Business Plan for a boat construction shop

Hi All,

I am thinking of entering in the boat construction business with a small shop and I would like to have a rough idea of the costs that might be involved to see if I have the financial muscle to go deeper on it (with consulting etc.).

My ideia is composite building (sailboats mono/multi-hull around 30-40') so things like tooling and space needed, construction man hours for a certain boat (I can extrapolate for other boats) etc are key things to let me calculate a rough estimate of the investment that I will need and see if I have any chances on moving forward.

Does anyone know any sites/docs/business plan templates for someone that wants to start a business ?

I know that this is not a trivial question because there are many variables (level of outsourcing etc.) but it's just to have an initial assessment so any help would be much appreciated.

Thanks/Brgds
João
Cascais-Portugal

 

Welcome here.

I am not aware of such plans and I doubt there are any, related to our business, on the world wide market. (published)

You are planning some serious investment, you know? If you have some perfect marketing established already, or at least easy access to it, your task might come out successful. If not, the chance to fail is about 99:1.

Do you have the funds to survive 2 years without any ROI? All wages, rents, insurance etc. included in the cost.

If not the chance to survive is again almost zero.

Rethink your plan several times before you go to ruin your life!

This is a rather tough market.

Regards
Richard

 

Richard gave you sound advise.

All I can add to that; the world had just experienced a recession that had put many a boat builder out (and other businesses as well). Currently, it is a buyers market out there with the market flooded with boats that can be had for a song.
When the going is getting tough financially, the first thing someone would sell to stay liquid financially, is the "unwanted" luxuries, and boats ranks the top of the list.

I expect it to be a buyers market for at least another 3-5 years before people will have the means to comfortably afford a boat again....

Rather use your money and sell cars and make a living that way rather to sink it in boats, no pun intended

 

I am earning a good living fixing old boats because people don't want or cant buy new ones. Consider something in rebuilding used boats. But still be careful, I am seeing boats being sold for 1/4 of value two years ago, way below cost of even building the hull.

 

Try New Boat Builders Home Page http://newboatbuilders.com. There is not a template for a business plan but there is a lot of info on starting up a boat building business. Let me know if you have any questions.

 

What is a rough idea of what you do? Size of boats? Type of boats, sail or power? Material of boats, glass or ? End use of boats? Do you stick to paint and putty type fixing or get serious in hull repair and parts repair and replace?

 

Production cost

Joao,

I’ve been contemplating the boat building business for many years. It is definitely a competitive business. As of now, I expect to try versions of some innovative smaller craft and then scale up if the market likes the innovations. However, I have one innovation which requires a large scale proof of concept. Entrepreneurship is all about creating strategies to reduce risk, not just being willing to take risk. Interestingly, Southern Portugal is a region that I’ve been considering.

As for top down estimates of production cost on composite catamarans in the range you are considering, you might try a factor of 10 for the cost of the design plans. I’ll attach a list of cost of Derek Kelsall’s design plans which should give a reasonable estimate by this multiple of 10.

Another top down approach is the production cost is roughly one third materials and equipment, one third direct labor and one third overhead ( including financing cost, profit, etc.). I’ll attach a copy of some of his estimations of labor hours also.

Bottom up estimations get much more involved. Highly dependent on designs, methods, suppliers, etc. Ball park, you could get anywhere from about 5 eu/ m^2 to 8 eu/m^2 for the materials. Then there are other design dependent cost, and other incremental cost supplies, overhead, labor, etc. Initial capital expenditures also vary greatly depending on your strategy. If you would like to contact me privately, I might be able to help a bit more.

~ Michael

 

Very helpful post !! Thx for starting it and for every one's feedback, its food for thought to any one starting a business in this field.

 

This is definitely not the time to start a boat manufacturing enterprise. Yesterday i spoke to a production supervisor at one of the larger, multi-brand builders in Florida. When he started 3 years ago there were 400 workers in the plant. He is now the ONLY guy on that shop floor.
And..... the tooling alone for a GRP 40 ft. monohull could easily cost a half million US. Best to do your homework and wait a couple years to see how it goes.

 

Yah this is a very dynamic business and boats are luxury items.

However each country, market details, economic growth etc. differs considerably so one has to make sure to study the market carefully.

 

The boatbuilding biz has always been a tough business in which to survive. In the US alone there are about 4000 boat building companies, from a single person building canoes, dinghies or whatever in his garage to giants like Brunswick building 10's of thousands of boats per year. In the US about 400 companies go into business each year and about 400 go out of business each year. In hard times I have seen that go as high as 800 going out of business each year. Much the same is true in Europe and around the world.

