aircraft rental instruction business plan
TRANSCRIPT
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AIRCRAFT RENTAL
INSTRUCTION(BUSINESS PLAN)
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Table of Contents
1.0 Executive Summary ....................................................................................................................................1
Chart: Highlights .......................................................................................................................................2
1.1 Objectives ................................................................................................................................................21.2 Keys to Success .......................................................................................................................................2
1.3 Mission ....................................................................................................................................................3
2.0 Company Summary .....................................................................................................................................32.1 Company Ownership ..............................................................................................................................3
2.2 Start-up Summary ...................................................................................................................................3
Table: Start-up ...........................................................................................................................................4
................................................................................................................................................................... 4Chart: Start-up ...........................................................................................................................................6
2.3 Company Locations and Facilities ..........................................................................................................63.0 Services .......................................................................................................................................................6
3.1 Service Description .................................................................................................................................6
3.2 Competitive Comparison ........................................................................................................................73.3 Sales Literature .......................................................................................................................................7
3.4 Technology ..............................................................................................................................................7
3.5 Future Services ........................................................................................................................................74.0 Market Analysis Summary .........................................................................................................................7
4.1 Market Segmentation ..............................................................................................................................8
Table: Market Analysis .............................................................................................................................8Chart: Market Analysis (Pie) ....................................................................................................................9
4.2 Target Market Segment Strategy ............................................................................................................9
4.2.1 Market Trends ..................................................................................................................................9
4.2.2 Market Needs ...................................................................................................................................94.2.3 Market Growth ...............................................................................................................................10
4.3 Service Business Analysis ....................................................................................................................10
4.3.1 Competition and Buying Patterns ..................................................................................................11
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Table of Contents
..................................................................................................................................................................... 16
Chart: Break-even Analysis ....................................................................................................................17Table: Break-even Analysis ....................................................................................................................17
7.3 Projected Profit and Loss ......................................................................................................................18Table: Profit and Loss .............................................................................................................................18
Chart: Profit Monthly ..............................................................................................................................19
Chart: Profit Yearly .................................................................................................................................19Chart: Gross Margin Monthly ................................................................................................................20
Chart: Gross Margin Yearly ...................................................................................................................207.4 Projected Cash Flow .............................................................................................................................21
Chart: Cash ..............................................................................................................................................21Table: Cash Flow ....................................................................................................................................22
..................................................................................................................................................................... 227.5 Projected Balance Sheet ........................................................................................................................23
Table: Balance Sheet ...............................................................................................................................23
..................................................................................................................................................................... 23
7.6 Business Ratios .....................................................................................................................................24
Table: Ratios ...........................................................................................................................................24
7.7 Long-term Plan .....................................................................................................................................25
Table: Sales Forecast .........................................................................................................................................1
........................................................................................................................................................................... 1
Table: Personnel ................................................................................................................................................2
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Lansing Aviation, LLC
1.0 Executive Summary
Introduction
Lansing Aviation is being formed as a private company offering services to student pilots.Lansing Aviation will offer well-maintained aircraft for individual rental and for flight training.
Lansing Aviation will also provide primary and advanced flight instruction through the use ofindependent flight instructors possessing corporate and airline backgrounds. Lansing Aviation
will offer professional aviation consulting for corporate, airline, and individual aviation needs.
The Company
Lansing Aviation, LLC has been created and legally organized as a Michigan Limited LiabilityCompany based in Lansing, Michigan. The principle investors and operators will be responsible
for all airplane acquisitions and company decisions.
Lansing Aviation will operate its aircraft out of Capital City Airport (LAN) in Lansing, Michigan.The aircraft records, scheduling, and office will be located at an off-airport location 15 miles
north of Capital City Airport.
Services
Lansing Aviation offers services in three primary areas; aircraft rental, flight instruction, and
aviation consulting. In order to do so, Lansing Aviation will maintain a Cessna 172 Skyhawkupdated with the latest avionics.
Our competitive differences include professionally maintained aircraft, renter/instructor
insurance, and our 24-hour scheduling service that will allow greater flexibility of our aircraftflight times.
