March 05, 2012

Improving FBO Productivity in 2012: Business Strategies for Better Success

March 05, 2012/ AC-U-KWIK

(Part 3 of a 3-Part Series: Planning a Successful 2012 FBO Business Strategy)

By John L. Enticknap and Ron R. Jackson

Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort. —P. J. Meyer

In the first two installments of this three-part series, we discussed “Our FBO Business Outlook for 2012” and “Decreasing FBO Costs in 2012.” In this third part of our series we discuss ways to improve FBO productivity in 2012.

First of all, the key to executing any business initiative is to set realistic and achievable goals supported by workable strategies to accomplish these goals. As the P.J. Meyer quote suggests, intelligent planning and a focused effort are required. Here are three goals and supporting strategies we recommend to put you on the right productivity track for 2012:

Increase Line Service Productivity
     a. Avoid ramp and hangar mishaps
     b. Create a credible audit system
     c. Increase fuel sales at point of connection
Produce Better Financials
     a. Fine tune your financial dashboard
     b. Watch your fuel margins
     c. Cash flow analysis and financial ratios
Build Long-Term Profitable Customer Relationships
     a. Be the restaurant owner
     b. Communicate your Customer Value Proposition
     c.  Don’t forget the Cheese

Goal No. 1: Increase Line Service Productivity
Strategy a: Avoid ramp and hangar mishaps

In the FBO business, there is perhaps nothing more perplexing than a mishap on a ramp or in a hangar involving a customer’s aircraft. It not only costs the FBO money and possible loss of business, it costs the customer valuable time and causes, needless to say, customer dissatisfaction.

The truth is, most mishaps can be avoided through proper training and adherence to a comprehensive Standard Operation Procedure (SOP) manual or document. Initial line service training and diligent recurrent training programs are essential. Following simple rules such as always using multiple wing walkers, especially in hangar situations, is vital. We recommend the NATA Line Service Training (LST) program as a great way to train your line service employees.

Strategy b: Create a Credible Audit System

As we noted previously, extra training keeps ramp and hangar mishaps to a minimum. However, we need to make sure training and management systems are monitored, utilized and policies and procedures maintained. An internal audit is one way to evaluate your training programs, but it’s hard to eliminate bias. Only an external audit can give you a true benchmark measure of policy adherence and performance.

There are a number of qualified professionals you can hire to evaluate your training programs and review OSHA compliance as well as environmental, SPCC plans and other internal/external operational procedures. In addition, an outside audit can verify and establish your business’s credibility with your insurance underwriters, which can often result in lower premiums. It also aids in keeping your line service team sharp and focused on safety and quality.

Recently, NATA established an industry-leading Ground Audit program. It is a nationally recognized audit program developed by and for the FBO industry. It uses trained and accredited auditors, including this blog post’s co-author John Enticknap. It’s a good program, but not easy to qualify for or complete. You may want to be one on the first FBOs to register and use it in your marketing campaigns.

Strategy c: Increase Fuel Sales at Point of Connection

Since your line service personnel are often the first FBO employees to come in contact with customers, they all should take part in any customer service training afforded to Customer Service Representatives (CSRs). In addition, they should be totally aware of any fuel promotion you have in place and should be capable of “suggesting” extra fuel at perhaps a volume discount.

Once you have your refueler hooked up to the aircraft, there are no additional fixed costs. Therefore, this is a great opportunity to pass along a fuel volume discount and add more fuel to the sale. Incremental sales of this type really add up and help improve the bottom line.

Goal No. 2: Produce Better Financials
Strategy a: Fine tune your financial dashboard

When you review your daily sales and productivity reports or dashboards, do you act on the information or just take it in stride? You should make sure the reports are giving you the information you need to make your business more efficient.

When you review your maintenance shop productivity, do you make sure the numbers match your targets? If you want 89% productivity from your technicians and don’t achieve it, even for a day, do you act on the information? If you lose even a few days out of the month, it’s easy to lose a month of reasonable profitability.

It’s the same thing on your fuel sales. If you’re having a soft month, run a fuel promotion. Use some demand pricing to stimulate sales.

Strategy b: Watch your fuel margins

During our NATA FBO Success Seminar we talk about fuel margins. This is no doubt one of the most popular subject matters at our seminars! Without a decent fuel margin your business doesn’t go anywhere.

With requests or demands for lower prices from your customers and contract fuel programs, there is increased pressure on your margins. We would like to recommend you institute our $2.00 management plan, another strategy we teach at our NATA FBO Success Seminars.

It works like this. When you price your retail Jet A fuel, set a two dollar margin as a goal. For example, in today’s market the price build-up would be approximately $3.30 GCPM-Platts—plus 65 cents for Federal taxes, transportation, and flowage fees, etc.—plus a $2.00 margin. Therefore, the total retail price would be $5.95. Most FBOs are above this retail market price already! Remind yourself, every time you have to spend $2.00 on overhead, you have to pump another gallon of Jet A. We suggest you keep a $2.00 bill on your desk to stay focused!

Strategy C: Cash Flow Analysis and Financial Ratios

We think it is fair to say most of your financial reviews involve looking at your profit and loss statement and balance sheets. As a reminder, you should also look at your Cash Flow Statement. This statement summarizes the operating, investing and financing activities of your business as it relates to inflow and outflow of cash. This translates to either positive or negative cash flow. With a focus on liquidity rather than profitability, it’s one of the single most important financial tools for your business. The statement provides a clear picture of how quickly cash is leaving the business compared with how promptly it is coming in. Have your bookkeeper/accountant provide this statement at least monthly.

There are two types of financial ratios which generally measure two areas within a company:

Liquidity ratios indicate your company’s ability to meet current obligations on time. With problems in this area, you have trouble paying your bills on time. It helps identify needs for more capital, more sales, better management or all of the above.
Profitability ratios measure your performance regarding your ability to generate revenues, net income and acceptable return on investment.

These are handy tools to use in your business to spot trends both good and bad. With these tools, you can have a better handle on cash management and forecast the effect on operations and profitability.

Goal No. 3: Build Long-Term Profitable Customer Relationships
Strategy a: Be the restaurant owner

In a previous blog, we discussed in length the concept of being the restaurant owner in managing your FBO business. Simply, this means getting out from behind your desk and managing by wandering around. Observe the workings of your FBO first hand. Praise your employees for the job they are doing.

But most importantly, just like the restaurant owner, meet and greet your customers from time to time. Show your CSRs and Line Service personnel, by example, how to create long-term profitable customer relationships by listening to the customer, calling them by name, and above all, thanking them for their business.

Strategy b: Communicate your Customer Value Proposition

Do you know what your Customer Value Proposition (CVP) is? It’s basically what you would tell someone about your business in a short ride on an elevator. It’s usually no more than a sentence, but it becomes your business mantra, your call to action.

As an example, here is one we developed for one of our clients, Heritage Aviation in Burlington, VT:

At Heritage, we are committed to quality service, the comfort of our customers
and a safe environment for their aircraft…and that’s Service You Can Fly On!

Not only is the CVP important for customers to understand, it also serves as a short, daily reminder about the level of service and commitment requested of all employees. In other words, it’s a service standard. Don’t be afraid to display the CVP in your FBO, publish it on your website and post it on your Facebook page.

Strategy c: Don’t forget the Cheese!

One of the customer retention strategies we touch on at our FBO Success Seminar is the concept of developing a memorable way for FBO employees to deliver an exceptional customer service experience. While most FBOs don’t tolerate mishaps on the ramp, why should they tolerate miscues with customers?

By standardizing your customer service training, you can consistently meet the needs of your customers, increase retention, and build the long-term profitable relationships you value.

At Aviation Business Strategies Group, we’ve developed a standardized training approach we call Don’t Forget the Cheese!

Simply, it’s a memorable way to help employees remember to do the simple things, like smile, even when they answer the phone; be professional yet personable; and above all, add a little something extra to each transaction. That’s the power of not forgetting the cheese!

Read Part 1: Our FBO Business Outlook for 2012
Read Part 2: Decreasing FBO Costs 2012

Let us know what you think! Please email John Enticknap at jenticknap@bellsouth.net or Ron Jackson at ron@thejacksongoup.biz.

Ron Jackson
Ron 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.

John Enticknap
John 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.

February 03, 2012

Decreasing FBO Costs in 2012

February 03, 2012/ AC-U-KWIK

Cash Flow and Controlling Expenses—Managing Your Business
(Part 2 of a 3-Part Series: Planning a Successful 2012 FBO Business Strategy)

By John L. Enticknap, Aviation Business Strategies Group

The buck stops with the guy who signs the checks.
—Rupert Murdoch

In the first installment of this series, we discussed our FBO Business Outlook for 2012. At the recent NBAA Schedulers & Dispatchers Conference held in San Diego, we had a chance to discuss this outlook and the current business climate with a number of FBOs in attendance.

Many we talked to agreed with our forecast of a slow uptick of around 2.5 percent average industry growth in 2012, with some individual FBOs experiencing up to 5 percent growth or even possibly more. We met a number of FBO owners and managers who indicated they were ahead of the 2.5 percent growth rate for 2011 and expect to do better than the 5 percent growth projection for 2012. And of course, some indicated 2011 was a flat year and they didn’t expect to do much better for 2012.

For this installment, part two of our three-part series, we want to discuss ways FBOs can better manage and even decrease their costs in 2012.

At our National Air Transportation Association (NATA) sponsored FBO Success Seminars, we talk in-depth on ways to generate more bottom line revenue. From growing fuel margins to lowering credit card interest rates, we analyze every operating element in order to maximize the efficiency of each transaction.

The basis for these seminars is our Aviation Business Strategies Group proprietary 10 Steps to FBO Success. You can review these steps on or website www.ABSGGroup.com.

