Start a lobster fishing business by following these 10 steps:
- Plan your Lobster Fishing Business
- Form your Lobster Fishing Business into a Legal Entity
- Register your Lobster Fishing Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Lobster Fishing Business
- Get the Necessary Permits & Licenses for your Lobster Fishing Business
- Get Lobster Fishing Business Insurance
- Define your Lobster Fishing Business Brand
- Create your Lobster Fishing Business Website
- Set up your Business Phone System
There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your lobster fishing business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
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 lobster fishing business?
The costs of opening a lobster fishing business are substantial. Business owners need:
- A lobster boat, which costs $200,000 fully equipped
- Lobster traps, which cost $80 each with a buoy
- A license, which costs $167 to $501
- Trap tags, which cost $0.50 each
Based on these figures, outfitting a new business with 800 traps would cost a little over $264,400.
Business owners who aren't able to obtain a license or outfit a boat probably shouldn’t enter this industry. While Maine lets residents place up to five lobster traps for personal use, there are harsh penalties for selling lobster without a commercial license.
What are the ongoing expenses for a lobster fishing business?
The ongoing expenses for a lobster fishing business are substantial. They include annual licensing fees, boat maintenance and repairs, fuel, and bait. Bait alone can cost $300 per day, and a new engine could run $30,000.
Who is the target market?
Cold water lobsters ultimately end up in restaurants and supermarkets, but lobster fishing businesses don’t sell directly to these businesses. Instead, fishers sell to wharf owners. Most wharf owner then sell catches to processors or distributors.
How does a lobster fishing business make money?
A lobster business makes money by selling the lobster that’s caught. The lobster is sold to the owner of the wharf that a lobster fishing business uses, and most businesses consistently dock at the same wharf.
How much can you charge customers?
In 2012, lobster fishers sold their catches for $2.00 to $2.50 per pound. That was a historic 30-year low, and the price has increased since.
How much profit can a lobster fishing business make?
For those who manage to get licenses, lobster fishing can be profitable despite the costs that come with running this type of business. Some business owners clear six figures in profits annually.
How can you make your business more profitable?
Since how much they make is dependant on what their wharf owner pays for their catch, business owners can increase their profits by selecting the best-paying wharf in the area. Co-ops that own wharves and call around to see what buyers are paying the most tend to offer business owners the best possible prices.
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 Lobster Fishing Business 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 lobster fishing business 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:
- LLC Taxes
- Sole Proprietorship vs LLC
- LLC vs Corporation
- LLC vs S Corp
- How to Start an S Corp
- S Corp vs C Corp
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
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Open net 30 accounts
Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term.
NetMany net 30 credit vendors report 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 best net 30 vendors, guide and start building business credit.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.
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.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
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 lobster fishing 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.
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
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
To avoid liability and potential lawsuits, Lobster fishing businesses should have their clients sign waivers.
An example of an appropriate waiver can be found here.
Labor Safety Requirements
The lobster fishing business can present some occupational hazards, so it is important that you follow all of the regulations set forth by the Occupational Safety and Health Administration (OSHA).
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.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a lobster fishing business
Because lobster fishing businesses sell directly to the wharf they dock at, there’s little marketing the business owners need to do. The most they must do is find a wharf to dock at. Wharves may be privately owned by a company, family owned or owned by a co-op.
How to keep customers coming back
Business owners in Maine don’t have to worry about retaining customers, but they do need to keep their licenses. Under the current system, lobster fishers who give up their license for any reason must again go through the two-year apprenticeship and wait for a new license. Until the licensing system changes, business owners should do whatever they can to keep their licenses.
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. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
Start a Lobster Fishing Business in your State
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
TRUiC's Startup Podcast
Welcome to the Startup Savants podcast, where we interview real startup founders at every stage of the entrepreneurial journey, from launch to scale.
Is this Business Right For You?
Anyone who enjoys being on the water and working alone may enjoy running a lobster fishing business. Business owners spend a lot of time by themselves on their boats, pulling up and replacing lobster traps.
Some business owners catch lobster year-round, while others do it as a seasonal business. Winter brings harsh working conditions, and catches are sometimes smaller during the colder months.
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 lobster fishing business?
Catching lobster is hard work. Hauling days start before sunrise, and business owners will haul traps for hours on end. During this time, they’re:
- Pulling up traps
- Grabbing and banding lobsters
- Removing debris from traps
- Re-baiting traps
- Dropping traps
At the end of the day, business owners bring their catch to a wharf where it’s sold.
On non-hauling days and during the winter, business owners spend time mending their traps, repairing their boat, and focusing on other aspects of their business.
What are some skills and experiences that will help you build a successful lobster fishing business?
In order to obtain a Maine lobster license, prospective business owners must first work as an apprentice on a lobster boat for at least two years. They can only apply for a license after a captain endorses them, and the waiting list for licenses is lengthy. Applicants wait years, and at times even decades.
Maine is reviewing the current licensing system as the population of lobster fishers ages.
What is the growth potential for a lobster fishing business?
The growth potential for a lobster business is finite. Maine accounts for about 80 percent of the United States’ lobster fishery, and the state heavily regulates the industry. Commercial lobster fishers in Main must be licensed, and there’s a limit of one license and one boat per person. The number of traps that a licensed business owner can drop is limited to 800.
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 lobster fishing business?
While Maine is a difficult state to start a lobster fishing business in, the state’s waters are the most promising for lobster fishing businesses.
As ocean waters have warmed, the waters in Southern New England and the Mid Atlantic have become too warm for lobster to reproduce at a respectable rate. In contrast, the waters in the Gulf of Maine have become the perfect temperature for lobsters. Lobsters are breeding at faster rates in these waters, which largely why business owners are seeing record catches.
Thus, lobster businesses in Maine have much more potential than those in Massachusetts, Connecticut, New York, and New Jersey.
How and when to build a team
Lobster fishers may choose to work alone or with an apprentice. Some have family members help on the boat, especially if the license holder is older and children/grandchildren are waiting for a license. Business owners can hire an apprentice or family member as is appropriate for their situation.