In the future Lansing Aviation plans to enhance their aircraft rental position by acquiring
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Lansing Aviation will be focusing initially on students interested in obtaining their private pilotcertificate. These students will primarily come from word-of-mouth-advertising from our
instructors, students, and other contacts at Mackinac-Great Lakes Airlines System (M-GLAS).We will attempt to continue teaching these students through their instrument rating course with
us, upon completion of their private pilot package.
Chart: Highlights
Sales
Gross Margin
Net Profit
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Year 1 Year 2 Year 3 Year 4 Year 5
Highlights
1.1 Objectives
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1.3 Mission
Lansing Aviation offers an affordable, professionally-maintained aircraft for rental and flightinstruction. We will provide a safe and effective learning situation for our students whileadhering to safe practice and to applicable federal and state aviation regulations. Lansing
Aviation will provide students with an excellent aircraft for flight training and an aircraft to flyupon successful completion of their training.
2.0 Company Summary
Lansing Aviation is a new company that provides aircraft rental for general aviation enthusiasts,
flight instruction, and a dependable aircraft to build flight hours. We will focus on aircraft rentalfor registered pilots and rental for beginning and advanced flight training. Initially we will be
marketing our new business with aircraft specifications which include:
Clean, safe, and nice-looking aircraft readily available.
Professionally maintained by certified aviation technicians.
Continuously updated with leading-edge avionics.
2.1 Company Ownership
Lansing Aviation, LLC has been created and legally organized as a Michigan Limited Liability
Company based in Lansing, Michigan. The principle investors and operators will be responsiblefor all airplane acquisitions and company decisions.
2.2 Start-up Summary
The start-up costs of Lansing Aviation, LLC include:
An aircraft down payment.
Office expenses.
Down payment on aircraft renter's and flight instructor's insurance
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Lansing Aviation, LLC
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal -- Attorney Fees $400Office Supplies / Expenses $200Consultants $0
Aircraft Insurance Down Payment $925Expensed Equipment $0Hanger Down Payment + 1st Mo. Rent $600New ADF Radio $575Aircraft 10% Down Payment $3,600MBNA Loan Origination Fee $250Total Start-up Expenses $6,550
Start-up Assets
Cash Required $300Other Current Assets $0Long-term Assets $36,000Total Assets $36,300
Total Requirements $42,850
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Lansing Aviation, LLC
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $6,550Start-up Assets to Fund $36,300Total Funding Required $42,850
Assets
Non-cash Assets from Start-up $36,000Cash Requirements from Start-up $300Additional Cash Raised $0Cash Balance on Starting Date $300Total Assets $36,300
Liabilities and Capital
Liabilities
Current Borrowing $0Long-term Liabilities $32,400Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $32,400
Capital
Planned Investment
Michael J. Zorn - president $10,450Investor $0Other $0Additional Investment Requirement $0Total Planned Investment $10,450
Loss at Start-up (Start-up Expenses) ($6,550)Total Capital $3,900
Total Capital and Liabilities $36,300
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Lansing Aviation, LLC
Chart: Start-up
$0
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
$32,000
$36,000
Expenses Assets Investment Loans
Start-up
2.3 Company Locations and Facilities
Lansing Aviation will operate its aircraft out of Capital City Airport (LAN) in Lansing, Michigan.The aircraft will be hangared on the airport located just north of the I-96 Expressway and
Airport Road exit. Students, renters, and instructors will be given full access to the hangarfacilities. The aircraft records, scheduling, and office will be located at an off-airport location 15
miles north of Capital City Airport.
3.0 Services
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3.2 Competitive Comparison
The competitive differences are:
1. Our aircraft will be professionally maintained to the highest standards and regulations.Flying the aircraft with broken, deferred, or damaged components will not be acceptable.
Our students, renters, and instructors will not have to fly aircraft that aren't properlymaintained.
