Start a cruise line by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your cruise line. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a cruise line?
The cruise ship must be purchased or rented. Most ships are purchased. However, some cruise ships cost upwards of a billion dollars. Obtain financing, buy a small used cruise ship and gradually build toward the financing of a larger, more upscale liner. The ship must be fitted with lodging including beds and furnishings like dressers, tables, chairs etc. Cruise ships have everything from gift shops to bars, restaurants, casinos, games, spas, and beyond. Employees must be hired right away to handle cruise ship duties like customer service, food preparation, cleaning, marketing and general cruise ship management.
What are the ongoing expenses for a cruise line?
Ongoing expenses include cruise ship maintenance, employee wages/salaries, insurance, marketing, food, refreshments, cleaning supplies and office costs. The typical cruise ship employee will earn between $10 and $18 per hour. Professionals who handle marketing, accounting and management duties will earn between $30,000 and $60,000 per year. Cruise liner captains typically make $100,000 to $200,000 per year. Budget at least $500 to $1,000 per month for advertising purposes. Cruise ship maintenance has the potential to be a major cost. Keep several thousand dollars in reserve just in case a major problem arises. Ship supplies will cost at least $2,000 to $5,000 per month. Budget at least a couple hundred dollars per month for office supplies and utilities.
Who is the target market?
Everyone enjoys a cruise. However, cruises are particularly popular amongst singles looking for romance and a fun way to spend their vacation. Families also flock to cruises as they provide an exciting and adventurous means of vacationing. In general, adults between the ages of 21 and 70 with an abundance of discretionary income should be targeted.
How does a cruise line make money?
This business makes money by charging people a fee for cruises. These voyages include all sorts of activities, food and lodging. Cruises typically stop at numerous locations, allowing customers to engage in fun activities like shopping and dining off the ship. The majority of cruise lines give customers the option of purchasing more expensive deluxe packages that include luxurious activities such as spa treatments.
How much can you charge customers?
Cruises range from $50 per person per day all the way up to several hundred dollars or more per person per day. Consider charging customers a flat rate for a cruise trip that spans several days and nights.
How much profit can a cruise line make?
The profitability of a cruise line business depends on numerous factors such as customer demand and the ship's maintenance requirements. A single cruise ship has the potential to generate a profit in the range of six figures. Add more cruise ships to your business and it is possible to make millions of dollars or more per year. As an example, Carnival Cruise Line posted a profit of $2.8 billion in 2016.
How can you make your business more profitable?
Add up-sell extras like massages, spa treatments, luxurious lodging and other niceties. Add quarter-operated arcade machines and pool tables to the ship's gaming section. Consider also adding a casino to generate additional profit.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your cruise line is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: You can get $300 when you open a Chase Total Business Checking® account with qualifying activities. Learn More.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a cruise line business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
To avoid liability and potential lawsuits, cruise lines should have their clients sign waivers. An example of an appropriate waiver can be found here.
In businesses where services are provided on an extended basis, a services contract is often put in place outlining terms and conditions of service. In the cruise line business, this is often referred to as a ticket contract.
Cruise lines should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example of one such contract.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a cruise line
If you plan on selling tickets to a general cruise without a theme, spread out your marketing efforts across numerous channels. Cruise ship customers consume media through inbound and outbound channels. Advertise on the web through SEO (search engine optimization) campaigns, social media, blogging etc. Mix in some traditional outbound ads in local magazines, newspapers, radio spots, and so on.
How to keep customers coming back
Consider a theme cruise that appeals to a specific age cohort or demographic. As an example, Disney's family-friendly cruise liners are quite popular. Perhaps you can establish a niche with a singles cruise theme, a golden years theme that attracts retirees or another theme. If you are attempting to secure the business of a particular target customer, market in the appropriate channel. Retaining customers is all about exceeding expectations. Make sure the food is fresh. Running out of a particular entree or drink is unacceptable. Customers should never be bored. Add a plethora of activities and entertainment options to your cruise liner to ensure customers can stay busy from the moment they wake until bedtime.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Cruise Line In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This is the ideal business or someone who is looking for a way to bring people together for a fun, rewarding and memorable experience. If you are a hospitable individual and enjoy providing people with a good time, you should consider starting a cruise line business. Furthermore, if you enjoy life on the water, good food and entertainment, a cruise ship business is worth considering.
What happens during a typical day at a cruise line?
Customers are on-boarded, brought to visually stunning destinations, fed, entertained, and lodged. Most cruises have scheduled stops in which customers can temporarily depart to enjoy the local offerings. Just about everything that happens on land can and does happen on cruise ships. Cruise ships offer everything from fine dining to movies, gambling, shuffleboard, and beyond.
What are some skills and experiences that will help you build a successful cruise line?
If you have experience in the hospitality industry, yachting, sailing or any sort of business relating to the water, it will help in your push to launch a cruise line. This way you will already be familiar with some of the laws that goveroperating a cruise line business.
It will also help to have a strong business background. Due to the expensive nature of this business, it requires a great deal of financial planning, advertising, and staff management in order to be successful.
What is the growth potential for a cruise line?
Cruise lines have never been more popular. Everyone from singles looking for romance to tourists and families are interested in taking a cruise line to one or several destinations. Invest in a quality cruise ship, carefully select your routes and you can grow this business quite quickly. Gradually add ships and your business just might turn into an international empire akin to the Carnival Cruise Line.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a cruise line?
Planning the cruise line's routes is of the utmost importance. The path the ship covers matters a great deal to prospective customers. Carefully select the ship's routes to maximize appeal. Furthermore, all of the on-board details should be considered down to the very last detail. Everything from the dining options to entertainment options, lodging, and other offerings must be carefully selected. Oftentimes, the cruise ships with the most activities and entertainment offerings prove to be the most successful. Add shuffleboard courts, ping pong tables, pool tables, arcade machines, gym equipment, and other activities to keep guests active and entertained at all times.
How and when to build a team
This is the type of business that requires a robust team. The cruise ship will require dozens of employees for guest services. Employees are necessary for everything from food preparation to ship maintenance, captaining the ship, marketing, ship management, room cleaning, and beyond. Though you can initially handle the marketing duties and possibly the accounting responsibilities, all other duties must be delegated to trusted employees.