Evolution of an Enterprise, Chapter 13: A Turbulent Start

After six months in business, Voyager Industries LLC has not hit its original sales projections. But co-founders Josh Somers and Binh Uebinger say they aren’t worried.

They say the original projections were based on a business model that has changed significantly since the airplane-detailing business started operations.

Through the end of June, the company posted nearly $11,000 in sales revenue – well off its projected $90,000.

The elusive one

While the company’s expenses thus far have been only slightly below estimates, part of the problem is that the two weren’t sure exactly how to estimate their job orders in the first few months.

The initial plan had been to find one or two weekly customers for which they could do regularly scheduled detailing and maintenance, which would give them a base from which to build. Somers said in that regard, the company is at least nine months behind initial estimates.

“We expected that one customer … would pay for our basic expenses,” Somers said, noting that customer would have covered most of the company’s month-to-month expenses.

“But that one customer would have to use us as their sole means of airplane cleaning,” he added.

Rayanna Anderson, director of the Small Business Development Center at Missouri State University, said the original plan’s dependence on an initial contracted customer was a significant flaw in Voyager’s business model.

“Not having that regular customer in place and thinking they’re going to go get those contracts is a problem,” she said. “When that doesn’t happen, it’s certainly going to delay profitability.”

While that has been the case for Voyager – the company has spent nearly $37,000 more than it earned so far – Somers and Uebinger are in a better position than might be expected for a new venture. Businessman Rick Williams, a former co-owner of Hospice of Southwest Missouri, is a partial owner in Voyager Industries, having invested $60,000 in the business in exchange for equal ownership.

The long-term plan is that Williams’ equal ownership will be reduced to a 10 percent stake once his investment has been repaid.

Williams, who also founded room disinfectant fogger manufacturer SafeSpace, said he isn’t surprised by Voyager’s start.

“I found out a long time ago that … everything you think is going to happen never happens that way,” he said. “If you think you’re going to break even at six months, make it 12. If you think your expenses are going to be $5,000 a month, you better make them $10,000.”

Change in the plan

Instead of having a handful of regular customers, what has come down the pike for the company is a steady stream of individual jobs for a dozen different clients in Springfield, St. Louis, Kansas City and St. Charles.

That geographic expansion is part of the change from the company’s initial plan. The duo initially planned to focus solely on Springfield, getting about 95 percent of its business from pilots flying into the airport to rest and relax.

The problem: Springfield doesn’t get very many planes stopping in for extended periods, because the airports don’t have an extensive fixed base of operations where pilots can rest.

“There’s a lot of air traffic coming in, but they just stop to use the bathroom and take off again,” Somers said. “That (lack of holdover traffic) is what caused us to say we had to change our expectations within the first month of business.”

Anderson said the mistaken market impression is an example of why market research and realistic financial expectation are so crucial before beginning operations.

“That’s why … you do those financial pro forma statements, so you can determine based on several scenarios how much working capital you’ll need until you are profitable,” she said. “That’s why the research process is so important.”

Spreading their wings

The lack of transient customers is why Voyager is working on building regular working relationships with one or more of its on-and-off customers, including charter companies Million Air St. Louis and Express Jet.

“We’re just starting to work with them – we’ve done one or two jobs for them, we’re showing them our insurance certificates, and they’re figuring out what we can offer and where we can offer it, and how they can utilize our services,” Somers said. “It’s not just that one customer – I think we’ve got three of those ‘one customers.’”

It’s that potential for the future that keeps Somers and Uebinger excited; they talk of regular business in Kansas City, St. Louis, Tulsa and northwest Arkansas within the next year, and the ability to hire one or two employees to handle the new business within a 350-mile range, potentially.

There’s also talk of a time – possibly by early 2009 – when the two will have their pilot licenses and can fly all over the region to do work on just a few hours of notice. They note that, with high gas prices and the cost of their time, flying costs little more than driving.

Anderson said she thinks the company’s restructured plan of attack was a necessary step.

“They probably need to rethink their business model, and it sounds like that’s what they’re doing,” she said. “It’s an education process.”

Overall, the two entrepreneurs have high hopes.

“This is a brand new business in a brand new market,” Uebinger said. “We’re just getting going and getting the kinks and bugs worked out, like any new business. And even though our numbers are off, I feel great about this company.”[[In-content Ad]]