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Friday
May062011

The Value of a Business Plan in Managing Your FBO

“A business plan is primarily an organizing tool used to simplify and clarify business goals and strategies, which might otherwise appear complex and intimidating. However, a business plan is also a sales tool. … Having no plan is like sailing the seven seas without a compass, digging a ditch without a shovel, or hunting for pirate's treasure without an 'x' marks the spot. Without one, you're better off heading down to the horse races and betting on the 'Win Three.' A plan helps keep you on schedule, makes it easier to recognize success and failure, helps pump you up when things aren't going so well, and most importantly, provides an essential focus.”Peter J. Patsula, The Entrepreneur's Guidebook #9, "Supercharging Promising Projects with a Plan of Action.”

In some of our previous blog posts, we have mentioned the need to develop a strategic business plan, not only as a way to define business goals, but also to help formulate your personal goals, such as detailing an exit plan from your FBO business.

As most of you know, if you want to borrow money from a bank, the SBA or other sources, one of the first things they will ask you for is a business plan. This alone is a good reason to develop one. However, beyond this basic need, a business plan can be much more and serve your business in many different ways.

The quote above illustrates the many benefits in developing a business plan. As any pilot knows, without a proper flight plan, you will never get to your destination efficiently.

Developing a plan can be intimidating, but it’s not too bad when you keep it simple. Do some organized research on your business; ask some fundamental questions; do a SWOT (strengths, weaknesses, opportunities and threats) analysis; conduct a market and pricing analysis; then lay out your plan in an organized manner.

Plan Basics

Let’s look at some basics involved in developing a plan:

Company Description: First, we need to establish the baseline information for your firm, including the type of business you run, the management and employee structure and a statement to define the mission of your company as well as a sense of your vision and direction for the growth of the company.

Industry Analysis and Trends: Define the marketplace you operate in now and the near future; this includes seasonal factors, maturity of the industry, etc.

Target Market and Audience: Define what markets you serve and detail any new business areas in which you wish to operate. Also define your target audience or audiences (customer groups) you would like to attract to your business.

The Competition: Define and isolate your competition by looking in detail at not only your competitors on your airport but also within a 50- to 100-mile radius.

Strategic Position and Risk Analysis: Consider doing a SWOT analysis to evaluate your company’s strengths, weaknesses, opportunities and threats. Included should be an internal survey of all your employees to gain their input as well as vendors and suppliers who know your industry and perhaps sell to your competitors. Find out what may differentiate the way you do business from your competitors and use this to position your brand in the marketplace.

Marketing Plan and Sales Strategy: Analyze what you are doing to promote your business now, and develop new ways you can penetrate existing markets and branch out into others. Also, define your sales goals and objectives in terms other than the amount of money you want to make. Rather, state in terms of actionable items that can be obtained and measured in terms of results.

Operations: Review your existing business and how it operates — labor, equipment, technology, customer service and management information systems.

Community Involvement: We all know this is a relationship business, so include in your plan what you are doing, or willing to do, within your own general and business community. If you’re already involved, think what you would like to do better.

Development, Milestones & Exit Plan: Detail your long-term goals, growth strategy and exit plan including a timeframe to complete.

Financial Plan: This is the bottom line. Determine what the business is doing from a profit-and-loss point of view, and define the short-term and long-term capital needs to get where you want to go.

Guide Points

To sum up the critical path in starting, developing and finishing a plan, think of these three simple guide points:

  • Develop a fundamental understanding of where you are today.
  • Take a realistic view of your options moving forward.
  • Think of your plan as a roadmap to success, a guide you refer to along the way to keep you on course.

The whole point of a business plan is to have firm ideas of where you are and where you want to go while realizing there are some hard choices to be made along the way. In the end, keeping focus is the key ingredient to success, and a plan will help you keep that focus.

Have any additional thoughts? Please email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Thursday
Apr282011

FBO Marketing, Part 1: Low- and No-Cost Promotion

Did you know there are ways you can market your FBO with little or no out-of-pocket expense?