For the purpose of this blog post, we will concentrate on the subject of Cash Flow.

Cash is King

Most business managers or consultants will tell you , “in my opinion, your business can increase cash flow by 5 to 10 percent by reducing operating costs.” Or maybe the “big boss" simply tells you to reduce costs—then walks away!!

The obvious way to do this is to cut overhead and the easiest way to cut overhead is to cut back on the number of employees. However, if you read one of our earlier blogs on this subject, you would understand why this is not such a good idea.

Instead, let’s look at your cash flow situation as one way to better manage your costs. Not to overstate the obvious, but cash is king. Without cash you can’t pay your employees or pay your bills! And depending on your credit situation with your fuel supplier, you may have to pay cash for your fuel deliveries.

Interestingly, a survey completed in 2009 by Intuit (the software company that makes QuickBooks) indicates that 22 million small businesses have overdue accounts for at least $1,500. That equates to 33 billion dollars in overdue cash!!

Cash Flow Case Scenario

Consider a hangar tenant with an overdue payment of $2,500 for a one-month rental. However, the tenant has not paid their hangar bill for 60 days and you’re now owed $5,000. (To make things worse, in good faith, you originally gave the customer a discount on the hangar in exchange for fuel sales this new customer would generate.)

Your accounting procedure calls for 30-day terms but you really didn’t worry about the bill until it hit the 60-day period! So after 60 days you are really owed $7,500 because you’re tenant is now behind two months, plus the current month you just billed. By the time you collect the original $2,500, the overdue amount can easily be five to six months past the original due date, which means the amount due should really be $15,000. Overdue accounts mount up fast!!

No one wants to offend a customer, or so goes the conventional wisdom. But we need to get over that notion. It is outdated and not part of today’s competitive business environment. You may fear hurting the feelings of those who owe you money, but you don’t need them for new business. That’s because they haven’t even paid for the old business! A business transaction is not completed until you get paid and the money is in the bank.

So what do we do about our overdue hangar tenant? As the owner of a multimillion dollar aircraft, one would think our hangar tenant is a business savvy corporate owner and is familiar with large financial transactions, borrowing money, and paying on time. So find out who pays the bills. Most likely it is not the pilot, although he may approve them. Talk to the CEO or the CFO, the person who signs the checks. It does no good to just talk to the pilot, who has no authority to sign the check. Just like our quote from Rupert Murdoch—the buck stops with the guy who signs the check!

Don’t be concerned with threats like “I’ll take my airplane to your competitor,” or ”I won’t buy any Jet A,” or “I’m leaving,” etc. This so-called customer is not really a customer because they don’t pay their bills. By the way, they’re most likely not purchasing any fuel either. If you have to, park the aircraft in the back of the hangar and demand full payment with a certified check or wire transfer. You can then move on to the better customers who value quality service at a fair price.

Want an idea to get attention for overdue bills? Rather than send these delinquent customers a regular overdue invoice notice, send them a vacation-style postcard. Put on it, “Wish we were here, but we can’t afford it since you haven’t paid your bill.” The card is public while it goes through the mail system of the company—it will get attention.

Collect your money—stay in business for the real customers.

Expense Management

How about expenses? It’s easy to say, let’s cut 10 percent! I’ve had bosses tell me that, or call me and say, “cut 5 percent of your employees.” This is no way to run a business.

When it comes to expenses, look at Zero-Based Budgeting. Zero-based budgeting requires that your budget requests be re-evaluated thoroughly, starting from the zero-base. This process is independent of whether the total budget or specific line items are increasing or decreasing.

Another tool is to competitively bid all your expenses. For example, simple office supplies purchases. Put a list together of what you need and send an e-mail or fax to all your local suppliers, like Office Depot, Office Max, Staples or better yet, your local small business office supply firm. They all want your business.

Note: Take the lead from your own customer base. Aren’t they seeking the best deal on fuel prices every day? You need to do the same thing with your vendors.

Here are a few actions you can take to cut expenses and maximize yours profits:

Put your own expenses up for competitive bids and use your best judgment
Create a monthly expense budget and stick to it
Never let expenses become routine
Benchmark your expenses to see trends from various vendors
Put systems in place to control expenses
- Set approval levels by expense category and employee
- Set the authority to approve all expenditures
Watch expenses by adding and tracking three key financial metrics weekly in your flash report
- Cash Balances
- Payables Balances
- Receivables Aging

Management Flash Reports

Now let’s talk about your Flash Report, Dashboard or Daily report, whatever you call it. First and foremost, you should have a Dashboard Report you can refer to in order to get real-time information on the metrics of your business. We discuss this in detail in our FBO Success Seminar.

Your report should include fuel pumped on the previous day, MTD and Budget MTD. It should also include the productivity of your maintenance shop, charter department and flight school. In addition to the financial metrics we mentioned above, you can include other easy to print reports from your accounting system. Let your bookkeeper be your “virtual CFO” who can regularly produce these reports—on-demand and without visiting your office.

Are your eyes on the money? If not, how can you be sure that you’re making any?
—Sam Frowine

Next in the Series:
Part 3: Increasing FBO Productivity in 2012

Read Part 1: Our FBO Business Outlook for 2012

Let us know what you think! Please e mail us at jenticknap@bellsouth.net

January 09, 2012

Planning a Successful 2012 FBO Business Strategy: A Three Part Series

January 09, 2012/ AC-U-KWIK

Part 1: Our FBO Business Outlook for 2012

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

Get your facts first, then you can distort them as you please. —Mark Twain

Recently we received a call from one of the major business aviation publications asking for our outlook for the FBO business in 2012. As writers, practitioners and consultants to the business aviation community, we are often contacted by the aviation trade press for our views on various industry subjects.

We have our ears and eyes glued to the FBO market, and recently completed one of our FBO Success Seminars for the National Air Transportation Association (NATA), so we have a pretty good pulse on the health of the industry.

Looking into the FBO Crystal Ball for 2012

First of all, in today’s political environment—especially with an election year upon us—it’s hard to get a good read on what’s going to happen in 2012 on a national level that will affect our FBO industry either positively or negatively. If you’ve watched any of the debates, you probably think ‘ol Mark Twain hit the nail on the head. You might as well wet your finger and hold it up in the air to see which way the economic wind is going to blow.

We can start by turning our attention to the cost of fuel because it’s one of the most watched components to running an FBO.

For 2011, the Platt’s (what fuel suppliers use to price Jet A) pricing index at the beginning of the year saw the Gulf Coast Pipeline Mean (GCPM) at $2.4738. By the time December rolled around, the GCPM posting was $2.4866 with the highest price occurring in May, when the GCPM topped out at $3.3239 per gallon. It is interesting to note that in the first week of 2012, the Platt’s index is up a little over 7 cents per gallon.

For 2012 we think it’s fair to say fuel prices are going to remain somewhat volatile and a range of $2.50 to $3.00 per gallon is going to be the norm. With nothing new to report on that front, expect more of the same general course for 2012. (Of course, a caveat is that the world economic situation needs to remain reasonably stable.)

Outlook for FBO Operations

As to actual operations, the best information comes from the FBOs themselves without all the filters from so-called experts. As mentioned, we recently completed another effective FBO Success Seminar in November. We gained a wealth of data from a diverse group of more than 25 attendees representing 20 various sized FBOs.

So what did they have to say?

They all experienced a reasonably stable business environment in 2011 with incremental growth in fuel sales as well as solid aircraft maintenance bookings. If you were to benchmark their growth with the National Gross Domestic Product (GDP) index for 2011, you would see similar numbers to what the attending FBOs experienced, which is a 1.9% increase on average.

Historically, the FBO business suffered significant lows in the 2008/2009 timeframe and since that period has seen small but steady growth. Of course, we’re still seeing some industry fallout from those lean and tough years, so keep in mind FBOs will not be getting back to the 2007/2008 business levels in the near term. This, again, tracks national business trends.

The Market for New Aircraft

Another leading indicator for aviation business recovery is industry forecasts for new business aircraft sales. Traditionally the demand for new aircraft picks up when companies operating business aircraft start to fly more hours and thus feel the need to either replace or expand their current fleet. Obviously, more flying hours equals more airplanes on the ramp equals more fuel sales. So tracking new aircraft bookings is a good idea.

Both Forecast International and Honeywell do not predict business aircraft sales to return to 2008 levels (1,313 units sold) until 2018! However, just for reference, the business aircraft production forecast for 2011 was 683 units with a rise to 728 units for 2012. Again, only a slight uptick, but an incremental increase is better news than a recessionary market.

The companies attending our FBO Success Seminar had similar concerns for the coming new year. They are not expecting anything new or earth-shattering that would help increase business growth.

Other Areas of Concern

Besides a less than robust business environment, the FBO community also has concerns about other areas which might adversely affect their profitability. These concerns include national business trends such as increasing regulations from the EPA and FAA; increasing labor costs including healthcare; and a national election year leading to sustained political gridlock.

In addition, FBOs are concerned about a potential trend of airport boards and authorities getting into the aviation service business and competing against existing firms, or not extending leases with reasonable terms.

So what’s our 2012 FBO business prediction? If your FBO sales increase 5 percent, you are a star! Based upon what the general business trends seem to be, a 2 to 2.5 percent increase would appear to be normal business growth. At the same time, most FBOs will not be adding new employees but instead replacing those lost to attrition. In addition, cost control will remain a high priority as will be increasing productivity. (Stay tuned for Parts 2 and 3 of this series for more on that.)

What about the big FBO networks? In 2011, every chain made some major expansion moves and worked to increase efficiency. (Signature just announced another FBO acquisition as we go to press.) It is reasonable to assume the chains will continue to consolidate the FBO industry. Remember, our national FBO industry includes fewer than 3,000 FBOs while the FBO chains combined represent a group of about 250 locations. Consequently, plenty of acquisition targets remain.