2. We will provide renter and instructor insurance for our clients.3. Our 24-hour paging service will be used for aircraft scheduling and will give us a competitive
edge over other aircraft rental and instruction operators that open and close according to afixed schedule.
3.3 Sales Literature
The company will advertise its rental aircraft and flight instruction position in the Mackinac-
Great Lakes Airlines System airlines pilot union newspaper, the "ALPA Times." Additionally,brochures describing the aircraft and rental charges will also be positioned in the M-GLAS
airlines' union headquarters in Lansing, Michigan. All other initial advertising will be through
word of mouth from current instructors, renters, and students.
3.4 Technology
Lansing Aviation will maintain an updated Cessna 172 Skyhawk.
1. The aircraft will have at least two 720-channel radios for legal and practical navigation andcommunication purposes.
2. The aircraft will have the required equipment and certification necessary to conductinstrument training and actual instrument flight.
3. The aircraft will be continuously upgraded with M-GLAS Aviation Technology (M-GLAS-AT)avionics.
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We feel that our well-maintained aircraft, combined with our personable and enthusiastic flightinstructors, will generate repeat business from our private pilot students returning for their
instrument ratings.
4.1 Market Segmentation
1. Unsatisfied Students: We hope to obtain students and renters that are dissatisfied withtheir current instructors or aircraft from our competition before they become so frustratedthat they cease flying.
2. M-GLAS Employees: Our largest group of new students will hopefully come from Mackinac-Great Lakes Airlines System employees looking to start an aviation career. However, the M-
GLAS pilots, M-GLAS mechanics with pilots licenses, and their children will also serve as astrong target market for us.
3. Curious Flyers: The unrealized group of students that have "always wanted to learn to fly"is another market segment that we intend to develop.
4. Other Flights/Miscellaneous Rental: Sight-seeing flights, color tours, real-estatesurveying, Air Force training, and traffic watch will also be targeted.
Table: Market Analysis
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Curious / Interested FuturePilots
20% 15 18 22 26 31 19.90%
M-GLAS Pilots, Friends,Neighbors
30% 10 13 17 22 29 30.50%
Other Schools UnhappyStudents
1% 1 1 1 1 1 0.00%
Other Flights / Misc. Rentals 15% 5 6 7 8 9 15.83%Total 22.58% 31 38 47 57 70 22.58%
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Lansing Aviation, LLC
Chart: Market Analysis (Pie)
Curious / Interested Future Pilot
M-GLAS Pilots , Friends, Neighb
Other Schools Unhappy Student
Other Flights / Misc. Rentals
Market Analysis (Pie)
4.2 Target Market Segment Strategy
We will focus our marketing to prospective students that are looking for fun, qualifiedinstructors and a well-maintained and well-equipped aircraft. The aircraft must fly several hours
each month, so we will continuously urge interested students to call our list of qualifiedinstructors. Each prospective pilot that contacts Lansing Aviation for information will be sent a
private pilot price sheet with approximate costs and a free 6-month subscription toAOPAFlightTraining magazine.
4.2.1 Market Trends
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4.2.3 Market Growth
The rental aircraft in the Lansing area are averaging over 50 hours of revenue flying per month.This indicates a very solid number of new students, additional ratings for current students, andmore disposable income being used to obtain the long-time personal dream of obtaining a
pilot's license. Lugnut Flying Aviation, a flight school that ceased operation, was averaging over70 hours of revenue flying per month and produced a net profit in the first year of operation.
4.3 Service Business Analysis
Our consulting will be a very valuable asset to people of the community who are interested in
flying or choosing flying as a career. Many parents have questions regarding the "correct" pathfor their children with regard to a career as a pilot in the airline industry. These would include
flight training, colleges and college curricula, and most importantly, costs. Our goal is to advisethem of the best possible options to their questions, using our own personal experience.
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Lansing Aviation, LLC
4.3.1 Competition and Buying Patterns
In the flight instruction business, word-of-mouth advertising and personal marketing are themain reason that students choose one flight school over another. Many students begin flying
after coincidentally meeting a certified flight instructor and discussing their dream of flying.
