6 Steps to Finding The Market For Your Boat Rental
Many people search for new business ideas to start and ask how to invest money to get good returns. A boat rental business is a great opportunity as the industry is growing, but similarly to any new budding business, it is not easy to start. It is important to find a strong market in order to focus your resources strategically.
At this stage, you might have some questions:
Should I be close to my competition and differentiate myself or is it better to be far from them?
Should I cater to the continuous flow of tourists or focus on the locals and returning customers?
Is my sailing route valuable enough in the eyes of my potential customers?
Is the route safe?
Can I take advantage of the development of the real estate market?
In this article, we will give you answers to all of these questions and more. We’ll also give some great examples of other companies that have built great strategies for finding their market.
Tourists or locals?
You have to decide whether you aim to serve tourists or locals. Cities with a higher population usually have a higher number of tourists as well. But in this case, it’s also likely that there are already plenty of competitors.
Tourists can bring you high revenue and there are numerous ways to attract them, but it will come with expenses and invested energy as well. Remember that it can be 7 times more expensive to acquire new visitors than to retain existing customers, thus their lifetime value is lower. It also requires better online visibility as tourists get to know your business from distance. In the age of online rating platforms such as Trustpilot or Tripadvisor, it is becoming more and more important to be able to handle complaints. Numerous research has been conducted on the topic and some of them suggest that negative online comments can stop 40% of people from using certain services and goods. It is a basic principle to be kind to your customers, mind their mood, always smile and be available for them and it is even more important if you target locals and you want them to come back. Hence, to provide the best service, GoBoat has developed its own training program available to all franchise partners, called GoBoat Academy.
Putting a greater focus on the locals creates a business opportunity for more returning customers and customer loyalty. According to recent research the probability of selling to a new customer is 5-20%, while the same number in the case of returning customers is 67%. Customer loyalty is important and being valuable for the local community is not only a great step to have a more positive image of your brand, but it also helps to build a closer relationship with customers. At GoBoat we host numerous music and food events that help to keep us in the loop of the local ecosystem - and they’re really fun to organise as well!
2. The sailing route
The market for outdoor micro-adventures in both urban and natural environment is booming extremely. If you are aiming to take advantage of it and if you want to operate in the experience economy then you cannot rely on the attractiveness of your goods. You have to make a plan about the environment where your customers use your service and it has to satisfy their needs and be safe at the same time. GoBoat provides electric boats, with unique design that helps to eliminate the noise of the engine, thus it does not reduce the experience. At the same time, boats with sustainable energy resources are not enough, your route has to be valuable for your customers. Conduct your research and identify the best possible water routes. The easiest way to start it is to explore the area through Google Maps. Outstanding spots can be idyllic natural areas or fascinating urban environments as well.
3. Currents, tides and wind conditions
Before you decide to establish your business at a new location, be sure to research whether the water is safe enough for your customers. Marine weather can be unpredictable. There are many areas in the world where weather conditions are not suitable for sailing and other water sports. In the big majority of the cases, currents and tides are determinative factors, but extreme wind can cause problems as well. Because of this, spend time finding the most suitable boat types for your location and your maritime business. We have many years of experience with boat sharing in different conditions, and we cooperate with Rand Boats, who provide us with sustainable, electric boats, designed for comfortable trips.
4. Purchasing power and the threat of substitution
Whilst choosing the location you want to operate your boat rental business in, you might be misled by a high population density, causing you to believe that there’ll be an abundance of future customers. Before being blown away by this, research the spending power of each citizen. This can be done though looking at housing and living expenses, growing tax rates, the unemployment rate, income rates and differences, welfare benefits and consumer confidence.
From a previous study it was discovered that 8 out of 10 customers say that the experience that they perceive at the company is just as important as the product itself. There are existing strategies that suggest not to pay attention to your competition but only care about your customers and their needs. However, we believe that being aware of the moves of your competition is equally important. When you find a potential area for starting your business, do not forget about the fact that it is probably attractive for other, similar businesses as well. Search for alternative offerings and competitors that your audience can compare to and see their offers and ways of differentiation. In the case of private boat rentals, these parties do not necessarily have to be other boat businesses, but they can be products and services that satisfy the same customer needs or can give similar benefits. If you identify a high threat for substitute products, consider choosing another location or make the necessary steps to overcome the competition. You can offer the same product for a lower price, you can offer better quality or the same product, but with different features. You can also utilise a mix of the more and more frequently used innovation types. At GoBoat, while we make our selection of cities, we use our own purchasing power/per capita ratio and competitive alternative products/per capita ratio that we have been perfecting for years.
5. Regulatory and currency issues
You also have to think about the regulatory issues and the stability of the currency in the given area. Good examples of regulatory changes can be the minimum age of sailing, obligations regarding life vest usage or alcohol consumption. If you import boats or supplies from outside your nation, drastic changes in the value of the currency can undermine your expectations regarding operation and business growth.
6. Development of the real estate market
Private boat rentals are highly dependent on location, the capital expenditure invested in local facilities and inventory. We see boat rental fairly much as a real estate business. It is necessary to make your research on your location whether it is among the fastest-growing cities or it is developing slowly and how it performed during a recession. There are areas that have industries or government practices that make them more recession-proof while other ones are more sensitive to these changes. Does your market display good characteristics? Can you enter with a competitive advantage? To have a winning business strategy you want to make sure that your competitive advantage can be fully exploited by you and appreciated by your customers.
HOW TO FIND THE BEST MARKET FOR YOUR BOAT RENTAL?
We took into consideration some of the most important aspects while starting up your rental business. Deciding whether you should target tourists or locals is essential and both sides have their pros and cons. Think about the competition that possibly sensed the big number of tourists, the cost of attracting a new customer, the threat of negative comments, but also the potential high revenue that international visitors can generate. On the other hand, locals have higher lifetime value, lower cost of acquiring them and higher chance to sell to them again. Get an understanding of the local housing and living expenses, growing tax rates, changing unemployment rate, income rates, income differences among other factors, and decide whether local buyers have high or low buyer power. Research your location whether it is appealing and safe enough to your customers. Winds, tides and currents are dangerous and it is highly advised to avoid them. Search for alternative offerings at the area that your sailers can choose instead of your boat business. If there is low competition and a moderate threat of substitution, then it is a promising sign. If the list of potential competitors is longer, then make your research and find the possible differentiating points. Regulations differ from city to city, and it requires careful planning as well. Last but not least, buying in a great real estate offer can be a huge competitive advantage that can attract your audience instead of letting them use the competitor’s services.