Last week I was asked a question on how to grow a drone business. Do you really need business plans and what was the best funding options? Well firstly, there seems to be a love affair with venture capital and technology at the moment. So how do you go from having your dream of a drone hobby where you are holding a full-time job and flying for fees on the side, to having a full-time drone business that pays the mortgage? Before we can go forward, we have to take a step back. So, let’s start at breakfast.
In a bacon and egg breakfast, what’s the difference between the chicken and the pig?
A: The chicken is involved, but the pig is COMMITTED!
So how does this relate to a drone business (or any business for that matter). Let’s start with the two main characters, the pig and the chicken
For the pig to be a part of the bacon-and-egg breakfast, the pig has to commit fully (with the most precious resource it has – life). The problem with this is that the pig can only be slaughtered once, so needs to be fully committed to the cause. In a business perspective, make sure what you think is true, is true. KNOW YOUR MARKET. This is like the drone business that comes in blazing, under quotes, over promises, can’t deliver, then realises that they don’t know if they have a market or client base who wants to buy their services and they’re back working in another job within a short time.
Is this real commitment or stupidity? I’ll leave that up to you.
For the chicken to be part of the bacon and egg breakfast, the chicken only has to do what is in its very nature – its passion. The chicken was born to lay eggs. And the chicken will continue to lay eggs for as long as physically able. This is like the drone business that isn’t really a business, more a hobby or passion. Because they have additional income from a full-time job or other means, they under quote, their operation wouldn’t pay the mortgage, or buy new airframes, or buy new software or upgrade machinery. In short it isn’t sustainable and being honest is like a hobby farm versus a serious farming business.
Is this real commitment? I’ll leave that up to you.
So how does this relate to funding for your business. Well, before you can convince anyone to fund you, you must convince yourself that your worth it.
Step 1 Get your act together
Identify what you are going to offer. This year the drone industry will start maturing and consolidating. What that means is that bigger players will be entering the market and smaller operators who are not professional or have a sustainable model will find themselves left out doing odd jobs. Think the live music scene. Many bands play pubs and clubs on the weekends whilst working a full-time job during the week and call themselves musicians. Other bands tour constantly in the around the country, sleeping in the back of transit vans as a full-time job trying to crack the big time.
Step 2 Do your homework
- Know your market. Do you know your market? Is the market saturated? Does your region really need another drone operator offering X? How much money is spent in your industry each year in your area? Is there room in the market for one more business?
- Does the market want what you’re offering? If you’re thinking of providing day care for dogs or a facility where people can cook a week’s worth of meals in a group setting, will anyone care? Or if you’re developing a new online service for day traders, is it something they can’t live without?
- What’s the competition doing? What do they do well? What do they do poorly? What’s unique about them? Can you offer something different that’ll encourage customers to patronize you instead of more established businesses?
- Can you reach your target audience? Many markets are very difficult to get access to. Refer to our earlier article to see how you can offer value ion markets and industries which are foreign to you.
- Know your figures. Know your breakeven point and set realistic targets. If you don’t know about Monte Carlo estimation, google it. I recently went into a meeting with a colleague who insisted that the basis for the deal was a mobilisation payment of 20% of contract value. I suggested this was very optimistic and aggressive. He assured me it was an industry standard and didn’t go any further into the modelling. And of course, the client didn’t want to hear about a mobilisation payment and there were no back up figures to refer to.
Step 3 Know yourself
Ask the following questions and be honest with the answers;
- Am I serious about this
- Am I willing to bet my house on it (you may have to for funding)
- Is there a market (see Step 2)?
- Would I consider myself an expert on that market (see our article from last week)?
- What am I good at -a small business needs operations AND sales, marketing, accounting etc. Are you good at any of them/all of them/none?
- What do I suck at – see above. Can you get someone else to do these things for you?
When you are honest with yourself, you can mitigate your weaknesses and play to your strengths. What I am getting at here is aim to regularly put yourself in the environment that you excel in. For example, if you are an average drone operator, find someone who excels at it and team up with them. If you are great in the board room making sales, then find ways to do that more often. After all its about longevity, not a quick sprint.
Remember, there is nothing wrong with being the pig OR the chicken. Just recognise which one you want to be and structure your operations accordingly.
Next week we will look at the steps you need BEFORE you fund your business. Spend some time researching industry trends and developments. It pays off. Click here to register to learn more and start growing your drone business today!