Situational Awareness: You Can't Manage What You Don't Measure

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

Situational awareness. It’s not just a term for pilots. It should also be a daily mantra for FBO owners and operators who want to run a successful operation.

In the FBO business, situational awareness is all about being aware of what’s happening in your inner and outer circle. It’s a process of understanding how information, events and actions impact business plan goals, both immediately and in the near future.

During our NATA FBO Success Seminars we discuss developing and reviewing statistics or dashboard reports on what is going on with your business. It’s a daily ritual that is all about situational awareness as it pertains to fuel sales, labor productivity, and tracking your actual profit and loss (P&Ls) against your budget and last year’s performance.

However, one area that seems to get neglected is measuring the sales and marketing initiatives by keeping track of what we are doing to sell our FBO services, develop new customers, bid new contracts and other marketing efforts.

CRM (customer relationship management) software is a category of software that covers a broad set of applications and software designed to help businesses manage and measure customer data and customer interaction, access business information, automate sales, marketing and customer support. To assist in your sales efforts through CRM techniques, you may want to utilize software programs such as Salesforce.com, Pipeline or QuoteRoller.

Once you’ve selected your software, we recommend keeping things simple by tracking at least the following three metrics:

1. Number of cold calls to prospective customers. Yes, cold calling is not dead. Pick up the phone and make contact.
2. Number of appointments, whether you’re trying to sell MRO service or just informing a potential new customer about your facility.
3. Number of closed sales or the number of new transient customers.

Once you get into this tracking, there are additional metrics you can add:

1. Number of referrals received and referrals closed. Referrals means your FBO is delivering a good customer service experience. Referrals should always be followed up on in a timely manner.
2. Amount of email, direct mail, social media and blog posts. The use of all communications channels will increase sales success.
3. Upsell attempts and rate of success. Upselling is critical to help make an FBO successful.
4. Number of business cards handed out. Sounds simple, but promoting the brand is critical.
5. Number of times you contact a prospect before you close the sale. Keeping in contact with the customer base, no matter what the message, helps create and cement relationships.

You can develop your own metrics to fit your business. Whether it is the number of annuals, 100-hour inspections bid on and closed, or the number of contacts for new hangar rentals, any of these metrics are vitally important to the success of your FBO operation.

And always remember, you can’t manage what you don’t measure.

About the bloggers:

John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.

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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.

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.