Decrease in Number of FBOs

Another industry trend we should all be concerned about is the continued loss of FBOs within the US. The most recent NATA Fact Book indicated in the year 2009 there were 3,138 FBOs in the US. In November 2010, that number decreased to 2,987. Now, at the end of 2011, there are reports of three more FBOs going out of business and no doubt there will be more to come. Will this be a continuing trend?

As mentioned earlier, there is still fallout from the massive 2008-2009 downturn coupled with the continued unsettled economy. In addition, bank loans have been called, credit has been tightened, leases have not been renewed under reasonable terms, and, to a minor extent, FBO consolidation continues.

Unfortunately, the business pressures FBOs have been under will continue in the coming years and managing a profitable FBO won’t get any easier. However, there are things we can do to affect the bottom line by decreasing costs and increasing productivity. Parts 2 and 3 of this series will discuss these opportunities.

Next in the Series:
Part 2: Decreasing FBO Costs in 2012
Part 3: Increasing FBO Productivity in 2012

Let us know what you think! Please e mail us at jenticknap@bellsouth.net

December 07, 2011

Not All Customers are Created Equal

December 07, 2011/ AC-U-KWIK

Or, Sometimes You’ve Got to Tell Them How the Cow Ate the Cabbage!

By Ron Jackson

Recently we completed our fall NATA FBO Success Seminar in Atlanta and we had a great turnout of FBO attendees representing locations from as close as the Atlanta area to as far away as Grand Rapids, Michigan, and points in between. We were fortunate to have as one of our sponsors AC-U-KWIK, and Jodi Espinoza made a very informative presentation.

One of our discussion topics at the FBO Success Seminar is how to work with customers who want everything but are not willing to pay for anything. Sound familiar?

The old adage “The Customer is Always Right” is usually true. However, every once in a while you run across customers who break this general customer service axiom. They seem to know everything, want everything, and want it now. Unfortunately, these customers usually don’t purchase a lot fuel, if any. Yet we manage to spend an exorbitant amount of time, resources and energy trying to make them happy.

My business partner in Aviation Business Strategies Group (ABSG), John Enticknap, knows all too well that a customer is not always right, and that sometimes you just have to take matters into your own hands. In one case, the customer was an Army Lieutenant Colonel (LTC) and John was the pilot of a Huey Helicopter doing Command & Control (C&C) reconnaissance during the Vietnam War.

“We were out flying, doing some C&C work, and I kept checking the fuel gauges when the yellow caution light went off indicating 20 minutes of fuel remaining,” John recalled. “I told the LTC we needed to get to the fuel dump to refuel. He said we’ll go in just a minute.”

Warrant Officer John Enticknap, center, with his Huey Crew in Vietnam, 1969John said five minutes went past and they’re still on the C&C point, and so he reminded the LTC of the fuel situation. “Just give me another minute or two and we’ll go,” the LTC told John. After five more minutes, John told the LTC “We need to go now,” pulling the ship’s nose around for a dead-head run to the fuel dump, while the LTC was yelling expletives from the rear of the aircraft.

“As we approached the fuel dump, I radioed for a direct approach instead of the customary routing,” John said.

“Good thing. We were flaring to a landing point, and we’re about 10 feet off the ground when poof, the engine quit and we went straight down doing a hovering autorotation.”

“What the heck happened?,” the LTC exclaimed, picking his jaw up off the floor of the Huey. “We ran out of fuel, sir,” John exclaimed.

After refueling and going back on C&C again for another two hour sortie, John told the LTC it’s time to get fuel. To which he replied, “Let’s go now…I can’t handle another one of them landings.”

Of course, this is an extreme situation, but as my dad always said, “sometimes you just have to tell someone how the cow ate the cabbage.” (Read the origin here.)

I wasn’t sure about the origins of this saying, but the way Dad used to say it, I knew exactly what he was talking about. Sometimes, you just can’t afford to put up with all the nonsense.

When John was President of Mercury Air Center’s chain of FBOs, he would tell his General Mangers not to put up with the non-paying habitual complainers. “It’s not worth it,” John explained. “I told my GMs to invite these types of customers to take a walk across the field. These folks are not really customers. I’d rather have my competition deal with these types of individuals so I can concentrate on wowing my really faithful, as well as profitable, customers.”

Giving up a customer sounds contrary to good business sense. But sometimes it is the best business decision. Your goal should always be to seek out and nurture long-term profitable customer relationships. They key word here is “profitable.“

I'd like to hear from you regarding how you handle these types of customers. Please email me at Ron@thejacksongroup.biz

Ron Jackson
Ron 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.

November 09, 2011

Your Airport Lease: The Lifeblood of Your FBO

November 09, 2011/ AC-U-KWIK

by John L. Enticknap

If you build that foundation… the business foundation, and the experience foundation, then the building won't crumble.—Henry Kravis

Like most FBO owners and operators, you probably wonder what your FBO is worth. To answer this question, you should start by asking another important question: What is my lease worth? That’s because they are inherently linked.

If you are thinking about capitalizing your investment or looking to sell your business, the first thing a banker or a buyer will assess is the value of your lease, especially the length and terms.

That’s why it’s such a critical component when figuring the intrinsic value of your FBO. You may have just put millions of dollars in building a fantastic infrastructure, but unless you have negotiated a long enough lease to amortize your investment, it’s easy to get upside down with little or no wiggle room.

With a long-term lease of at least 20 or more years, you have great value. However, if you have less than five years you have little or no value.

(Side Note: One of our most popular courses we conduct at the NATA FBO Success Seminar is “Developing a Favorable Airport Lease”. During this session we discuss many of the important elements of an FBO airport lease agreement. If you’re interested, the next one is in Atlanta November 8, 9 and 10. Contact NATA at www.nata.aero and look under Events, or call 800-808-6282)

For the purpose of this blog, let’s hit a few of the highlights we discuss in our seminar.

Length of Lease

First and foremost, the longer term you can negotiate the better. Let’s say you have negotiated a 20 or 25 year lease. You should also negotiate at least one additional option period of five years; two option periods would be even better. The goal should be to have at least 30 years on your lease including the option periods.

It is not unusual to get longer terms at some airports for large investments in facilities. I’ve seen leases of 40 and even 50 years. ‘The Longer the Better’ should be your mantra. When you are negotiating lease extensions, try to get at least back to this sort of term. You’ll need it to finance capitol projects and have a reasonable depreciation term.

However, in order to get this type of long-term lease, be prepared to invest in facilities and/or upgrades. Traditionally, the length of term is commensurate with a larger capital investment.

Big/Commercial Airport Lease Terms

So why are the big airports giving only five year leases and reliever and general aviation (GA) airports giving longer term leases?

During the recently held Airports Council International (ACI)–North America meeting in San Diego, there was a session titled “Fixed Base Operators and Airports—Strategies for a More Successful Partnership”. A detailed discussion was conducted concerning lease term length. It seems there have been some divergent opinions between some airports and FBO’s concerning lease terms.

At a few large airports, five year leases are all that have been granted. Some of the new FBO leases, included existing facilities, have high rental rates and gross revenue fees being paid to the airport authorities. In many of these cases, renovation of existing facilities was all the capital investment required by the FBO. Not surprisingly, General Aviation activity at these selected airports was not the priority for the airport authority. That’s because commercial airline operations took precedent at the vast majority of the operations.

In all appearances, both the FBO community and the airport community had a very open and fruitful discussion at the ACI conference. The results being that both parties appear to understand the lease term issues from each other’s perspective.

For the predominantly General Aviation airport sponsors, both parties understand that to get infrastructure built, a long-term lease is required. Fortunately, this was not difficult to appreciate.

During a recent meeting I had with one Airport Director, he fully understood the issues for the FBO. He realizes that for the FBO to be successful--to provide the high quality services that the airport and customers desire and make a reasonable profit--the FBO must have a good lease with a good term.

This practice will attract superior FBO operators who can make capital investments in hangars, new business operations and employees.

The All-important Minimum Standards Clause

This same airport director also mentioned that one of his first priorities, before commencing lease negotiations with an FBO, was the development of new up-to-date Minimum Standards provision to be inserted into the new lease.

I’m sure that many (most) FBO operators have Minimum Standards written into their lease—at least we hope you do. Minimum Standards are your basic protection for your business. In addition to your lease, they allow your FBO to operate within defined parameters.

Minimum Standards allow you to know

What services you must provide
What services you may provide
What defines a full service FBO
What your investment and facilities requirements must be

More than what defines your business, Minimum Standards protects your business from inequitable competition. If another FBO wants to operate at your airport, they must provide the same services, the same investment and the same facilities.

Since 1938, Congress has passed laws to improve safety and efficiency at Airports by, among other things, promoting competition among aeronautical users. This includes FBOs.

In order to promote competition, the Sponsor Assurances lease provision prohibits any party from obtaining or maintaining an exclusive right to perform services at an airport, and requires Airport Authorities (also called Sponsors) to not unjustly discriminate against aeronautical users of the airport. Minimum Standards, therefore, are your safeguard. It allows for fair competition and makes sure that your FBO will continue to be successful.

Other Lease Issues

These two issues are just examples of important items an FBO lease covers. Here is a list of other issues we cover at our FBO Success Seminar regarding leases:

Term and option years
Operating rights
Payments: rental, gross revenue and out years to include escalators
Building/ramp maintenance responsibilities
Assignment-sale clause
Termination-from FBO and Lessor
Non-discrimination clauses
Improvements, new buildings, renovations
Insurance, Indemnity, Hold Harmless
War & National Emergency
Right of Entry
Environmental Liability

The airport management and the FBO owners make success together for their mutual benefit. As we mentioned in our premise, the lease is your foundation, your value in the business and ultimately your protection.

