People often are often concerned with the cost of hiring an aviation consultant to come in and evaluate their business, whether it is for business development or the acquisition of the business. For some, people don’t understand what a consultant really does with a majority of them thinking that all a consultant does is cost money to tell you what you already know anyway.
HOWEVER, in the aviation business that is a totally untrue statement, because aviation ISN’T an ordinary business, it is a business that is more niche and with limited demand, and that is why many aviation business entities never make very much money. Is it possible to make money in aviation? Absolutely! Then why don’t more people hire a consultant to build the business model that maximizes profitability and/or brings pure business practices into the realistic pricing of a business? Please read on!
This is one of the most unique questions, the question of why don’t more people who are in aviation or are considering an aviation business use a consultant to evaluate the business? I think the most honest answer to the question, is that most of these people already know more about aviation than the Wright Brothers/Kelly Johnson/Chuck Yeager/Berkshire Hathaway that they don’t need anyone to show them how to purchase or build the business. However, the profit & loss statement proves otherwise, but for the most part, aviation business has a problem with acknowledging the fact that they MAY NOT BE THE BEST BUSINESS ENTREPENEURS that are out there. I am not saying as a consultant we know everything, but most aviation business entities are easy to identify areas that can be improved on, and if implemented, the business usually takes off…no pun intended.
Obviously the first question is advertising, and 90% don’t get it. The second problem is the product…how many people really need/want/use the product to be sold, and has a “demand study” been addressed at anytime? The third problem is that we don’t know how to treat customers properly, and this doesn’t mean we aren’t good people trying to provide great customer service, we don’t know how to provide the value the customer expects. And fourth…we don’t know how to sell, up-sell, or make a presentation that gets someone outside of aviation to make the decision to purchase. I am mainly making these points based on what a majority of FBO’s and flight schools do, but they are well proven facts that must be addressed.
You can ask yourself the question to just about any flight school what the marketing budget is, and a majority will tell you they don’t do any marketing, because people already know who they are? How is that? Well, people know where the airport is, therefore why do we need to do any marketing? Plus, marketing never gets any results..right? That is why aircraft sales are down, why we have a 83% drop out rate for private pilot certification, and why aviation is in a decline. Want to know a secret? There are plenty of people out there with money and a need for an airplane if we identify who they are, and demonstrate the benefits of owning and operating an airplane including learning how to fly, etc. But because we continue to go down the path of doing the same thing done over and over again, our client is someone who doesn’t really need to fly, but wants to fly when they can afford it.
Lets get to the cost of hiring an aviation consultant, because truly it is the best money you will ever spend. I typically will require a $500.00 initial flat fee plus $50/hr to conference call which is usually one hour in duration, and $100/hr to actually work on the project. The $500.oo initial fee is to evaluate the situation, which requires research and documentation from the owner or purchaser. Depending on the type of operation, and I will be honest with you, if there isn’t much to offer, we will never get to the $500 fee…in other words, if you are in a demographic location that cannot support doves and geese, other options that are better for your future will be presented and we will be done. Typically, for a medium sized flight school, the cost to get things rolling will be under $2,000. When you consider the upside of returning that investment within 90 days due to increased profitability and increased business, that is a no-brainer!
The real sad part about all this is, most FBO’s and flight schools don’t have the money to build the business, and if they do, they don’t really want to learn how to build the business anyway. It is like Rod Beck has always said, “I just flew in a Piper Cub, it was challenging but I did it, so now I am ready to solo the P-51 Mustang!” And guess what happens? The pilot crashes and takes with it a million dollars in assets down with him/her! I recently had an inquiry about a flight school that hasn’t made any money the last three or four years, and never really was a money maker, but WOWZA, the demographics were terrific and with a little bit of thinking outside the box, the flight school would have put the other two flight schools on the field out of business in approximately 18 months MAX! I suggested a few ideas for marketing…they had a marketing budget around $12,000 per year, but this hadn’t been producing any results. Evaluating the marketing, I could see why nothing was happening. I think the real truth behind not being hired, was that the owner was scared that he would have to change his way of doing business…it wasn’t that he couldn’t do it, he just was too comfortable doing everything the way they were, but to turn things around, changes need to be made!
