Alan Perlman

How much money does it take to start a drone business?

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How much money does it take to start a drone business?

I know we've discussed this at length on the forum but thought it might be nice to resurface.

When I think about starting a drone business, here are some expense categories that come to mind:

  • sUAS
  • Post-Processing Software
  • Website / Marketing
  • Liability Insurance
  • FAA Registration / Certification
  • Training / Professional Development

What categories am I missing?

How much did you / do you spend on this stuff?

Were there categories that were more or less expensive? Where were you able to cut costs?

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A thing that I struggle with is relying on the concept of basing a business on building the infrastructure first and then trying to determine how much you need to spend.  Don’t get me wrong, as a management tool I get the need to do it but I think there’s a problem when investment and performance decisions are evaluated based on starting a business this way.  

Although this is how mos people start businesses that approach supports a yet undeveloped concept that depends more on the promise of future wealth rather than what customers actually want, need or are willing to pay for.  What are you basing any sort of forecast on?

In order to build a company that people believe in and shareholders want to invest in, they will need to believe that there is a broad trend towards aerial based remote sensing where the data becomes hugely valuable, and that what ever your products and services are, customers can build a platform of business on top of them.

Along with this “list” is the need to explicitly identify the risks to your success and how will you mitigate it?  You need to identify your competition and develop a better understanding of the competitive risks and develop a strategy for a competitive advantage.  Why do you think you can break from the pack?  What is your advantage? what is your understanding of product-market fit?  Is it your technology?  How can you scale your company?  How can you support the demand for your services or technology?

You missed the most important ingredient for building a profitable UAV business, the people!  How many and what will it take to attract good talent, not just drone operators.  What about a facility?  

If you want to figure out how much it takes to start a “drone” business you need to start by figuring out what a “drone” business is.  What problem can you solve with a drone that customers are willing to pay you for?  Another category your missing is what data are you collecting?  A LiDAR used for civil engineering costs $100k, a hyperpectral sensor can cost $250k and a camera on a DJI generally costs $1600.  Which instruments do you think people are willing to pay enough to create a good business?  

You don’t need to start spending that kind of money, but you’d better understand why you might want to.  

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10 hours ago, Alan Perlman said:

What categories am I missing?

Initially I would not need a building as I have office space in my house but a major expense in starting a simple drone business like real estate photography would be in purchasing a vehicle for business use as my wife and I just have the one car between us and of course I would need to include running costs as part of my businesses expenses. 

As far as I know to register a business as a LLC is not so costly but in California I understand that there is a yearly LLC tax of $800. Its not really a tax as it doesn't depend on the business's revenue so it really should be called a fee.

In addition to the ones you listed I would also add

  • phone & carrier plan
  • point of sale (e.g Square)
  • Accounting and invoicing software
  • Credit card fees 

I guess I could use a my personal phone to start but would prefer to separate my business and personal finances with the other items. 

Edited by Spitfire76

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On 9/9/2018 at 8:42 PM, Alan Perlman said:

What categories am I missing?

I would say that a crucial piece is Lead/Project Management Software. 

Knowing what you need to work on this week, and what projects are coming in your pipeline is a very important piece.

That's what separates real businesses from 'hobby' businesses. 

A spreadsheet or scratched piece of paper may be sufficient to get started, but certainly not enough to scale up.

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I imagine that there is a big difference to starting a drone business from scratch compared to adding drones to an existing business. For example if you already have a photography business adding a drone is a bit more than adding a camera since you need to obtain part 107 certification and insurance but you already have a business infrastructure in place including items like editing software so the investment and risk is much less. Also with it becoming so much easier to learn to fly a drone I am sure its easier for someone that already has skills in an industry like photography, surveying, agriculture, inspection etc to add drones to their tool box than for someone with drone skills to obtain skills in those industries. 
Edited by Spitfire76

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@Spitfire76 you make some good points but the margins for small photography and video production companies is generally pretty thin.  It’s not about the cost of the drone or the 107, it’s an issue of focus.  

When the Canon 5dII started the HD DSLR movement a lot, and I mean a lot of photographers who were already using them started producing videos, and visa versa and quickly went out of business.  Although the technology was the same and the infrastructure was similar, they are very different businesses.  

I agree that Aerial should be a good fit for an established photographer, but keep in mind that photography is very competitive and they can either create a look that differentiates them and they can charge more for their product, they can make slimmer margins on volume, or they can cut their expenses commensurate with revenue.  

I know a lot of people won’t agree with this but you have to really think about why such a high percentage of 107’s  Can’t make a good living?  Using a MAVIC or a Phantom, for example is antithetical to the success in every business model I used as an example. 

Your not going to be able to differentiate your work from the thousands of other people using them, they add enough complexity that they don’t fit the model for efficiency, and for the individual it adds unnecessary expense they are probably averse too.  

None of what I’m saying actually has anything to do with who manufactures the drone, it’s just the reality of all this.  The people who are employing people, putting their kids in school and making a living using drones quickly pivoted away from the drone.  

I have a lot of friends who make a great living using a hammer, but they don’t make much because of the hammer.  You can take a tool, a truck, a camera and build a business around it.   But it is not the business. 

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On 9/10/2018 at 9:37 AM, Spitfire76 said:

Initially I would not need a building as I have office space in my house but a major expense in starting a simple drone business like real estate photography would be in purchasing a vehicle for business use as my wife and I just have the one car between us and of course I would need to include running costs as part of my businesses expenses. 

As far as I know to register a business as a LLC is not so costly but in California I understand that there is a yearly LLC tax of $800. Its not really a tax as it doesn't depend on the business's revenue so it really should be called a fee. 

In addition to the ones you listed I would also add

  • phone & carrier plan
  • point of sale (e.g Square)
  • Accounting and invoicing software
  • Credit card fees 

I guess I could use a my personal phone to start but would prefer to separate my business and personal finances with the other items. 

It only cost $100 in Virginia to register your LLC and $50 annually to maintain........

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On 9/9/2018 at 9:42 PM, Alan Perlman said:

How much money does it take to start a drone business?

I know we've discussed this at length on the forum but thought it might be nice to resurface.

When I think about starting a drone business, here are some expense categories that come to mind:

  • sUAS
  • Post-Processing Software
  • Website / Marketing
  • Liability Insurance
  • FAA Registration / Certification
  • Training / Professional Development

What categories am I missing?

How much did you / do you spend on this stuff?

Were there categories that were more or less expensive? Where were you able to cut costs?

Workstation to process your jobs - imagery files are large and while you may get away with your current setup and running the jobs for 12-18 hours, you are going to need a dedicated machine that can handle the load sooner rather than later.

Ancillary equipment- what about a folding table, chair(s), a canopy. portable generator, an additional laptop to run flight software, ect..

Spares - additional batteries, other consumables

 

To date we have about $27,000.00 associated with the program covering the past two years. The new budget for next year comes in at just under $30,000.00 for a new. more capable aircraft and its associated support equipment and training. The Inspire got us started but we now need an aircraft capable of working 100-150 acres multiple times a day. The Inspire just does not have the legs nor the camera to handle that type of work.

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On 9/15/2018 at 11:40 AM, Av8Chuck said:

have a lot of friends who make a great living using a hammer, but they don’t make much because of the hammer.  You can take a tool, a truck, a camera and build a business around it.   But it is not the business. 

Good analogy with the hammer. I agree its not about the tools but more the skills in using the tools to solve a problem that customers are willing to pay for and differentaiting that business from any competition. 

 

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