If you have a particular question or would like to discuss a lease issue, please let me know. We would like to hear from you. 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.

September 22, 2011

What’s Your FBO Insurance Story?

September 22, 2011/ AC-U-KWIK

A better way to impact your bottom line!

Insurance for FBOs is a necessary business expense with a huge impact on your bottom line. Wouldn’t it be nice if you could effectively manage this activity and even reduce the expense?

This is one of the subjects we cover in detail at our next NATA sponsored FBO Success Seminar, scheduled for November in Atlanta. However, for now, here are some ideas you can incorporate into your business.

If you’re a medium-sized FBO, we would not be surprised to hear that you are paying $1,000 per day for your insurance package. This is one of your more critical expenses; the one you pay all the time and hope you never have to use. So what can you do to actively manage this activity, not to mention the expense?

One of the key points is get to know your insurance broker on a first name basis. You need to get to know your broker. Have your broker visit your FBO, not just at renewal time, but at regular intervals. It’s your broker who can be the person who saves you money.

Yes, your insurance broker makes a fee off your insurance, but you have to establish a level of trust. That’s because one of your broker’s major jobs is to tell the insurance underwriters about your business, including the risks, accident history, training programs and your plan to manage those business risks.

Step 1

The key to your broker’s better understanding of your businesses begins with developing what we call Your Insurance Story. A main ingredient of your insurance story is establishing a comprehensive preventative safety and training program. Yes, it is more than just training your line service technicians in fuel quality control or fuel and ramp operations.

Whether you use the NATA Safety 1^st program or another program, it’s a first step in the development of a strong company culture fueled by constant operational improvement and active participation to reduce risks.

Step 2

So how do we put this important first step into action?

Senior management must have a sincere commitment to establishing an active risk management program.
Pick a training program and stick with it—don’t just teach it, put it into practice.
Assign the training responsibility to active-hands on employees
For Line Service—assign a Senior Experienced Supervisor.
— The Customer Service component must have its own training program.
— A&P’s must have more than technical training; they also need customer interaction skills.
— If you employ Pilots and/or Flight Instructors, they need to be intimately involved in your training
programs. Flight Operations insurance coverage is some of the most expensive in your insurance
package.

Step 3

For the third step, you need a good internal audit program. There are many tools out in the industry which can assist you in developing an internal audit program. This is where your training programs are tested, your employees are seasoned and the company’s policies are validated. Where do you get an internal audit checklist? Talk to your insurance broker or talk to the fractional aircraft operators. For instance, NetJets’ web site posts the FBO Standard of Service document (www.suppliers.netjets.com)

Then follow these steps:

Review your training program and develop your own checklists.
Talk to your insurance underwriters.
Conduct selected internal audits at least quarterly.

Step 4

As part of your good operating practices, you should have, or be willing to develop, a Standard Operating Procedures (SOP) guide. I know, you’re a small company and you don’t want any of that “big company” and “big bureaucracy” feel in your own firm. In plain terms, you want to keep it simple!

However, in the aviation world, you need to operate a tightly run ship. It is a precise business, involving the care of multimillion-dollar aircraft. Therefore, you have to use standardized procedures. The checks and balances that are built into aviation are what keep our operations safe.

No matter what size your company, use standard training and operating procedures. This is no different than the standardized accounting practices that you must use to keep your books, file your taxes and pay your bills. What happens on your ramp needs to be standardized also!

So what will keep your insurance broker happy and also allow you, as the manager/owner, peace of mind? It’s knowing that your firm is operating well, even when you’re not in attendance.

Step 5

You need to conduct regular external audits. Internal audits are not enough.

The company needs an unbiased “third party” audit.
It eliminates the “fudge factor.”
It provides a true evaluation and validation of your own internal audit program.
It helps build insurance story to brokers.
It results in lower premiums, fewer costly accidents.

Your employees, probably the most important part of your safety program, need to have guidance and empowerment to have the confidence to enforce good operating practices.

Step 6

Therefore, give the power to your employees to enforce the standard operating practices. If they see unsafe operations, they should have the power to stop those operations.

As the old saying goes, “do it right the first time.” For example, your SOP requires that you have a tug driver and two wing men to tug an aircraft out of a hangar. On Sunday morning, a customer wants his aircraft and there is only a tug driver available, what does the supervisor do?

If you run a good operation, the aircraft does not get out of the hangar until the SOP requirements are met. Which would you rather have, a damaged aircraft or a customer who can be educated on the correct tugging and towing procedure? An extra employee is less cost to your business than dealing with damage claims.

In addition, your employees need to be recognized for their good works.

Develop a good rewards program.
Establish achievable goals and stick to them.

The Five Most Important Tips for Effective Recognition

You need to establish criteria for what performance or contribution constitutes rewardable behavior or actions.
All employees must be eligible for the recognition.
The recognition must supply the employer and employee with specific information about what behaviors or actions are being rewarded and recognized.
Anyone who then performs at the level or standard stated in the criteria receives the reward.
The recognition should occur as close to the performance of the actions as possible, so the recognition reinforces behavior the employer wants to encourage.

So what is your insurance story? It is a concise document that details your actions, training, management culture, audit results and most of all, your accident/incident history. Your investigation of the incidents to find the root cause, and what you’ve done to prevent future incidents: this is what the agents and underwriters want to know. Tell your broker and tell your insurance underwriter(s).

There are many do’s and don’ts for insurance. But the above actions and efforts will make your company safer and reduce your exposure. And, as a result, you will reduce your claims and reduce your costs. Make sure your employees enjoy the fruits of their labor and reward them.

I’d like to hear from you—email me at jenticknap@bellsouth.net

John Enticknap

August 31, 2011

Use Good Customer Service Ingredients, and the Proof Is in the Pudding

August 31, 2011/ Ron Jackson

“‘The proof is in the pudding’ is a popular figure of speech meaning ‘the quality, effectiveness or truth of something can only be judged by putting it into action or to its intended use.’” – The Word Detective

We’ve all heard the phrase, the proof is in the pudding. This expression dates back to the early 1600s and is really a derivative of an expanded phrase: The proof of the pudding is in the eating.

This, of course, makes perfect sense because tasting the pudding determines whether it is good or bad.

And so it is with delivering a great FBO customer service experience. You start with the best ingredients and follow the recipe to success. The recipe is very simple:

An ounce of sweetness in the form of a sincere smile
Two heaping tablespoons of caring
One generous cup of reliability and dependability
And a pound of perceived value

Mix completely, and serve.

Now, all you have to do is ask your customers to find out if your pudding — or their experience — is to their liking. That’s why you should have a good way to collect feedback from your customers through a short customer service survey.

When I say short, I’m talking about a maximum of five direct questions regarding your deliverables. Here are some examples:

Quality and reliability of line service
Accuracy and dependability of the customer service representatives (CSRs)
Timeliness of response to customer service requests
Cleanliness of the facilities, especially the bathrooms
Evaluation of the value received

Always add what I call the bonus question: Would you recommend our FBO?

This question is really the most important. It is a key customer service metric, and, if you’d like, it is the litmus test of whether your pudding — the customer service experience — hits the mark or needs some extra ingredients.

Another Way to Test Your Pudding

Of course, customers can be too nice at times and might not want to offend you by being overly critical in a survey.

You should also look at a more definitive metric to see if your hard work at delivering an exceptional customer service experience is really paying off.

A loyal, happy customer remains a customer for a greater length of time. So you should be tracking your customers to make sure they are coming back to your facility every time they travel to your destination. You can use a flight tracking service to monitor incoming flights.

Your line service personnel should become familiar with regular customers’ aircraft registration numbers and be alert when tracking inbound flights to your airport and surrounding airports.

If you haven’t seen a regular customer in a while, pick up the phone and call to learn why. If your line service personnel notices a regular customer going to a competitor, again, pick up the phone and find out what you might have done wrong.

Source: Strativity Group, in partnership with Customer Service Experts.Research shows that most unsatisfied customers won’t tell you there is a problem before they jump ship. They simply change their buying habits. So you need to know why they made a change and why they became unhappy with your service.

Loyal Customers Lead to Financial Rewards

As the chart indicates, a happy customer is a loyal customer and stays with you for a longer period of time. A satisfied customer also tends to spend more and, thus, take on more fuel at your facility.

And oddly enough, a satisfied customer does not need incentives or discounts to continue being loyal. In fact, they do not mind paying a small premium to be treated well.

In the end, the payoff for delivering a truly memorable customer service experience is a contingent of loyal, highly engaged advocates who will recommend you at the drop of a hat.

So it really does pay to include quality ingredients in delivering a good customer service experience. The proof is in the pudding!

If you have some good customer service ingredients you’d like to share, please email me at Ron@thejacksongroup.biz.

Note: This blog was inspired in part by a Bloomberg Businessweek Research Services article titled How to Achieve a Great — and Profitable — Customer Service Experience.

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.

August 12, 2011

When Negotiating the Best Fuel Supply Agreement, Preparation Is as Important as Price

August 12, 2011/ John Enticknap

“You hit home runs not by chance but by preparation.” – Roger Maris

Your fuel supply agreement is one of the most important contracts in operating a successful FBO. Your lease with the airport authority is what puts you in business, but your fuel supply agreement is what keeps you in business.

Because your fuel supplier agreement regularly comes up for renewal, do not just go out and get a “free” dinner with a fuel supplier and sign on the dotted line! If you want to know whether or not you have a competitive agreement, you’ll need to prepare, do some research and maybe invite several suppliers to submit proposals. As Roger Maris said, preparation will help you hit that home run.

There is a lot more to a fuel supplier relationship than just purchasing fuel. You are dealing with substantial costs that affect operating expenses and have an impact on your:

Cash flow
Balance sheet
And, most of all, the profitability of your business

Yes, profit is great. That’s why you are in business. Don’t forget your fuel supplier is in business to make a profit too. You need balance in your agreement to ensure a winning contract for both parties.