At our NATA FBO Success Seminars, we examine various aspects of marketing for an FBO. One of the most popular sessions is Marketing and Communications for Any Size FBO.

Many FBOs that attend our seminars believe they can’t compete with the big FBO chains because they don’t have the money and resources. To that, I kindly say, “Bunk”. There are plenty of ways you can “shake hands” with your customers or potential customers without breaking your budget or robbing your kids’ piggy bank.

Getting Down to Basics

In the business of running an FBO, there are basically two ways to increase your business and, thus, the amount of fuel you sell.

  1. Increase the number of base customers you service.
  2. Increase the number of transient customers you service.

For the purpose of this blog post, we will concentrate on the second item of reaching out to the transient customer. However, if you are having trouble filling your hangars and think you can do a better job of increasing your base customer population, read on. There are tips for you as well.

Here is what I call the Level One, or Basic Communications, Checklist. You might be already doing these, but they are worth the review. These are not all free, but we’ll get to those shortly:

  • A listing in a major FBO directory and Web site, such as AC-U-KWIK and acukwik.com. There are various listings and offerings to choose — some at little or no cost. You need to create some kind of awareness at the most basic level.
  • Fuel supplier listing. Most FBOs have a relationship with a major fuel supplier. Make sure you are listed accurately in everything they produce, including their Web site and other promotions.
  • Basic Web site. By now, most FBOs have built at least a basic Web site. Believe it or not, though, some companies forget to put their phone numbers up front to make it easy for the customer to make contact. Instead they bury it on an obscure page.

You must remember the most basic reason for a Web site is to provide information quickly. Therefore, you don’t need a lot moving pieces, fancy graphics, etc. Also, you should test the viability of your Web site in terms of search engine optimization (SEO) by doing a Google search of keywords for your area and business segment. Keep in mind keywords a customer would use to do a Web search. Some keywords for the fueling side of the business are obvious:

  • FBO Dallas, TX (Your City and State) and FBO DAL (Your airport identifier)
  • FBO Dallas Fort Worth (or) FBO North Texas
  • Aviation Fuel Dallas, TX (or) Jet A Dallas, TX (or) Avfuel/Jet A DAL

Note: If your facility does not appear at or near the top after keyword searches, you need to look into rewriting the copy for your Web site to include keywords and phrases for your business segment and geographic locations. There are numerous free articles on the internet that can help you.

Web Site Tip: Refresh your copy on a regular basis. Keep keywords and phrases intact, but create something new that will be of interest. And don’t forget to post any press releases or news articles that may have been published. Look for ways to post your press releases to the free aviation sites, such as acukwik.com. Do some research, and create a PR database to which you may send your news.

  • Get Social! Create a business Facebook page, list with LinkedIn, and investigate Twitter but only if you are serious about keeping social networks active and up to date with frequent posts.
  • Giveaways. Don’t be afraid to put out a bunch of low-cost pens or other freebies at the customer service desk or in the pilots’ lounge. What’s the worst thing that could happen? So what if they disappear? That’s a good thing. They just might get back to the customer’s home base where a dispatcher gets a hold of one and, presto, your brand is right there, top of mind!

The Really Free Stuff

As mentioned, there are a number of things you can do that really don’t cost anything except some time and effort.

  • I Spy Program. One of the techniques we teach at the FBO Success Seminars is creating your own I Spy Program. This is simply building a database of potential customers by tracking the transient customers who use your airport, or surrounding airports, but don’t come to your facility.

In the old days, you would simply use a pair of binoculars and scope out your competitor’s ramp and record the aircraft registration numbers. Now there are a number of electronic programs you can access that track flights into and out of your area. Usually a registration number is associated with the flight, and you can then cross-reference this registration number with a database of aircraft owners and operators. Some of these databases do cost money, but most that use these services do find them to be worthwhile.

Once you’ve started to build your database, send out a postcard to the potential customer offering an incentive to come to your facility on the next occasion. Incentives can be a one-time fuel discount, lav cleaning, interior cleaning, a fruit tray, etc. Note: Most of the time, one contact will not do the job. You need to be consistent and aggressive in making frequent contacts.

