Friday, January 28, 2022

PfCO’s surviving in a competitive drone industry (Part 2)

If you want to be successful in something, indeed anything, in life, then time will never be wasted if you look at what you need to do and how you are going to do it. In other words, plan.

In my travels in the drone industry, I have met many hundreds of PfCO holders, from all parts of the world and walks of life. All of us are bound by a common thread, the use of drone technology to achieve an end effect, to carve a business out of a new activity in a way that is profitable.  It is evident though that we are not all linked by a common approach to that business and it is also astonishing that so many of them seem to have a poorly thought out business plan, and in some cases, no tangible plan at all.

So how do you start? If you read one of those self-help business books which shows how to set out a business plan, it often looks like an overly complex piece of narrative and analysis packed with graphs, charts and projections on every page. This makes it a daunting task for anyone who is unfamiliar with this process and it can be difficult to grasp the basic principles.

There are some simple ways to break this task down. A business plan needn’t be 400+ pages long but it does need to have structure, be comprehensible and most, importantly be rooted in practical reality. It should focus on 4 key questions that you must answer for the business plan to be viable. These questions are:-

  • What are you going to do?
  • How are you going to do it?
  • What will it cost?
  • What money will it make?

This seems very simplistic but the validity of the entire plan revolves around a sufficient, comprehensive answer to each of these 4 questions. You need to be content that you have answered these questions properly because if you haven’t then you will need to revisit them and adjust to achieve the right outcome.

Significantly, PfCO holders often have a good grasp of Questions 1 & 2 but typically less so with Questions 3 & 4. It is important to note that the comparison between the latter (outgoings vs income) is the key viability factor to whether your business will be successful or not!

Market Research Market research is a critical component of your business plan. It isn’t enough to read the numerous reports available online which predict huge values in the future drone sector and then, in your excitement and without an understanding your path to that money, simply set out in a random manner to profit from that growth. You will need to understand fully the markets you are getting into and what the appetite is in that space for drone technology and services.

For instance, if you aim to penetrate the property sector by offering imagery to estate agents then, as a minimum, you should engage with several local estate agents and gauge the likelihood that they will want your services. This will avoid you wasting time focusing on a sector that is never going to want to commission your services.

Competition With over 3500+ PfCO holders now in the UK, the chances are that unless you are in a very remote area, some of them will be close to you and are therefore competitors. This is a simple fact of life of any business in any sector but you should never be afraid of competition, as long as you accept that you need to put in place a strategy to distinguish yourself in a shrinking marketplace.

A ‘Living’ Document When a business plan is written it is often placed on a ‘shelf’, to gather dust. After all, once written, why any need to revisit it?

With a plethora of shifting factors (economic, political, strategic, regulatory, etc), the drone sector path is always changing and your plan should also adapt accordingly. You have to revisit it routinely to see if you are on target, if the assumptions you made at the start are being borne out and, ultimately, that the plan is working as you thought.

Pricing Pricing for jobs in the drone sector is a huge conundrum for many PfCO’s holders, especially at the outset of their career. It is quite a complex question that drives the whole financial model, is subject to the sector you intend to operate in and what its accepted market rates are for any given task. The problem, of course, is that this information is rarely available online and seems to be a keenly protected secret in the PfCO community.

The key pricing principle is, quite simply, that your costing model MUST be at a level that makes it sustainable for you, not only to operate but to make a living in being a drone operator. If you are inclined to keep dropping your prices due to competition then eventually your income will fall below a level that is sustainable for a viable business – you will then fail. It is simple as that!

So resist the urge to drop your prices in the industry ‘spiral to the bottom’. Identify and maintain your value at all times and be proactive in ensuring that you tell your prospective clients why that is of benefit to them.

Summary In the 1980’s film, ‘Field of Dreams’, Kevin Costner’s character is obsessed with creating a baseball diamond to entice the ghost of a dead baseball player to come and play at his farm. His driver is a voice that continually tells him, ‘build it and he will come’. A fantasy this might be and to many, counter-intuitive but there are plenty examples of this approach in our industry. It might seem that the best option is to build your proposition and then see what market is out there but this is a clear example of ‘the cart before the horse’ and is a huge strategic mistake.

This ‘build it and they will come’ approach seems to be a strategy for some PfCO applicants as they start to build their drone business but it is a path that, no matter how much luck plays a part, is unlikely to work. So if you are in the drone sector or are planning to enter it imminently, and haven’t got a business plan, then don’t waste any time. Start right here and right now, even before the end of this article.

In the next article, we will look at Innovation and how it should be applied to your drone business proposition.

ClearSky Consulting has successfully completed business strategy projects for major global clients. These can help transform your drone business into a major success so if you would like to know more about this offering then please email [email protected]