In our NATA FBO Success Seminars, we teach a course about negotiating a favorable fuel supplier agreement. In this course, we also discuss how and when to buy aviation fuel. Here is an overview of some of the elements to address in a fuel supply agreement.

Be Prepared with Platts Oil Price Data

First, of course: What is the fuel going to cost? In order to answer this question we need to understand how world fuel markets work.

No doubt you hear all the time on the news what the price of crude oil is doing. As you know, it has been all over the place but mostly up, up, up — with an occasional downward correction. The price of crude drives jet fuel prices, but it is also affected by supply and demand, speculators, inventory, etc. So how do all the world buyers keep track?

The Platts Oilgram Price Report published daily by McGraw-Hill includes the Platts Jet Fuel Index. The fuel price indices are published worldwide with nine regional segments in the United States alone. There are also indices for Europe, Middle East and the Far East.

For general aviation, each week, the daily U.S. Jet A index prices are averaged. The change in the average price for the week generally is posted on a Tuesday, and your Jet A fuel price changes are calculated by the change in the average change for the week. You may purchase a subscription to this information from McGraw-Hill. (It is expensive.) A free source of Jet A pricing information and changes is the IATA web site, which maintains the Jet Fuel Price Monitor and Fuel Price Analysis.

Making the Numbers Work

Because jet fuel is priced based upon a Platts index, ask your potential supplier to quote a fuel price based upon a nearby index. For example, we can choose the Gulf Coast, New York, Los Angeles or another available index.

Given that the fuel supplier needs to make some money, it will quote a price based upon a Platts index, plus a differential (the supplier’s profit margin). Ask several suppliers to quote a price based on the same Platts fuel price index for a specific date, plus a differential. Now you can measure each quote on an apples-to-apples basis.

Say your business is doing $5 million per year in fuel sales, and you are paying anywhere from $125,000 to $185,000 per year in credit card fees that can range up to 4 percent or higher. How would you like to save $10,000, $20,000 or even $30,000 per year on these credit card expenses?

Believe it or not, you can realize this kind of savings when you negotiate your new fuel supplier agreement. Yes, you may negotiate the best arrangement for credit card fees paid vs. payment terms. We like to call this free money! This savings goes right down to your profit line.

In addition, did you know that until recently, you were paying on average $0.41 per transaction for each debit card transaction? This fee just dropped to $0.21 in July!

When you ask various suppliers for a fuel proposal, credit card fees and payment of due amounts are part of the competitive nature of your agreement. By getting better rates on your credit cards and educating your employees on the best card to use, you can save substantial money for this expense. Again, free money!

Creating Cash Flow

When you have to purchase a load of jet fuel, you either need to have cash in hand or, in short order, the cash to pay for the load. That’s $25,000 or more.

If you have collected your accounts receivable and reconciled your credit card payments, then you’re in pretty good shape. However, if it happens to be Friday, the payroll is due, and your insurance payment is due, then, all of sudden, you’re short on cash.

As part of your fuel supply agreement, you need to negotiate favorable credit terms. Of course you need to provide financial statements to support a credit line, which is no different than when you apply for credit from your local bank.

These are just a few of the terms that affect your profitability. You should also prepare to negotiate these other components that are part of a comprehensive fuel supply agreement:

Marketing support
Equipment leasing and maintenance
Incentives to make a change in suppliers
Pricing for 100LL fuel
Transportation fees
Contract fuel and other issues vital to your success

All these issues affect the cost and benefit to you and your fuel supplier. As the FBO owner, you should evaluate proposals from various suppliers to get the best agreement. Remember Roger Maris. Preparation is the name of the game when working toward a balanced fuel supply agreement.

If you would like more information or assistance in developing a favorable fuel supplier agreement, please let me know. In addition, the National Air Transportation Association (NATA) is a great resource. We will be covering this subject in detail at the next NATA FBO Success Seminar: Fuel Summit 2011, Nov. 8-10, Atlanta.

We would like to hear from you. Give us your comments. You can call me at 404-867-5518, email me at jenticknap@bellsouth.net, or go to our web site for more information: www.absggroup.com.

John Enticknap

August 01, 2011

Lessons of $1 Hot Dogs Help FBOs Cut the Mustard

August 01, 2011/ Ron Jackson

Frankly Speaking, FBO Customers Must Relish Their Surroundings, Be Happy and Perceive Fair Value

As a red-blooded American, I love hot dogs, apple pie and baseball. Being from the Dallas area, I’ve been following the Texas Rangers through thick and thin for more than 20 years. Mostly it has been thin, though the Rangers made it all the way to the World Series last year for the first time in franchise history.

When the newspaper hits my driveway at 6 a.m., I read the sports section from stem to stern and go over the box scores and team stats.

Recently, I read a sidebar article about Dollar Hot Dog Night at the Rangers’ stadium. On Wednesdays when the Rangers are in town, they cook some 65,000 hot dogs for hungry patrons. At a buck each, the promotion attracts a lot of families to the game, and the conies are quickly snatched up!

The Art of the Deal

I’m sure you have your favorite sport, and if it’s baseball, you know how a hot dog with your favorite beverage tastes on a warm summer night around the diamond. It hits the spot! But something else is going on at the ballpark.

In the article, the writer asks a university professor for his opinion on why a $1 hot dog attracts so many to a game when patrons can have all the hot dogs they want for a lot less money by buying them at a supermarket and eating them at home.

His answer, posted in the Dallas Morning News, is what spurred me into writing this blog post.

According to Ernan Haruvy, a management professor at the University of Texas at Dallas, a perceived deal, such as the $1 hot dog, depends on several factors, including:

Your physical surroundings
The customer’s mood
What the customer believes is a fair value for the transaction

OK, that all sounds logical because the customer is at the ballpark; therefore, the surroundings are fun. Secondly, because a day watching baseball is better than a day at work, the customer is probably in a pretty good mood. And lastly, $1 for a dog that usually costs $4 seems like a relatively fair value.

But what does this have to do with an FBO?

Play Ball!

In previous blog posts, Are You the Restaurant Owner; Do You Feel Lucky; and Don’t Forget the Cheese, we discuss what is important to customers when they choose a particular FBO.

First of all, the physical surroundings need to be pleasant enough that they don’t cause a distraction. The ramp and equipment need to be neat and tidy. Line-service personnel should use crisp ushering techniques to guide the aircraft. The facilities, particularly the bathrooms, need to be as clean and sparkling as possible.

Next, from the time the customer comes onto the ramp to the time for departure, it’s everyone’s job to create an atmosphere that keeps the customer in a good mood throughout the transaction. Customers who fly on private and business aircraft are used to getting good service wherever they go.

And finally, when the customer goes to pay the ticket, it’s important that he or she truly believes it represents a fair value. Remember, just because you may have offered a volume fuel discount doesn’t mean the customer flies away feeling like he or she received a fair value.

For the type of customer that you want to attract and keep, receiving a fair fuel price is just part of the equation. If you failed to deliver an exceptional customer service experience, chances are your facility will not be remembered, and you will not get a recommendation.

So the next time you bite into a red hot coney, remember these three simple principles of pleasing a customer:

Maintain good physical surroundings.
Keep the customer in a good mood.
Give the customer a fair value.

If you have had success in pleasing a customer, please let me know the particulars by emailing me at Ron@TheJacksonGroup.biz.

Ron Jackson

July 12, 2011

Municipalities Competing with Private FBOs: Fair or Foul?

July 12, 2011/ John Enticknap

As many of you are aware, over the past couple of years there has been an effort by a number of municipal airport managements in the United States interested in entering the aviation services business where private enterprise providers already exist.

It’s a political hot potato to be sure. No one is suggesting that municipal airport-managed FBOs should not exist. There have always been airport-managed FBOs providing essential services at small and large airports, and for good reasons.

The controversy arises when a municipal airport authority decides to either compete with or edge out an existing private FBO enterprise. This begs the question: Is it fair, or is it foul? To answer this question, let’s examine both sides of the issue.

The Case for Municipally Run FBOs

Here are some background statistics from the 2011 NATA general aviation fact book:

Total number of civil private-use airports: 14,353
Total number of civil public-use airports: 5175
Civil public use Part 139 airports: 551
Civil public use non-Part 139 airports: 4624
Total number of FBOs in the United States: 2987
Approximate number of FBOs within chain operators: 250

As we can see by the above statistics, there is a very large number of airports and a relatively low number of FBOs. Without going into details, for airports with low traffic figures that cannot support a profit-oriented FBO, municipal airport management can provide essential services — fueling, terminal operations, tie downs and hangars. Our general aviation industry would not operate efficiently if these services were not available.

The statistics above also show that the FBO business continues to be fragmented, and major consolidation will continue to occur. Add to this the fact that only about 8 percent of the FBOs in this country are part of a network or chain. In addition, the vast majority of the 14,353 civil private airports are unable to support an FBO. At these airports, the operator of the airport must provide the essential services.

The Thin Gray Line

In some recent incidents, some municipal airport authorities are muddying the waters by threatening free enterprises. With reduced budgets and reduced business, they are now looking at getting into the business of offering private aviation services as a way to increase income and defray operating costs.

What is most troubling is that at some airports, the management is trying to displace existing private businesses.

Here are some scenarios that seem to be playing out:

Existing privately held FBO’s lease comes to end. Airport authority takes over FBO operations.
Municipal airport managements builds FBO with federal funds to compete against existing privately owned FBO.
Existing FBO’s long-term lease is coming to end. Airport wants to build new FBO with federal funds to displace FBO. Considers federal funds “free” money.

