Evolution of an Enterprise, Chapter 10: Burning Questions

New businesses can learn a lot from the experiences of others.

As Voyager Industries owners Binh Uebinger and Josh Somers pass the half-year mark for their aircraft cleaning and detailing business, local business and industry experts offer their takes on the fledgling company’s operations and plans for the future.

Question 1: What difficulties can arise from a partnership as opposed to a single business owner?

Bob Trewatha, Score counselor: Partnerships can create problems. A partnership can be done on a handshake basis, where the partners talk among themselves and agree to how much each will put in and what the distribution of income or profits will be. But generally, there are so many problems associated with that, we recommend having a written agreement between the partners (with) the use of an attorney.

Question 2: Somers and Uebinger originally were turned down for a bank loan. Is that common for a new business, and if so, why?

John Wilson, U.S. Bank Springfield regional president: If someone has had experience in that line of business and has managed to accumulate some money, and they want to borrow some more, that’s much more palatable to a bank.

If there’s no skin in the game, it’s much more difficult. … It’s not just knowing something about the industry; we like to see that somewhere along the way they’ve managed people and budgets.

Question 3: Voyager Industries was able to secure $25,000 of initial financing through a private backer. What are the advantages of private financing or venture capital?

Steven Fox, Quest Capital Alliance general manager: We’ll sometimes do things a bank won’t do. If you look at the risk of a startup, a lot of times banks don’t want to deal with that or they want a guarantee that’s not feasible for an entrepreneur. The other advantage to using private equity is that it’s more patient capital; you don’t have a required debt payment due every month typically. It gives the business the opportunity to get off the ground and generate some cash, and not immediately have to make bank payments and give away a lot of its liquidity.

Question 4: The pair is working on plans to manage the fixed base of operations at Perfect Landing Airpark near Branson. How important is an FBO to a business like Voyager?

Bob Dickens, Aircraft Owners and Pilots Association Midwest region representative: For pilots in general, it’s absolutely essential. I’ll tell you, though, that (for proprietors) it’s one of the toughest ways to make a buck in the aviation business. It’s very competitive, and there are a number of issues – for example, the price of fuel.

Question 5: Somers said the company has overestimated its initial annual revenue by about 40 percent. Is that common?

Trewatha: It’s very common. Very seldom do you see someone hit something like that on target, and if you have little or no experience with that company’s operation, there’s a lot of estimation and guesswork that goes into those revenue figures and net income figures. We often do monthly estimates for the first year, quarterly estimates for year two and just an annual figure for year three. By doing it monthly, and looking at what you’re doing each month, you can adjust those figures (as you go).

Question 6: To date, Voyager has focused on serving individual pilots rather than charter companies. Is this a good move?

Dickens: In many businesses, the key is location, location, location, but in aviation, it’s reputation, reputation, reputation. Starting with (individual) pilots helps build reputation. All aspects of general aviation, including charters, are good for what (Voyager) is doing. They’re looking at individual pilots because that’s the easiest – it’s the low-hanging fruit on the tree. The next logical progression would be the more structured aviation entities like … nonscheduled air taxi operations and certainly corporate aviation.

Question 7: How important is reputation and word-of-mouth to a new business?

Jason Mitchell, co-founder of theworkshop 308 (the focus of Evolution: Year 1): It is the most important means of marketing that you have. If you provide a quality product to a client, they’re going to tell one or two people, but if you provide a poor service, they’ll tell 10 people.

Question 8: What are the best ways for young business owners to make connections, and what is the importance of networking?

Kristen Westerman, Springfield Area Chamber of Commerce manager of work force and business development, who runs The Network for young professionals: For young professionals who are figuring out what they want to do, through networking you can meet so many people that can help advance you or expose you to new business.

Getting more involved can tie you with that business community. It’s like anything else – you get out of it once you put into it.

Question 9: Voyager recently sent out a direct mail postcard to 800 prospective clients. How effective are direct mailings, and what is the key to success?

Ron Marshall, president of Greenleaf Marketing: Direct mailing is as difficult as it has ever been before. The response rate has gone down to one-quarter to one-half of 1 percent, and a lot of that can’t be tracked immediately anymore – we see that people will call in later, even a year after we’ve sent things out.

The mailing piece should have a specific offer with a limited time; they’re not really an educational piece. The key is to follow up.

We’ve tried every combination under the sun, and we’ve said to use a multitude of types – send a postcard first, follow it up with a letter, and then a phone call is mandatory.

Also, reduce the size of your list. If you’re sending out 5,000 pieces, you can’t make 5,000 phone calls. Work a shorter list, but work it thoroughly.

Question 10: As a businessperson who’s just gone through the startup process, what piece of advice would you give Voyager?

Mitchell: Just keep doing what they’re doing. Keep working hard. The time they invest in what they’re doing right now – in marketing and networking – will pay dividends three months, six months, a year from now.