Through these discussions, students participate in an introductory flight and decide whether ornot they enjoyed the experience and whether or not the training will be affordable.
Occassionally, a student will have a personality conflict with his or her instructor and maychoose to try a new instructor. We intend to capitalize on some of these unfortunate conflicts at
Capital City Airport and attract their business with our professional, enthusiastic, and qualifiedinstructor group.
Our reputation of maintaining a nice-looking and well-maintained aircraft at an affordable pricewill be our final and most respected selling medium.
4.3.2 Main Competitors
Spartan Wings:
Strengths: They have several different rental aircraft from which to choose, and excellentmarketing in the field. Because of an all-female management team and ownership, their
exposure to women in aviation is enormous.
Weaknesses: Their flight instructors are only instructing to build flight time in order to obtain an
airline or corporate job. Male students have complained of special treatment and training forfemale students. Aircraft are not well-maintained, and the pilot-product of their school has not
been strong.
Wolverine Aviation:
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Lansing Aviation, LLC
5.0 Strategy and Implementation Summary
Lansing Aviation will be focusing initially on students interested in obtaining their private pilotcertificate. These students will primarily come from word-of-mouth-advertising from our
instructors, students, and other contacts at Mackinac-Great Lakes Airlines System (M-GLAS).
We will attempt to continue teaching these students through their instrument rating course withus, upon completion of their private pilot package.
In order to attract larger sums of money, we will offer a 10-hour block of aircraft rental for$730 ($73/hour) which is reduced from our normal rental rate of $75 per hour. Additionally, we
will offer M-GLAS employees the same $73 per hour rate for block or non-block rentals.
5.1 Sales Forecast
Our Sales Forecast tables shows our estimated aircraft rental revenue. This monthly breakdowncan be seen in the appendix. Estimated operating expenses and other charges are listed in the
Profit and Loss table.
Chart: Sales Monthly
Aircraft Rental
$4,000
$5,000
$6,000
Sales Monthly
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Table: Sales Forecast
Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Aircraft Rental $49,068 $54,007 $55,392 $50,776 $60,931Other $0 $0 $0 $0 $0Total Sales $49,068 $54,007 $55,392 $50,776 $60,931
Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5Aircraft Rental $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0Subtotal Direct Cost of Sales $0 $0 $0 $0 $0
Chart: Sales by Year
Aircraft Rental
Other
$20,000
$30,000
$40,000
$50,000
$60,000
Sales by Year
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Lansing Aviation, LLC
5.2 Milestones
Sample Milestones topic text.
The milestones table and chart show the specific detail about actual program activities thatshould be taking place during the year. Each one has its manager, starting date, ending date,
and budget. During the year we will be keeping track of implementation against plan, withreports on the timely completion of these activities as planned.
Table: Milestones
Milestones
Milestone Start Date End Date Budget Manager DepartmentSample Milestones 1/4/2008 1/4/2008 $0 ABC DepartmentFinish Business Plan 9/13/2010 10/13/2010 $100 Dude BossAcquire Financing 9/23/2010 11/12/2010 $200 Dudette LegumersAh HA! Event 10/3/2010 10/8/2010 $60 Marianne BossesAh Merde Alors! Event 11/2/2010 11/7/2010 $250 Marionette Bouc missaireGrande Opening 11/12/2010 11/17/2010 $500 Gloworm NobsMarketing Program Starts 10/13/2010 11/7/2010 $1,000 Glower MarketeersPlan vs. Actual Review 3/10/2011 3/17/2011 $0 Galore AllesFirst Break-even Month 7/12/2011 8/11/2011 $0 Bouys SalersHire Employees 6/10/2011 7/10/2011 $150 Gulls HRMUpgrade Business Plan Pro 8/29/2011 8/31/2011 $100 Brass BossiesTotals $2,360
Chart: Milestones
Milestones
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Lansing Aviation, LLC
6.0 Management Summary
The initial organizer of Lansing Aviation, LLC is Michael J. Zorn. In order to maintain legalrequirements of an LLC, there is one other member of the company. At the current time, thereis only the need for two members in the organizational structure.