Obvious questions arise. Should a government entity be allowed to enter an existing free market and compete against an existing private sector FBO? Should a municipal airport authority be allowed to eliminate private enterprise under circumstances listed above and become the sole source of providing a product or service where a private enterprise is available and can more than qualify?

So What Are We to Do?

There are no easy answers. Sometimes when government takes over there is not much you can do. The government has sovereign immunity, and many attorneys will tell you that you do not have a realistic chance to win a lawsuit. In the majority of cases, litigation ends up being a costly waste of time.

Yes, you can do plenty to protect your business. But sustaining your FBO with a satisfactory long-term lease is not necessarily a purely business proposition. Rather, it requires an effort to pull together your political, business and legal skills.

First and foremost, you must participate in your airport and business community. That means being a part of and taking part in the airport management processes no matter what kind of management structure the airport operates under, whether run by the city, airport authority or county municipality. You, as a tenant on the field, should be attending all public airport meetings, get to know the manager and board members, be part of the local business community and be involved in supporting local civic organizations.

These activities will give you information! You can get to know the thinking of the airport personnel, know the finances of the airport and know the political movers and shakers. By having knowledge of the local political and business community, you can get a sense of what you need to do to extend your lease.

Further, you should have an idea of the temperament of the airport authority. You should have a sense for whether it will negotiate a new lease, whether the airport is willing to have a Request for Proposals (RFP) process and what the “hot buttons” or issues are for the airport.

Get Help!

You might want to engage your attorney, who is no doubt a major part of the local business and political community. Engage some experienced consultants in the industries who have dealt with these complex issues before.
Contact NATA. This organization is very involved in this issue. It has already engaged government officials on several levels to support private FBO businesses.
Contact your senators and congressperson to support the Freedom from Government Competition Act, H.R. 1474/S.785. This bill removes the unfair advantage government has by subjecting commercial activities performed by government entities to market competition to benefit the taxpayer.

We have to be actively involved in our businesses and not only on the day-to-day operational issues. You must also be involved in the local business and political community. These are not easy issues to deal with. Remember, airports are businesses also. They are always seeking more traffic count and federal funding and dealing with many environmental and political issues themselves. Be part of the solution for their issues.

Remember, don’t be the FBO owner who wonders what happened. Be the owner that makes things happen!

What do what you think of this issue, or what you have done to protect your FBO as a going concern? Let us know in the comments, and email me at jenticknap@bellsouth.net.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

June 29, 2011

Reeling in Customers: Either Fish, or Cut Bait

June 29, 2011/ Ron Jackson

I have returned from a much needed vacation to the Canadian outback where I enjoyed a week of fishing with no phone, TV or newspaper.

Every year, I travel to the far western reaches of Ontario for our annual fish camp outing that has been a part of my family tradition since 1961, when my father first went with his buddies to the same waters we fish today. I started going with my dad in 1984, and now his 16-year-old great-grandson, my grand nephew, is representing the fourth generation to wet a line in these great Northern waters.

On this most recent outing, I started to think about writing a blog post based on the similarities between fishing for dinner and casting a net for new FBO customers.

Planning the Trip

As many times as I have gone on this fishing trip, there is still a fair amount of planning to do. Same goes for developing a sound marketing plan to increase your FBO business.

Blogger Ron Jackson and 16-year-old grand nephew Chas holding a 20-inch Walleye on a Canadian fishing trip.As author Stephen Covey says in his book The Seven Habits of Highly Effective People, you have to begin with the end in mind. Because I’ve been on this trip before and have had success in hauling in some nice fish, I can visualize my goal: A 29-inch, 10-pound Walleye!

Same goes for the FBO business. You know the type of valued customer you want to attract, so you should visualize reaching your goal, whether it’s five more new customers or 50. And you should be updating these goals annually.

Research shows that a business can lose up to 30 percent of its customer base annually due to attrition or churn in the marketplace. Factors include companies downsizing and selling their aircraft; companies going out of business; mergers and acquisitions; new flight destinations; and the worst case scenario, defection — losing a valued customer to a competing FBO.

New customers are paramount to keeping a healthy balance sheet.

Fish or Cut Bait

You have set your goals, you have written your business and marketing plan, and you have followed your map to your destination. Now you have to ask yourself, “Are you going to fish or cut bait?”

Sometimes we can take planning and strategizing too far. We can call too many meetings and second-guess our way to being highly ineffective. As one of my bosses at a Fortune 500 company years ago said, “If you don’t get started, you’ll never finish.”

And so it is with catching fish or a new customer. If you don’t get your pole in the water, nothing will happen.

Years ago, I read a book titled Bunkhouse Logic by Ben Stein. The premise was about the same. You can’t win at anything unless you first get started. You’ve got to start the cattle drive and you’ve got to finish the cattle drive, point A to point B. Also, if you want to win at poker, you first have to get yourself to the table. In other words, you have to get your feet wet and sometimes force yourself to get started.

Using the Right Bait

Catching a good customer on your terms is a far better scenario than catching a customer on his or her terms. Remember the blog I wrote titled Building Long-Term Profitable Customer Relationships, Part 2: Do You Feel Lucky?

In this post, we discussed the danger of attracting the wrong customer by subjectively lowering the price of fuel. Remember, you have to use the right bait in attracting the right profitable customers if you want to keep them for the long-term.

You have to give them a reason for choosing your FBO by providing them with a sense of delivering a real customer value proposition (CVP). For instance, done properly, the CVP can be the right combination of clean and attractive facilities, fair fuel prices and a knock your socks off customer service experience.

Now that is baiting your hook with something more than corn from a can.

Keeping Your Fish Healthy and Happy

When a person goes to a fish camp in Canada, he is there for primarily one reason: catching fish. So the fisherman is up at the crack of dawn and fishes all morning and then from late afternoon until sunset, which is usually after 9:30 p.m. this far North.

Therefore, having a live well in the boat is a great asset so the fish stay fresh.

So it is with attracting new customers to your facility and keeping them. You have to figure out a way to keep them happy and satisfied while they are in your facility.

In my post Building Long-term Customer Relationships, Part 3: Don’t Forget the Cheese! I talk about delivering a memorable customer service experience that will keep your customers coming back for more. Here is a recap:

The use of Cheese in our proprietary customer service training course serves as a key reminder to CSRs, as well as other employees, to practice exceptional customer service. A few fundamentals of great customer service are:

Smile. Remember to say, “Cheese,” to yourself, as if someone were taking your photo. Even when answering the phone, put on a smile, and the customer on the other end will sense they are talking to a happy person.
Add a little extra when delivering customer service. Cheese represents the added touch, the little extra that puts a smile on the customer’s face and makes them keep coming back.
Remember a customer’s name. In the FBO environment, adding cheese can be as simple as remembering a customer’s name. Most people react positively to being called by their name and are impressed when you remember. Are you the restaurant owner?
Go the extra mile. Going the extra mile could be something as simple as showing the customer where the pilot lounge is located instead of pointing in the general direction.

If you’ve had success in casting your net for customers, I’d like to hear from you. Please email me at Ron@thejacksongroup.biz.

Ron Jackson

June 20, 2011

When Pricing Fuel, Use Numbers to Your Advantage

June 20, 2011/ John Enticknap

“You can't do today's job with yesterday's methods and be in business tomorrow.” – Anonymous

We know the pricing game all too well. Gas stations and auto dealerships have conditioned us to react to pricing of a product or service by offering a perception of a good deal.

In the FBO fuel pricing arena, we tend to play the same game.

In a previous blog post, FBO Fuel Pricing: Seeking a Silver Bullet, we discussed some pricing theory and came up with some ideas to find the silver bullet — which is the best price.

In the FBO business today, some customers call ahead for fuel prices, seek to use contract fuel suppliers and try to negotiate when they arrive on your ramp. We would like our customers to believe that our prices are well thought out and not just some arbitrary posted numbers.

Knowing how customers interpret numbers can help your FBO make stronger pricing decisions. What we would like to discuss here are some thoughts that go through people’s minds when they are looking to purchase. Consider these ideas drawn from “The Importance of Numbers,” written by Geoff Williams and published in Go magazine:

Make Your Prices Easy to Remember

If you make your prices easier to remember, comparison shoppers should think of your FBO more readily. Your potential to complete a sale increases.

The numbers 0 and 5 are remembered easily. For example, $4.70 for a gallon of fuel is easier to remember than $4.72, and $5.50 sticks better than $5.58.

Precise Numbers Feel Firm

Precise numbers seem less flexible to consumers than rounded numbers, according to a study by a social psychologist named Matt Wallaert. If you price your fuel at $6.00 per gallon, your price might seem flexible. If your price is $6.23, it appears to be non-negotiable.

Minds Play Tricks

Our minds play tricks, according to DePaul University professor and pricing expert Tim Smith. Auto gasoline priced at $3.699 is really $3.70 a gallon. In the Western world, our languages read left to right, so to some extent, we encode the lower numbers on the left first. In addition, we seek the best deal from a rational point of view, but we perceive emotionally that we have “saved” by not paying $3.70 a gallon.

We tend to have a mindset when it comes to prices. It is incumbent on us to break out of normal thought patterns and be original with our pricing proposals to pilots. If you know how people view numbers, you can predict their reaction to prices and, therefore, price more strategically. For example, above a certain threshold — say $5.00 per gallon — people will not react too differently to $5.25 or even $5.45 a gallon. They will not balk until you approach the next threshold, $6.00 per gallon. For maintenance services, on a higher price scale, $875 is better than $900, yet $825 will sell as well as $800.

Blogger John Enticknap presents at the 2011 Florida Aviation Trades Association (FATA) annual conference.Much can be said about numbers and their importance to your pricing theory as well as your target margin — both gross and net. By keeping in mind some of the psychological factors discussed above, you have a better chance of making the sale.

