Start a cruise line by following these 10 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.
Check out our How to Start a Business page.
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 important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Cruise Line Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your cruise line is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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.
TRUiC's YouTube Channel
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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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
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.