Starting a small school

Finally, a place for sport pilot instructors and/or wannabees to talk about instructing.

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mhaleem
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Starting a small school

Postby mhaleem » Fri Jun 01, 2012 4:55 pm

I will have my instructor rating in the very near future , and wanted some feedback on an used economical trainer to purchase for sport instruction. For example, does the Allegro fit the bill? I have some funds saved up for a down payment, but how difficult is it to secure financing for LSA's? If I have 50% of the purchase price would that help towards financing? Should I start off in the vintage aircraft arena? My goal is to obtain an aircraft that can be used for sport and private instruction where I could bring on an independent contract type cfi to do the private and I focus on sport instruction. How difficult is it to obtain a leaseback? I'm located in the Raleigh NC area and any advice would be greatly appreciated. Thanks
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drseti
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Re: Starting a small school

Postby drseti » Fri Jun 01, 2012 8:25 pm

mhaleem wrote:I will have my instructor rating in the very near future , and wanted some feedback on an used economical trainer to purchase for sport instruction.


My comments will be not about recommending a specific trainer, but rather the broader issues surrounding opening a flight school (which ambition, BTW, I commend and salute!)

how difficult is it to secure financing for LSA's?


if you were buying a plane for your personal use, that would be a simple matter - an airplane loan, like a car loan, is backed by a combination of protective equity and personal income/resources. But in your case, you would not so much financing an airplane as financing a business. That's a much more complicated matter. Any bank is going to want to see both experience/expertise and a thorough business plan. Having an MBA or equivalent training would help a lot. (Did you take lots of business courses at Tuskeegee?) The aircraft itself is a major investment, but just the start of putting together a successful business. Do you have a strategy for attracting students? A realistic feel of revenues and expenses? A specific goal as to number of flight hours against which to amortize fixed expenses? Bankers are not aviators, but rather businessmen and women (who want to deal with another businessman or woman).

Putting together a convincing business plan is a non-trivial matter. I spent seven months, fulltime, in research before I started (and I had already done three prior startups). If you're new to the world of starting and running a business, take on an experienced partner. He or she need not be an aviation expert (that's what you bring to the table), but should be well versed in financial accounting, managerial accounting, business law, taxes, manpower administration, and fundamentals of management.

Should I start off in the vintage aircraft arena?


That, IMHO, would be false economy. Trainers take a beating, and a vintage aircraft is going to require a lot of maintenance, even before the student gets his or her hands on it. It may cost less to purchase, but insurance and upkeep can eat you up.

My goal is to obtain an aircraft that can be used for sport and private instruction where I could bring on an independent contract type cfi to do the private and I focus on sport instruction.


Good plan, as long as you realize that the Sport Pilot hours you would give as a Subpart K CFI won't count toward higher ratings, for those of your students who want to advance to the Private. To count, those hours have to be given by a Subpart H instructor. Search for those terms on this forum, as there has been extensive past discussion on the subject.

How difficult is it to obtain a leaseback?


Could be quite difficult for a new business just starting out. Much easier if you have a track record. Leaseback is a business arrangement; you have to be able to show that it will be a good business deal for the aircraft owner. Again, search the forum for past discussions on leaseback.

Most flight schools, BTW (like most small businesses) fail in the first two years, chiefly by being undercapitalized. It takes two to three years to establish yourself and become profitable. You need to go in with adequate resources (savings, other income, or an employed spouse) to cover all fixed expenses and overhead for that long, and not to need to generate income (any revenues will need to be reinvested for a couple of years). You'll need curriculum, an instructional plan, a maintanance plan, and a plan for training yourself and any employees.

My own small flight school publishes detailed annual reports (see http://avsport.org and use the website's search function to look for them) that might prove informative. If you're new to both flight instruction and running a business, it might make sense to get some experience by working for an established flight school, before striking out on your own. Want to move to central PA and apprentice under me? :wink:
Last edited by drseti on Thu Aug 02, 2012 4:24 pm, edited 1 time in total.
The opinions posted are those of one CFI, and do not necessarily represent the FAA or its lawyers.
Prof. H. Paul Shuch, Ph.D., CFII, LSRM-A/GL/WS/PPC, iRMT
AvSport of Lock Haven
fly@AvSport.org
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drseti
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Postby drseti » Thu Aug 02, 2012 4:21 pm

Here's a flowchart on the financial realities of operating a small flight school:

http://avsport.org/graphics/flight_school.pdf

(Pardon my cynicism. Consider this a companion piece to my "How to become a Sport Pilot" flowchart, posted to the Training forum.)
The opinions posted are those of one CFI, and do not necessarily represent the FAA or its lawyers.
Prof. H. Paul Shuch, Ph.D., CFII, LSRM-A/GL/WS/PPC, iRMT
AvSport of Lock Haven
fly@AvSport.org
http://AvSport.org
http://facebook.com/SportFlying

Aerco
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Re: Starting a small school

Postby Aerco » Wed Aug 29, 2012 6:38 pm

Should I start off in the vintage aircraft arena?


That, IMHO, would be false economy. Trainers take a beating, and a vintage aircraft is going to require a lot of maintenance, even before the student gets his or her hands on it. It may cost less to purchase, but insurance and upkeep can eat you up.
[/quote]

Have to disagree. Our club has several aircraft, including a Tecnam Eagle and a 1946 J3 Cub. The maintenance records show the Tecnam being grounded for long periods for comparatively trivial matters. Some rivets went missing near a flap hinge and it was down for weeks while we waited for a repair scheme from the factory (which consisted of "Check for damage and put in new rivets"...). Many other things like that, including electric problems, gearbox inspections etc.

The Cub? It's always flying. Nothing ever goes wrong with it. If you know any mechanics who knows a little about old aircraft, it's almost impossible to make it stop flying. (Maybe not so much with a young mechanic who has never seen fabric before.)

But insurance companies seem to think there is something diabolical about having a wheel at the back, so that will probably cost more.
"Someone already thought of that."


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