  • Pick up the phone. Sounds simple, but if you can track a potential customer with an address, you should be able to get a phone number. Don’t be afraid to ask for their business.
  • Be aware of customers who haven’t been back in a while. Getting customers to come back is like finding new customers. Again, pick up the phone, and find out why they haven’t been back. Ask them if you did something wrong, and offer an incentive to get them back in the fold.
  • Be aware when a new customer does come in. Have your line service personnel and CSRs become aware when you do attract a new customer. Then be the restaurant owner. Meet, greet, thank him or her for the business, etc. And don’t forget the cheese!
  • Write hand-written notes. It doesn’t cost anything to write a note thanking customers for their business. Anytime you can keep a customer coming back time and time again is one fewer customer you have to replace.
  • Network, and be a part of the community. FBO owners, operators and general managers should use opportunities for community involvement, which will strengthen local aircraft owners and operators’ and their flight department staff’s awareness of your business. There are usually high-profile clubs, fellowships and nonprofit organizations that rely on volunteers that include high net worth individuals. Moving in the right circles can strengthen these relationships and help provide referrals. This is a great way to increase your base customer prospect list.

And because business aviation is such a small niche market, you never know who a pilot for a new base customer knows. Chances are they know more pilots at other companies who just might give you a try.

These are just a few strategies and tactics we teach at our FBO Success Seminars. If you have something that works for your FBO, please let me know by emailing me at Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.



Thursday
Apr212011

Is Your Cost of ‘Plastic’ out of Control?

Get a Grip on Credit and Debit Card Fees!

"The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic." – Peter Drucker

One of our more popular courses at our FBO Success Seminar is Maximizing Your Credit Card Transactions. We discuss in detail the credit /debit card processing system and how it affects your FBO business. Needless to say, the cost of this vital service is substantial and increasing.

Debit Card Update

First, let’s take a look at the use of debit cards. In the process of updating our seminar course materials, I’ve been researching the recently enacted regulations by the Federal Reserve to reduce debit card interchange fees. Here’s a little background information.

The new laws are still being written and are scheduled to be completed by April 21 with an implementation date of July 21. The laws change the fees from percentages to fixed fees. Some efforts in Congress may further delay the implementation or change the regulations.

Currently, debit card swipe fees average $0.44 per swipe. The new requirements reduce them to $0.07 to $0.12 per swipe. The banking and credit card industries are not in favor of the new requirements because they stand to lose some $12 billion in fees; therefore, they are lobbying Congress and others for changes.

As an example of the impact this would have on a retailer, look at The Home Depot’s operations. If the debit card fees are reduced as planned; The Home Depot will see a reduction of $35 million in debit cards costs. Obviously, the average FBO doesn’t have the volume of debit card transactions of a large box retailer, but we’re talking about potential savings over the long term and revenue to your bottom line.

A Look at Credit Card Fees

Regarding credit card fees, each transaction fee in the FBO business varies greatly. The fee can be zero for your branded oil company card to a high of four percent of the transaction. During the classes we teach at the FBO Success Seminar, we provide a detailed analysis of fees, but for now, here’s a look at an example of an average transaction:

First of all, the current national average cost of Jet A is $5.38 per gallon. Based on the Platts index, this average is an increase of more than 92 cents per gallon in only the last six months. For the FBO operator, this adds up to an increased credit card transaction charge of just over $0.02 per gallon or a total of $0.11836 per gallon, assuming the average fee is 2.2 percent. Under this scenario, a 500 gallon sale would result in credit card fees totaling $59.18, which includes an increase of $10.02 in extra charges resulting from the rise in fuel costs over the past six months.

We would venture to say that credit card fees are a bigger portion of your costs than you imagined!

If you are selling 1.5 million gallons a year at $5.38 per gallon, your annual credit fees will be $177,540. In this scenario, your credit card fees have gone up approximately $30,360 per year, based on recent fuel price increases.

Bottom Line

Here is the bottom line: The credit card processors are profiting during this crazy volatile spike in fuel prices, and the FBO is not! So what do we do?

