Despite the relative ease of buying a drone to photograph and market real estate, Tom Baird IV and crew discovered the field would be a hard nut to crack.
“We found that out very quickly,” said Baird, operator of Midwest DroneWorks LLC. “But drone technology is a lot more than just making a pretty picture.”
Like many, Baird began flying drones as a hobby. He then realized the potential to create cash flow via real estate marketing and opened Midwest DroneWorks in August 2015 as an affiliate of concrete company Conco Cos., where he works full time as vice president of sales and marketing.
Conco is also where he discovered another – and now prominent – use of the technology.
“We started to do a little more research on drone technology and found out that we could actually measure our stockpiles with it at our quarries and each of our ready-mix sites,” he said.
Adding to the diversity element, entrepreneurs are attracted to the low barrier to entry in drone ventures.
A $5,000 investment is about all that’s needed for a drone startup, Baird said.
But there’s another key element to viability: legitimacy, mostly determined by the Federal Aviation Administration.
“It’s substantial software,” Baird added of front-end costs. “Then, also, the FAA requires certification. We have done that. And we also carry a $1 million liability policy.”
Diversity sky high
At Drone City in Nixa, retailer John Wolfe said the drone business boils down to recreational and commercial uses.
For recreation, Wolfe said there’s the typical hobby flyer and a growing interest in drone racing. Commercially, there’s the widening world of aerial photography.
“Eyes in the sky, basically,” Wolfe said. “A lot of people, when they think drones and commercial, they think real estate, and that is like the oil change of the industry. It’s a foot in the door, but it’s not profitable.”
He said drones in real estate are overpopulated.
“The market’s saturated with people trying to do photography for real estate agents because it’s the low-hanging fruit,” he added. “Saturation just lowers the price, and the expectation of a real estate agent versus what they want to spend is topsy-turvy.”
Wolfe said the commercial sector is growing exponentially to include volumetrics – like Conco’s stockpile assessments, but much more – as well as 3D rendering, cartography, heat sensing, law enforcement aid, and search and rescue. He said there are regularly new business discoveries for the aerial equipment.
Jason Preston, owner of Springfield-based 417 Drone Imaging LLC, said the industry is saturated by next-door-neighbor types who are little more than drone hobbyists. But therein lies the difference.
“It’s not hardcore businesspeople,” Preston said. “They’re saturating the market by being the lowest common denominator. They’re cheaper, and that’s the end of it.
“If you take basic business practices and apply them to the drone business like you would any other business,” he said, “then all of the sudden you’re not just a fish in the sea. You’re the shark that’s out there. You make yourself stand out.”
In the few years operating Midwest DroneWorks, Baird said the company has invested some $40,000 in high-end equipment to diversify services. Fees for the work start at $275 per contract.
He said, for example, the company recently garnered a contract from an undisclosed cellular company to monitor area cellphone towers, but in general, “no two jobs are the same.”
The Midwest DroneWorks team comprises three part-time employees, who also work full time for Conco, and Baird said they’re current-year revenue projection is about $60,000. If hit, it would double last year’s tally.
417 Drone Imaging is on a similar path. Preston founded the business in 2015, investing about $7,000 at the time. His 2018 revenue projection is about $60,000, from the eight to 15 jobs landed each week.
“We’re spending about $12,000 to $15,000 a year staying on the leading edge of technology,” said Preston, a commercial helicopter pilot by trade.
He said real estate work has slowed a bit.
“We’ve been focusing a little more on just basic video production and industrial support,” he said. “Recently, we’ve shot for the Golf Channel and Columbia Sportswear. We do a lot of shooting for the Top of the Rock area for Bass Pro [Shops].”
With annual revenue growth of 15 percent to 20 percent, Preston’s team also comprises three part-time employees.
In addition to expanding into volumetric work for asphalt, rock and mulch companies, 417 Drone has moved into infrared imaging – an $18,000 upgrade, Preston said – to monitor solar farms or heat loss in buildings, among other uses.
“If you’re a drone business, you need to be very well diversified, because it’s hard to go down one track and make enough money to survive,” he said.
The FAA essentially applies two rules for a drone, otherwise known as an unmanned aircraft system: the Special Rule for Model Aircraft, which applies only to hobbyists; and the Small UAS Rule, which applies to recreational and commercial drone uses.
The latter requires a remote pilot certificate. Certain waivers granted by the FAA also allow certified pilots to operate drones outside of a visual line of site, or above 400 feet; closer to airports and heliports, with the standard allowable distance otherwise being a five-mile radius; and during twilight hours.
FAA requires certified drone pilots to be at least 16 years old and pass an aeronautical knowledge test at an agency-approved center. Pilots also must pass a security screening and register their UAS, according to the agency.
Preston, whose business is also FAA certified, said free material is available to study for the test, which costs $150.
“That’s it, other than the $5 you spend to register your drone,” he said. “So, $155, and you’ve met all of the FAA rules.”
Of course, some commercial operators may skirt around the FAA licensing regulations. Baird calls them rogue pilots, and he said they’re the biggest threat to drone businesses.
“Probably the second barrier, if you will, there are a lot of misconceptions and misinformation floating around about drones as far as them being used to spy on people,” Baird said. “Any technology that is designed to make life easier or make life better, someone can take that and use it for mischievous purposes.”
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