Most companies are going through hard times right now, but there are some companies that are thriving, mostly custom builders that build for middle to high end customers. As is usual the rich still have money and the rest of us can't afford to buy a boat right now.

So, with the right business plan, and an enthusiastic and supportive financer you can make it. It is a risk. Any business is. Boatbuilding is probably more risky than some because for most people boats are something bought with disposable income and most of us just don't have any.

So the secret is make a good plan, Stick to the plan, Get adequate financing. Many new businesses find out they simply underestimated what it would cost to startup and keep the business going until you break even. That can be anything from a year to several years, before you actually start making money.

Remember this, you aren't in business to build boats. You are in business to make money. You make money by building AND selling good boats. An old maxim goes, good boatbuilders usually don't make good businessmen, and good businessmen don't often make good boats. You have to find a middle ground, you want to build good boats and make money.

You have started on the right foot, asking questions and wanting to develop a business plan. In the US most colleges have classes in writing a good business plan. I would suspect the same is true in Portugal. Check with your local schools and see if they have business classes.

When you look for someone to finance your business, find someone who will actually help you with the business, someone who has experience running a succesful business. This person will have a huge stake in making sure your business succeeds. But you will need someone who gives you good advice, not a lot of pressure and no help. In the US there are organizations made up of retired business men who will help you run your business. I don't know if you have that in Portugal but I would certainly look for it.

And last but not least, there are alot of people who will tell you to forget it. If this is what you really want to do, look for those who will give you good advice and help you. The naysayers are right it is a hard time to start a business, but that doesn't mean it can't be done.

For more on the business of boatbuilding see, http://newboatbuilders.com/pages/business.html

 

Very constructive post Ike and thanks for the link

 

Mainly powerboats (fiberglass and Aluminum), the size has decrease lately since pocketbooks are smaller. Basically get other people somewhat abandon boats and give them some TLC. Then resale for profit. Can do serious hull and engine damage but the question is it worth the $$$.

 

Like all businesses -- when everyone says this is no time to get in the business, it's the best time to get in the business. You don't want to "build" a business, you want to "buy" a business. When times are tough, you can buy another persons failed venture for pennies on the dollar. You only pay retail when times are good.

Business plans are simply plans -- they either reflect reality or they don't. Most plans are simply wet dreams propped up by unrealistic assumptions. Realistic assumptions are generally made by those with experience. The person selling their boatyard has experience.

Unless you have a niche market you have unique access to, or have the ability to differentiate yourself in some other way -- be very careful with your assumptions.

Good luck!

 

Wise Quotes from the thread:
“Are you in the business of building boats, or in the business of making money?”
"The best time to go into business is when everybody says it’s the worst time".

João, the first and single rule when setting up a business is not to plan the “costs” but rather the income. Do you already have a well worked out plan for that, as for the “costs” you where asking about here?

I have a put up several performing business in various industries and I can tell you that the path that you are describing is a very expensive way to reach failure. --Reach failure??? Generally, no one make it on their first try so the faster and cheaper you manage to run your first business to bankruptcy the faster you will be of with your second try and after 2-3 times you be flying.

The worst case scenario is not that your business goes bankrupt after 6 months. The worst case is that it takes you 24 months and leaves you with an unplayable dept and enemies among your old clients a business partners.

So let’s assume you have this really great idea about something that no one has though about. You are enthusiastic and like to get started today, right? Why don’t you? Can you sell it? A good sales guy/woman can sell a concept without having the actual product in his hand.
Why not start selling today? If you can’t sell it now this mean that you are either a lousy salesperson, or you have a lousy concept. Ether way, today you have the possibility to learn and revaluate for free, while in 12 months down the road this is a whole other story to do.

Some can say that it’s not so smart to sell a boat unless you have a shop to build it in. Compared to someone that buys a shop and build a boats that you can’t sell I would say he’s a genius.

Ok, you have now worked out this great concept, and you have turned into a sweet sales guy and managed to sell three boats. Now then, can you buy a shop? Yes you could, if you are into the business of building boats, but if you are in the business of making money you would remember that "The best time to go into business is when everybody says it’s the worst time" and instead ask the “smart” guy who started his business by buying a shop to build it since his will do it for almost free or go bankrupt.

That was perhaps not what you wanted to hear, but after building up several companies I have had the opportunity to spend some money for this knowledge. Trust me!

Good luck!