The first step is to look at your processing fee costs and where the fees are being generated. Start by analyzing your sales and payment history:

  • Retail sales and payment by what credit card or debit card?
  • Factor out no-fee cards such as oil company cards.
  • Factor out contract fuel sales. (By the way, are you getting paid promptly by the contract supplier?)
  • Take a look at based customers vs. transient customer sales and payments.

Once you have completed your research, look at changing customer buying/payment habits, — not an easy task!

  • You should want all your base customers paying with a no-fee oil company card. If they don’t, figure out an incentive to make this happen.
  • For your transient customers, you should train your CSRs to ask for no-fee cards for payment.
  • Make sure your contract fuel suppliers are paying you quickly and within contract terms. If they are late paying or otherwise, you need to rethink your contract fuel supplier relationships.

As your business changes with all the turbulence in today’s marketplace, you need to analyze all of your cost structure. Credit card fees are sometimes a cost we think we cannot manage. Not true!

With the tools and ideas we have presented here, these costs can be reduced. As Peter Drucker indicates in his quote, new thinking is most important in business, not only for this issue, but for all your business management concerns.

Let us know your thoughts on this issue or any of our FBO Connection blogs. Please contact me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Thursday
Apr142011

FBO Customer Expectations: How High Should You Set the Bar?

“Start early, and begin raising the bar throughout the day.” –Bruce Jenner, Olympic athlete

Is the level of customer service expectation set high enough at your FBO? Does it meet or exceed the standards of the industry, or are you doing just enough to get by?

Recently, I was reading a customer service-related blog titled: “Did You Know You’re Competing with Apple?” The premise piqued my interest. Could it be possible the level of service a customer expects to receive at an FBO can be properly compared with the expectation of service offered by the top brands in their respective industries — companies like Apple, Virgin America and Amazon?

I was hooked on the notion. So I read on, and the more I thought about it, the more it made sense. Customers who walk into any FBO have already been exposed to the highest level of customer service possible because they are all consumers. They probably have been exposed to how Apple can make the mobile computing experience easy. Or to the way Amazon aids online customers in the selection process and then delivers the product in the blink of an eye.

I was on board when the blogger mentioned how Virgin America can customize the in-air experience by delivering food and in-flight entertainment the way you want it when you want it. So I reasoned, why can’t professional pilots and crew members expect a similar level of service when they deliver a CEO to his or her destination?

What Pilots and Passengers Expect

Remember, your customers, the pilots and crew members, have customers of their own. They’re the VIP passengers who are often the most well-heeled, high-net-worth individuals on the face of the planet.

You think an FBO manager’s job can be tough? Try keeping track of what each passenger likes to read, eat, listen to and watch. And, oh, by the way, remember to be the passenger’s confidant, and know their family history and names of children and pets. And while you’re at it, fly the airplane flawlessly!

Passengers on business aircraft are used to receiving the highest levels of service available. They dine at the finest restaurants, golf at the nicest country clubs and vacation at the swankiest resorts. Do you think their customer service bar is set high?

So once the world’s movers and shakers are carefully transferred from the comforts of the jet cabin to the perfect 72° interior of a waiting limo, what level of customer service should the crew expect when they set foot inside the FBO?

Hopefully the answer is the same level of service they just gave their passengers. Anything less is simply unacceptable.

As an FBO owner or operator, you can do several things to instill in your employees the level of service you would like to see and customers expect. One suggestion is to take small groups of employees, on occasion, out to eat at a very upscale restaurant. Let them see firsthand how a high level of service is delivered.

Maybe once a month, or once a quarter, reward an employee and his or her spouse with a night at the best hotel in the area. Have them take mental notes of the level of service and share their experience with the rest of the customer service team.

Occasionally issue a gift certificate to a deserving employee for a day at a spa at an upscale resort. The experience will probably transform the employee in a positive way.

What are you doing to raise the bar of customer service expectation at your FBO? I’d like to hear from you. Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

Thursday
Apr072011

The Cost of Aviation Fuel

Why is the price continuing to increase, and what can an FBO do?

“Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.” – Henry R. Luce

We think it’s fair to say we are all feeling the impact on fuel price increases over the last six months or so. As a pilot, I’m seeking the best fuel price and am modifying my flying patterns to get the best deal.

Historically, after an initial spike in oil prices, the market tends to settle down. So why haven’t we seen a stabilization in Jet A fuel prices? What’s causing the volatility in the open and spot fuel markets?

Besides the obvious affects of world events, including the disaster in Japan and political upheaval in the Middle East oil-producing regions, there are other underlying dynamics that contribute to rising aviation fuel prices.

What Others Are Saying

Let’s review a few articles that have been written lately.

As discussed in Charles Kadlec’s article, the current Fed policy of keeping the value of the dollar low in the international markets is one of the main influences. Because it takes more dollars to buy a barrel of oil, the low dollar value pressure drives up the costs. It’s not necessary to review the entire article here, but suffice it to say the continued low value of the dollar is not going to reverse anytime soon.

In the article “Oil Spike Prompts Airline Profit Fears,” the authors discuss in detail the increasing cost of fuel and its effects on the airline industry. The airlines anticipated the increasing cost of fuel to be in the $75 to $90 range, but now a barrel of oil costs more than $108 this week. The economics of the airlines are such that a $1 increase in the price of a barrel of oil will increase the costs to the airlines more than $1 billion in a year.

As a result, the airlines are looking at a $10 billion cost increase in 2011 with fuel costs, on average, representing approximately 29 percent of the airlines’ operating costs. In order to gain back revenue, airline ticket prices are going up. Expect to see more fees and reduced flights with higher load factors.

The NBAA article details some similar statistics. They indicate 20 to 25 percent of a turbine operator’s cost of operation is fuel. The article notes, as we have discussed in previous blogs, that corporate operators are utilizing tactics such as using contract fuel providers, discounts with their base FBOs, tankering fuel and other fuel savings measures.

What Does the Crystal Ball Say?

As Henry Luce noted in his quote, in business we are always trying to look into the future. So looking into the crystal ball, what is going to happen with fuel costs, and what can we do about it? With the continued world unrest in the Middle East, oil prices will probably remain volatile.

The wild card in this equation is the Fed monetary policy. If the dollar remains weak, it’s our opinion the price of a barrel of oil is not going to go down anytime soon. Unfortunately, these factors are also going to slow down the economic recovery.

The bottom line: Just as the airlines are dealing with higher fuel costs, the cost of operating your FBO is going to go up and will probably not get any better soon. You’re also going to continue to see increased pressure on your fuel margin as aircraft operators, faced with their own budget problems, seek to negotiate better fuel prices.

So how do you survive during this fuel crisis? First, you must reconnect with your customers. Get out from behind the desk, and be a pro-active owner/operator. Be the restaurant owner!

Get to know your base customers and your transient customers. Learn their needs, wants and desires. By knowing your customers’ requirements, you can negotiate your own fuel delivery program that is customized to their operating parameters. At the same time, you minimize outside influences and maximize your returns. With regards to transient customers, you should already know who is flying into your location, so meet with them, and negotiate a reasonable service fee program which includes your fuel delivery.

Secondly, remember the Pareto 80–20 Principle.

Generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:

  • Twenty percent of the input creates 80 percent of the result,
  • 20 percent of the workers produce 80 percent of the result,
  • 20 percent of the customers create 80 percent of the revenue,
  • And on and on.

The Pareto Principle helps you realize the majority of results come from a minority of inputs.

As the FBO manager and chief marketing/sales person, this principle can help you concentrate your efforts by identifying your top customers — the important 20 percent that generate 80 percent of your business. That is the best bang for your buck. Know these folks well. This understanding of the vital few is what will make your business successful, and you can manage the change in cost of fuel.

Remember our premise as we forecast for the future. Concentrate on what you can control in a measured and methodical manner. We have little control over world events or what the Fed is going to do with monetary policy.

How are you dealing with the higher fuel costs? I’d like to know. Please email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.