As our anonymous quote states, we must keep an open mind and study new business ideas and methods to be successful. Yes, we see many of the same business situations time and again in the FBO business, but that should not allow us to get complacent or not try new thinking.

Stay flexible, and stay informed.

Please let me know what you think, and share your ideas. Please email me at jenticknap@bellsouth.net.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

June 07, 2011

Coaching Provides Valuable Seasoned Advice

June 07, 2011/ Ron Jackson

At some point in our lives, we all need a little coaching to get through the task ahead of us.

I remember when my dad took the training wheels off my bike and encouraged me to keep the handlebars straight as he ran alongside on my first solo ride.

High school football and baseball coaches shaped the way I performed on the field and taught me valuable lessons about life along the way.

As a student pilot, my instructor coached me through turns and stalls and built up my confidence for the eventual solo flight.

After a couple of decades of developing marketing plans for companies such as Cessna and Fairchild Aircraft, I had the opportunity in the year 2000 to create a public relations campaign for the grand opening of a Mercury Air Center location in Burbank, Calif. My client was John Enticknap, who served as president of the 21-location FBO chain.

I didn’t have a lot of experience in the FBO business back then, but under John’s tutelage, I’ve been spending the last 11 years soaking up his vast knowledge of the FBO business.

When John and I discussed starting an FBO consulting business together, I knew I had a partner that had a lot to offer the FBO community. So in 2006, John laid the groundwork for Aviation Business Strategies Group by outlining his vision for the fledgling company.

Vision of Helping FBOs

He told me he wanted to start a business that would help aviation service companies, FBOs in particular, become more profitable. His vision was to provide an affordable resource to the FBO industry through sharing, teaching and coaching.

As a basis for the new business, I suggested we put together a list of initiatives that would help FBOs run their businesses better and ultimately become more profitable. There were several marketing projects that John and I worked on together for the Mercury Air Center chain that would make great white papers and teaching strategies.

The result was what we called 10 Steps to FBO Success. It was way more than “FBO Business 101.” It was the essence of years of real-life experience seeking solutions to problems that arise from operating an FBO.

One problem we attacked was the high cost of FBO insurance. After the Sept. 11, 2001, tragedy, insurance companies began dramatically raising FBOs’ premiums. Mercury’s insurance premiums for the 21 FBO locations were escalating exponentially.

We decided to create a strategy for lowering the insurance premiums by developing a better insurance story for the insurance brokers to evaluate. (This is one of the 10 Steps to FBO Success and a subject of one of the sessions we teach at the NATA-sponsored FBO Success Seminar.)

Under John’s coaching, I absorbed what insurance underwriters were looking for in terms of safety and security of all FBO operations. We took this information and built a comprehensive safety audit program. Part of this initiative raised awareness among FBO employees for the need for two wing walkers, especially for aircraft movements inside hangars.

We created some large banners and posters for display in the hangars and then conducted safety classes for employees on a regular basis. One of the banners exclaimed, “Don’t Get into a Tow Jam!” and a supporting poster listed all the steps to safely tow an aircraft.

As a result of this industry coaching initiative, hangar rash went way down, the level of safety went way up, and customers actually liked seeing the banners and posters as a reminder of how carefully the FBOs were treating their aircraft. And, by the way, insurance premiums started to come down.

The business coaching John gave me helped me in understanding what I needed to do to get my job done. It also helped FBO employees improve and FBO owners control insurance costs.

Who Can Benefit from Business Coaching?

Over the past several years, business coaching has come to mean a lot of different things. What I’m talking about is not a personal life coach, which is different from what a savvy business coach can offer an FBO.

FBO owners, operators and managers can benefit from a little or a lot of FBO business coaching. The best candidates for such coaching services are:

Those seeking to improve FBO business performance and earn a better return on their capital investment.
Those who are committed to improving the FBO operations and are thus unsatisfied with the status quo.

Working with a coach is normal for many. Musicians, tennis players and golfers, to name a few, work regularly with coaches to improve their performances. In the mainstream population, hiring a personal trainer is not uncommon.

Business coaching can be found through various channels. Find a mentor in your business you can bounce ideas off of, attend seminars and workshops, or even hire a professional coach. The goal is to improve the way we manage and to seek solutions to problems that plague the efficiency of an FBO operation.

Learning Opportunities

If you are interested in some seminars specifically for FBO owners, operators and managers, here are some opportunities:

Florida Aviation Trades Association Annual Meeting

On June 14, John will be a guest speaker at the annual convention for the Florida Aviation Trades Association (FATA) in Sarasota, Fla. Working pro bono, John will be teaching two sessions:

Session 1: Risk Management & Claims Avoidance Through Better Operating Practices
Session 2: Developing Your Own Third-Party Fuel Pricing Strategy

FBO Success Seminar

Those seminars are also part of the three-day FBO Success Seminar we will be teaching Nov. 8-10 in Atlanta during the NATA’s first FBO Fuel Summit.

If you can attend either or both of these seminars, I would encourage doing so. These are opportunities to get some good advice from a seasoned professional.

If you would like to share a teaching or coaching story, please email me at Ron@thejacksongroup.biz.

Ron Jackson

May 26, 2011

Deliver Great Customer Service by Practicing Your Craft

May 26, 2011/ Ron Jackson

“Maybe because I've hit a million balls? … And maybe because I'm dedicated and want it more.” – Vijay Singh, professional golfer ranked No. 1 in the world, 2004-05

Recently, I was reading a newspaper article about the practice habits of professional golfer Vijay Singh, and I thought this would be a good basis for a blog post on delivering the ultimate FBO customer service experience. Perhaps this seems a little disjointed, so allow me to explain.

Whether you follow golf or any other sport, I’m sure you’ve run across articles and have heard TV announcers remark about the successes and failures of professional athletes. Frankly, I like to learn about the elements of success, rather than the failures, so when I read this article on Singh, it reminded me of his breakout year in 2004.

As you may recall, Tiger Woods had vaulted to the top of the world ranking and looked invincible. Then came Singh, playing like a man possessed, and he eventually replaced Woods as the No. 1 ranked golfer in the world, at least for a period of time. He openly admitted that his goal was to become the No. 1 golfer in the world, thus replacing Woods, and he knew it would take long hours of practice.

Even Madison Avenue took notice that year. Singh appeared in a TV commercial where he was shown practicing putting on a frozen lake in Alaska while native Eskimos looked on in bewilderment.

And what was the message the commercial was trying to drive home? What made Singh so successful?

Dedication to Practice

The answer, of course, is being good at what you do by practicing your craft. In Singh’s case, it wasn’t just an hour here and an hour there but a wholesale dedication to improving his game through countless hours of practicing, practicing and still more practicing.

Everyone in the golf world was talking about it. Other players took notice, and his work ethic became legendary. As the old joke says, if you looked up the word practice in the dictionary, there would be a picture of Vijay Singh.

As part of our NATA-sponsored FBO Success Seminar, we teach a course on delivering the ultimate customer service experience. Called ”Don’t Forget the Cheese!” we use what we call Cheese Bites to help illustrate various good customer service habits.

One of these Cheese Bites is Practice Your Craft. Like an actor who must perform well on a stage, customer service staff are also on stage every time they put on their uniform and enter the FBO terminal arena or greet an aircraft on the ramp.

The whole process of delivering a great customer service experience needs to be a well-orchestrated performance, practiced over and over to ensure the safety of not only the customers, but the FBO staff as well.

What Pilots Want from an FBO

At Aviation Business Strategies Group, we’ve conducted many FBO surveys to find out what pilots and dispatchers want most from an FBO. What pilots say is they know whether or not an FBO will deliver a good customer service experience the moment they pull off the taxiway and onto the ramp. If the line service personnel are not on the ball and looking sharp, they know the rest of the turn will be disappointing.

It’s called a first impression, and if an FBO is not practicing the art of delivering a good first impression, the rest of the customer service deliverable is lost!

It all starts with the way the line service crew ushers in an aircraft. Here’s where practice comes to bear. First comes a firm grasp of the wands, followed by crisp movements of the arms and a precise motion signaling the pilot to stop the aircraft at a designated spot on the ramp.

Then, the rest of the crew springs into action by carefully placing orange safety cones according to the SOP manual. Once the passengers disembark, the baggage is swiftly unloaded and placed into the waiting limo, which is then safely escorted off the premises.

At the proper moment, the lead line service person (or CSR, depending on how you’re organized), approaches the pilot in command and reads back the order information previously sent to the FBO by either a phone message, fax or email. What pilots don’t want to hear is: “Howdy, how can I help ya?” Especially if they took the time to send in an order for service ahead of time.

Remember, You’re On Stage

While at the driving range with with another golfer who had grown frustrated with practicing, Singh admonished the other golfer. “That's your problem,” Singh said. “You won't work at your game enough to be as good as you could be.”

No matter if you are a professional athlete, a line service technician or a customer service representative, practicing your craft is an important element to having a successful career. Remember, when you put on your uniform and hit the deck, you’re on stage, and every customer is watching how you, and your FBO, perform.

If you have any tips or stories to pass along on delivering a great customer service experience, please email me at Ron@thejacksongroup.biz.

Ron Jackson

May 19, 2011

The Cost of Aviation Fuel, Part 2

May 19, 2011/ John Enticknap

FBOs Might Need a Two-Pronged Pricing Strategy

"Everybody has accepted by now that change is unavoidable. But that still implies that change is like death and taxes — it should be postponed as long as possible and no change would be vastly preferable. But in a period of upheaval, such as the one we are living in, change is the norm." – Peter Drucker, Management Challenges for the 21st Century (1999)

Recently, I was reading an article posted to Eye on the Economy on msnbc.com. The article was titled “As oil prices drop, Fed should get credit.” After reading the article, I decided to write Part 2 to a previous blog post titled The Cost of Aviation Fuel.

