.
What’s great about this industry is that the barrier to entry for ownership is relatively low. Startup costs are minimal, no real experience, trade certifications, or college degree is required. Which brings me to my first thing you need to know... is the difficulty of opening. Truth is, it really isn’t that difficult to start a watersport business. It does become more challenging when you involve powered equipment, but this hasn’t been a major hurdle from what I’ve experienced. If you are a competent individual that is passionate about what you do, you’ll find this industry rewarding and fulfilling.
Some operators say that the initial investment can be expensive, but this ranges on what type of equipment or tours you are planning on running. This brings up #2 on things you need to know, initial investment. There are 3 items that will dominate your start-up costs... Your lease, insurance, and equipment purchases. Your lease and insurance will be dependent on the equipment you are looking to purchase. For example, if you rent personal watercraft, you will be able to put several in one slip, but boat rentals will require several slips. Insurance might be double on personal watercraft. There is also the question to whether buying used equipment vs new. Some operators would say to purchase all new equipment because they are less likely to breakdown, and they include a warranty. What you don't want to happen is for your fleet to break down during your busiest weeks, and this is more likely to happen with used equipment. When I started my business, I purchased all used equipment from reputable companies because I was able to get 3 used personal watercraft for the price of 1 new. After my first year, I ended up selling all the used equipment and purchasing new ones. If I had a larger budget for my start-up costs, I might have purchased new, but going with used equipment might be your only option, and It’s absolutely ok to do that.
Looking for a location to run your watersport business is going to be the most time-consuming part of starting your business, and this is why it’s #3 on our list. Depending on where you live, there might not be many options. Some operators go mobile to save money, and deliver equipment or meet their customers at the boat ramps. This might be ideal for the first year, but any operator you talk to will tell you this model is hardly sustainable. I recommend taking your time and visiting as many locations as possible. Think about the popularity of the marina, walk-up traffic, size of the slips, how long other tenants have been there, and if your business is complementary to others. In a future podcast, we’ll talk specifically about how to find the perfect location for your business.
If you don’t have great credit or a lot of money in savings, don’t sweat it. There are several ways to finance your business. This comes to #4 on our list, where to get financing. Traditionally, you would have to tap into your savings, take a home equity loan, or leverage some other asset to raise the money. Considering that your lease and insurance is not due all at once, you won’t need to raise this full amount on day one. Also, if you purchase new equipment, the dealer sometimes offers financing options. If not the dealer, try your local bank. Another idea is to look into peer to peer lending sites like Prosper who can help raise amounts typically between $5,000 to $20,000. The better credit you have, the better interest rate you get. Watersport operators are very hands-on, so a lot of the expenses are variable depending on how busy you are. Start-up costs can be deferred if you do it right, but I always recommend having extra cash on hand in case of an emergency.
Lastly, and perhaps one of the most important is profit expectancy. Like any other business, it’s not likely you’ll see a profit in the first year. You might find yourself making rather careless decisions the first year as you navigate the unforeseen challenges. By educating yourself and learning from other operators, you can accelerate your business to profitability sooner. Set goals, and focus on your processes as these will be the major lessons you learn in year one.
I appreciate you taking the time to join me today as we discussed the 5 things you need to know before starting a watersport business. No matter your age or interest, this is a great opportunity to be around people who are having fun, and many operators I talk to find it very fulfilling. Good luck on your journey, and let us know if there is anything we can do at WaveRez to make that vision come to life. Again, I’m Greg Fisher, and thanks for listening to the Weekly Wave.
Thank you for tuning into the Weekly Wave presented by WaveRez! Please share your comments and feedback by connecting with us on social media. If you’re looking for an industry leading reservation software, schedule your free demo today at WaveRez.com. And don’t forget to subscribe to our newsletter for more news and feature updates. Catch you next time!