What is this business development stuff all about? Business development is the implementation of strategies and techniques for increased sales using formulas that work in profitable business models. An example would be the flight instructor situation. This person is a key ingredient to the success of a flight school, yet they are the ones that are getting the finger pointed at for the dismal rate of graduates of pilot certificates. Business development is about figuring out ways to increase the number of students getting the pilots license, just by working with the CFI to bring more professionalism and success. How? Tracking the student to solo ratio’s, just by doing that and comparing the good CFI to the not so good CFI gives a way to measure performance. Also…what about pay plans? Structure the pay so that the CFI can make some real income by bonus for solo, cross country, and/or the finish up for the private pilot certificate. By maintaining a student pilot ALL the way from start to finish, the CFI will make more money, you will make more money and can provide that bonus. Does anyone do this? I haven’t seen it. You can have increased income from the current students YOU HAVE, no extra money needs to be spent!
Business development is also about presentation about the product, and identifying the best customer. Target marketing in aviation is the ONLY way to market to most clients, yet not many people understand how this works. Most of the time when I look at the marketing program of an aviation business…they are doing the same thing that they have done for 20 years and that was to only copy the competitor across the street. The fact is, the automotive industry spends a lot of money on marketing and identifying their customer, and if you would just implement 20% of the best performing methods, the aviation business is going to grow very quickly. Why? Because “aviation is a different animal” but that doesn’t mean business methods that work in other industries should be totally ignored in aviation. True marketing brings results that are measured and believable…it draws traffic/inquiries into your product, and gives you the opportunity for business.
Another example of why aviation has a high failure rate, is the total abstract evaluation methods of what a flight school or FBO business is really worth. Many times people want to start a flight school or open an aviation operation, and they 1) Don’t have any capital??? 2) Are going to purchase the business at a price that doesn’t make any sense at ALL! Really? Why do you want to pay retail +++ on something that isn’t making any money? Yet, because it is aviation and the grandeur and overall appeal of being in an aviation business is SO intoxicating, that you will find out how fast you can lose money in this business. Often I will be approached with someone that is considering the purchase of a flight school, and in reality, hiring me is going to do one of two things. #1) We will negotiate the purchase price with the fee to hire me is pennies on the dollar, because often the business isn’t making enough money to justify the asking price, AND the asset value is not ANYTHING close to what they are worth. #2) I will save your entire savings and the next 5 years of your life by getting to the bottom of the question – can this business provide a growing income and profitability.
Unfortunately, people have not listened to what the reality of the situation, and just had to go and lose their entire saving and 401K, and while the ship was sinking, GOT A DIVORCE for all this aviation excitement. And, these people had operated their own business before.
One of aviation’s weakest links, is the aggressiveness of the business owners and flight schools. If I could put one thing as a major change that needs to take place, is to get rid of the thought that “everyone loves airplanes like me” and starts to think that “everyone needs to have an airplane and I am going to show them why” would be the first order of business. Unfortunately, all those talented people aren’t in aviation right now because the lure of real stability and income has taken them to other industries. When the money is there and the business is on the move, talent is attracted to that and they are the ones who make everything a game changer. If there was good money to be made in the flight school business with a formula that would reward the risk, capital would flow into the industry and very talented people would become part of the industry and it would grow again. The problem is, aviation currently has a culture of the social nature and not of the business needing to get done.
If you don’t know what an aviation consultant can do for your business, you need to ask the question “are you exceeding your business goals?” If you aren’t sure or the answer is no, chances are a consultant can identify areas that won’t necessarily cost you any more money, the objective is to make changes that provide higher income and profitability. These changes involve simple methods of implementation, a real marketing program that is a monthly budget that doesn’t cost you anything, and the rewards are significant. If you spend $200 for every new client, and that average profitabiity of each client is $4,000…seems like I would be spending some money on marketing and get rid of the theory that “everyone knows who we are!”