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Golfman530
02-06-2012, 11:51 AM
Hello, I am just asking this question because I am just wondering (I do not have any desire to try and start anything like this.)

I saw a commercial for Carnival cruise lines the other day and it got me wondering, how do these types of businesses that would require a massive amount of startup money come to be? I mean one person could not just say I want to start a cruise line company and proceed to buy 10 cruise ships at 500-800 million a piece. How do these types of companies start?

Airline companies would also be a good example. How would an individual go about starting an airline company with the enormous startup and overhead expense that it would involve?

I never understood how these massive companies with (billions) wrapped up in their operating expenses even start. Is it one person? A large group of people? Did these people win the lottery to get their startup money? Haha

Thanks for helping a currious mind.

lucas.bowser
02-06-2012, 02:10 PM
I can't tell you the specifics of Carnival Cruise line per se, I can give you a viable way a company might start out in a business like this.

* Incorporate your cruise company
* Find a cruise line that has spare capacity (in terms of ship*weeks)
* Contract with them for a week
* Find enough customers to fill the cruise
* Use the proceeds to rent and fill additional weeks
* Keep doing this for about 2 years until you have built up a fair amount of cruise business
* Take the next step of annually leasing a cruise ship.
* Keep filling the capacity of the ship profitably.
* After you've been doing this for about 3 years, you have five years of history upon which to apply for your first loan to buy a cruise ship.
* Buy your first cruise ship. Use the cash flow from this cruise ship to finance the next cruise ship.
* Once you have reached a certain size, you decide to go public to get equity capital to buy even more cruise ships, or continue to grow with bank financing.

This of course is simplified from the steps that actually happen along the way. There are twists and turns. Bumps and bruises. Learning experiences. And more. If you want a really good history of a company that went from small to big, Southwest Airlines Newsroom: By Date (http://swamedia.com/channels/By-Date/pages/history-by-date) has a step by step of Southwest Airlines and how they became the player they are today. They started as a local carrier, then regional, and now national.

Business Attorney
02-07-2012, 02:52 PM
Very few of the really big companies started out big. Most are like the story of Southwest Airlines, starting small and kept growing.

Small, of course, is relative. I consider FedEx to be an exception because it started relatively big: it launched its network with 8 planes and 35-40 cities and added to them quickly. It needed to do that to have an effective network. Of course, looking at what FedEx is today, its "big" launch looks pretty small by comparison.

billbenson
02-07-2012, 03:32 PM
The FedEx story is interesting because it came out of a business plan a Yale university student got a C for. When he graduated, he implemented the business. You can see the details at FedEx Express - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/FedEx_Express)