In the first post, I talked about continued increases in the cost of aviation fuel and what FBOs can do to mitigate high retail prices. We looked at a number of the reasons for the increasing cost of fuel:

The Fed policy of a weak dollar — a weak dollar requires more dollars to buy a barrel of crude oil.
The continued unrest in the Middle East.
Uncertainty with the federal deficit.
Speculators betting on the increased price of fuel.
Lack of offshore drilling in the United States.

Since then, here is what is happening in the world markets:

The dollar’s value is up 3 percent so far this month after sliding 15 percent against other currencies over the past year.
Global growth seems to be slowing.
The inflation threat from easy money policies may be easing.
Oil stocks have remained high even with the unrest in the Middle East.
Inflation fears in Europe have prompted European central banks to raise interest rates.
China has required its banks to hold larger cash reserves to help curb inflation.

The Platts fuel index prices peaked two weeks ago. The Gulf Coast Pipeline mean was $3.3239 per gallon. Looks like the West Coast took the prize for the highest Platts prices at $3.4275.

So what happened in the last two weeks? Prices dropped more than 15 cents last week (May 10). This week, we have seen nearly an additional 8 cent drop (May 16). We now have a drop of 23 cents! Perhaps your customers are wondering why you haven’t dropped your price.

I’ve seen posted retail prices of Jet A as high as $8.74 per gallon. Who is going to pay that for jet fuel?

And what’s going on with oil futures? The trend right now is good, but will it last? There are many factors in the national and world marketplace that can affect what is happening.

On a national basis, we have the debt ceiling vote coming within two weeks or so; the economy might continue to slow; demand might be down; the Middle East could get more unstable. All these issues can negatively affect the markets and drive up prices again.

It appears the oil commodities markets/speculators are backing off the high prices to be paid for futures.

Simply put, the forces that drove the market up are now down.

All this begs several questions:

Will the fuel prices continue to drop?
How do I react and price my fuel?
The customers want better prices now! How do I help them while trying to keep my business profitable?

What Can You Do?

First, do not change your price! You have all that high priced fuel in storage — the same goes for the terminals and pipelines. This high-priced inventory will take a few weeks to work itself through the system. So when you purchase you next load of fuel, you will then be able to purchase at the lower price. How fast you turn over your fuel will determine how and when you pass along price reductions to your customers.

In a previous blog post, we talked about FBO Fuel Pricing: Seeking a Silver Bullet, so we won’t plow that ground twice. Suffice it to say you must maintain your margin to sustain your profitability and understand pricing theory. But the high price of fuel is making the customers very price sensitive. Change is coming!

Dual Pricing Strategy

One possible scenario is to establish a dual pricing strategy by providing an a la carte service as well as a full-service offering.

Remember when gas stations offered two levels of service, self service and full service? You would pay extra if you wanted everything under the hood plus your wipers and tire pressure checked. Otherwise, you saved by doing it yourself.

An FBO could offer two levels of service as well. For instance, you could offer full service for one price, whether retail or contract fuel. Under this pricing scenario, you continue to offer all your usual amenities for one set full-service price.

Then you could offer a discounted or a la carte “basic” service price. If the operator wanted other services, he could pay for ice, coffee, papers, lounge, transportation, baggage handling, galley and lav servicing, etc.

Our advice is to stay in touch with your fuel suppliers and what is happening in the national and world marketplace. Change will continue to happen, and you must be aware of it and react in a reasonable businesslike manner to be successful. Think seriously about an a la carte or full-service pricing methodology.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

May 12, 2011

FBO Marketing, Part 2: Affordable Promotions

May 12, 2011/ Ron Jackson

As any FBO owner or operator knows, attracting new customers and keeping current customers is the lifeblood of your business.

In previous blog posts, we have discussed the aspects of keeping current customers by providing an exceptional customer service experience: Be the restaurant owner, and don’t forget the cheese!

In this multipart series, we talk about attracting new customers with little or no cost. In Part 1, Low- or No-Cost Promotions, we discussed the basics of promoting your FBO on a limited budget. In this post, we’ll talk about public and media relations as an affordable promotion that will help extend your brand reach even further.

Public and Media Relations

Writing and distributing a news release is a cost-effective communications tool. However, there are some basic guidelines that FBOs need to follow in order to ensure their announcements make their way to the selected media.

1. Ask yourself if the news is newsworthy.

Many companies, including FBOs, will send a news release out on everything that happens at their place of business. Trouble is, most of it is not newsworthy and, therefore, gets ignored. If you do too many of these, there is a chance that when you have something that is truly newsworthy, it may get passed over because of your past history.

Editors and writers keep very busy, so only offer announcements that are at least potentially newsworthy. Here are a few ideas that most editors find of interest:

New facilities or expansion of current facilities
Any significant renovations
Acquisitions of other facilities on your airport or other FBOs
Key personnel changes to your organizations

Here are some things editors would rather not see:

Announcements about a new web site
Releases that are not timely or current
News that is completely off target and irrelevant to the industry

2. Be clear and concise.

In journalism school, you learn to write in an "inverted pyramid" style. In other words, say what is most important in the first sentence or paragraph.

Then support the main information with other facts and figures. Think of the five “Ws”: Who, what, where, when and why?
Include a relevant quote by a key manager or employee
Follow up with what we call a “boilerplate” that is a concise overview of your company information, the services you provide and your contact information.
Keep the information as short as possible, and don’t use flowery language.

3. Include a photo if possible.

Use a fairly good camera. Make sure the photos are in focus and of high resolution. Most publications request a resolution of 300 dpi.
Frame your photo so you are not too far from your subject.
Watch out for background clutter. This is particularly important when you shoot a photo of an employee for what we call a ‘head shot’. I’ve seen photos taken against a wall with a clock in the background, pictures, bright colored paintings and even model aircraft that look like the airplane is flying right out of the person’s head.

4. Timely and relevant: Think outside the box!

Earlier, we talked about being timely and relevant with your information. A couple of years ago, I worked with one of my clients on a short news release relating to the popular green movement. They had just replaced all their gas powered ramp courtesy carts/golf carts with state-of-the art electric carts. They also invested in a new ramp sweeper to pick up FOD.

For this announcement, I took a photo of their new cars along with the ramp sweeper, and framed it with an aircraft in the background to add relevance to the aviation market. I also used their distinctive terminal building with company logo as a backdrop. As they say, a photo is worth a thousand words.

Then I issued the photo with a photo caption only, not as a long news release. Of course I included details about “going green” on the ramp. This announcement was picked up by many on the media database.

Media Database

Now that you’ve crafted your new release, it’s time to send it out to a qualified database. First of all, you should always send it out to your local media, including newspapers and business journals. Also include local TV and radio if possible. You never know when someone needs a story like the one you send in or maybe just a filler story.

Also, you should build a list of aviation writers and editors. You can find these contacts in the front part of magazines and newspapers in what they call the masthead. Also, for most media, you can go to their web sites and get either specific email addresses or a generic one that goes to their news department.

And don’t forget the electronic newsletters, like acukwikalert.com. They’ll be happy to review your release for posting.

In addition, you should give a courtesy call to a few of the selected media to make sure they received the information.

Electronic and Social Media

All news releases should be published on your Web site as well. Services like Google send out crawlers that search for keywords that help push your news item to the top of a search. Speaking of keywords, your release should use key industry words and phrases in both headlines and the body of your copy.

Also, post a link on your company’s Facebook page to your news release on your Web site, and issue a tweet to your followers.

If you have any questions regarding writing or issuing a news release, please contact me at Ron@thejacksongroup.biz.

Ron Jackson

May 06, 2011

The Value of a Business Plan in Managing Your FBO

May 06, 2011/ John Enticknap

“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

April 28, 2011

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

April 28, 2011/ Ron Jackson

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.

Increase the number of base customers you service.
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

April 21, 2011

Is Your Cost of ‘Plastic’ out of Control?

April 21, 2011/ AC-U-KWIK

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.

AC-U-KWIK FBO Connection

Length of Lease

John Enticknap

A better way to impact your bottom line!

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

John Enticknap

Another Way to Test Your Pudding

Loyal Customers Lead to Financial Rewards

Ron Jackson

Be Prepared with Platts Oil Price Data

Making the Numbers Work

Creating Cash Flow

John Enticknap

Frankly Speaking, FBO Customers Must Relish Their Surroundings, Be Happy and Perceive Fair Value

The Art of the Deal

Play Ball!

Ron Jackson

The Case for Municipally Run FBOs

The Thin Gray Line

So What Are We to Do?

Get Help!

FBO Success Seminar Registration

John Enticknap

Planning the Trip

Fish or Cut Bait

Using the Right Bait

Keeping Your Fish Healthy and Happy

Ron Jackson

Make Your Prices Easy to Remember

Precise Numbers Feel Firm

Minds Play Tricks

FBO Success Seminar Registration

John Enticknap

Vision of Helping FBOs

Who Can Benefit from Business Coaching?

Learning Opportunities

Florida Aviation Trades Association Annual Meeting

FBO Success Seminar

Ron Jackson

Dedication to Practice

What Pilots Want from an FBO

Remember, You’re On Stage

Ron Jackson

FBOs Might Need a Two-Pronged Pricing Strategy

What Can You Do?

Dual Pricing Strategy

FBO Success Seminar Registration

John Enticknap

Public and Media Relations

1. Ask yourself if the news is newsworthy.

Media Database

Electronic and Social Media

Ron Jackson

Plan Basics

Guide Points

John Enticknap

Getting Down to Basics

The Really Free Stuff

Ron Jackson

Get a Grip on Credit and Debit Card Fees!

Debit Card Update

A Look at Credit Card Fees

Bottom Line

John Enticknap

AC-U-KWIK ALERT