How to Start a Cruise Line

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Our guide on starting a cruise line covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of a cruise line owner, the typical target market, growth potential, startup costs, legal considerations, and more!

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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 step 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 initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Luckily we have done a lot of this research for you. Skip on ahead to the Business Overview for more detailed answers to all your questions.

Choosing the right name is very important. 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.

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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. 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.

STEP 4: Open a business bank account

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.

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.

STEP 7: Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

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.

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.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Business Overview

A cruise line has one or several large boats designed to accommodate numerous fun-seeking individuals. This business is centered on providing guests with a good time. Cruise liners are a place for relaxation, socialization, and romance. Cruises are in-demand as they provide people with a fun and relaxing means of vacationing. Cruise lines offer all sorts of social activities on and off the ship. This business is a fantastic way to bring people closer to one another, bolster social ties, and provide people with a sense of belonging.

Who is this business right for?

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 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.

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.

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 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.

Where can I 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.

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.

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Growing 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.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

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.

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.

Legal Considerations

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:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

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.

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.
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To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Liability Waivers

To avoid liability and potential lawsuits, cruise lines should have their clients sign waivers. An example of an appropriate waiver can be found here.

Services Contract

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.

Food Regulations

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

Earning Potential

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.

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.

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.

Next Steps

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