Lansing Aviation will rely on the member(s) of the LLC for decision making and financialinvesting when needed. The ultimate responsibilities of the entire LLC will be given to the
member(s).
6.1 Management Team
Lansing Aviation is not departmentalized. The owner and organizer, Michael J. Zorn, is also theCEO, CFO, and planner. All decisions will be based upon the company mission statement.
The collegiate advertising and marketing background, combined with the current airline pilotexperience of the CEO, will provide for timely, accurate, and professional decisions.
6.2 Personnel Plan
Lansing Aviation will employ no one. All flight instructors will be independent contractorsresponsible for their own payroll. The company will not collect any funds from the instructors
for their time, but solely from the rental of the company's aircraft. The owner will be paid a
nominal stipend.
Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
Owner $7,833 $12,000 $0 $0 $0Name or title $0 $0 $0 $0 $0N i l $0 $0 $0 $0 $0
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Lansing Aviation, LLC
7.0 Financial Plan We want to finance our aircraft loan through cash flow from our aircraft rental.
We want to pay for our engine overhaul at the recommended TBO through cash savingsacquired during our aircraft rental.
In order to attract larger sums of money, we will offer a 10-hour block of aircraft rental for$730 ($73/hour) which is reduced from our normal rental rate of $75 per hour. Additionally,
we will offer M-GLAS employees the same $73 per hour rate for block or non-block rentals.
7.1 Important Assumptions
The financial plan depends on the number of revenue hours flown each month in our aircraft.
The most important assumptions crucial to our success are:
The aircraft will maintain flying status other than routine, required inspections lasting a day
or two.
We will not have any major aircraft accidents or incidents that will result in major downtime.
We also assume that student pilot starts will continue to increase and the demand for pilotswill continue.
Table: General Assumptions
General Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Plan Month 1 2 3 4 5Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate 28.17% 28.00% 28.17% 28.00% 28.17%
Other 0 0 0 0 0
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Lansing Aviation, LLC
7.2 Break-even Analysis
Breaking down our monthly fixed costs enables us to calculate how much the aircraft needs to
be flown each month to maintain profitability. Our monthly fixed costs include:
Hangar rental.
Aircraft insurance.
Engine overhaul fund.
Aircraft loan payments.
Routine aircraft maintenance and inspection costs.
Estimated monthly fuel costs.
The following chart and table summarizes our break-even analysis.
Chart: Break-even Analysis
$0
$1,000
$2,000
$3,000
($1,000)
($2,000)
Break-even Analysis
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Lansing Aviation, LLC
7.3 Projected Profit and Loss
With monthly fixed costs of hangar rent, renter and instructor insurance, an engine overhaulfund, aircraft loan, planned maintenance and inspections, and fuel, we can actively market our
aircraft to obtain the correct number of students to exceed our expenses while making theaircraft convenient for the students to schedule for training and rental.
A loss is expected for the first few months while a student base is carefully chosen and
constructed. We hope to increase our number of flight hours flown each month by 25% untilthe break-even point is reached. At that time, we will assess the number of students and the
number of hours being flown to determine how many more students and renters we want toincrease our profits and maintain good aircraft availability.
NOTE: You will notice in the year 2003 that the company is showing a net loss for the year.
This is the year that we estimate the aircraft engine will require a factory overhaul. Thisexpense ranges from $13,000 to $20,000, depending on several variables. Therefore, we have
chosen to show an overhaul expense of $15,000 for that year. However, this was only shown todemonstrate the effect of not properly saving for the overhaul expense. We have allocated a
certain percentage of each flight hour toward the engine overhaul savings fund which will cover
all of our expenses, thus, hopefully returning Lansing Aviation to a net profit for 2003.
Table: Profit and Loss
Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $49,068 $54,007 $55,392 $50,776 $60,931Direct Cost of Sales $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0Total Cost of Sales $0 $0 $0 $0 $0
Gross Margin $49,068 $54,007 $55,392 $50,776 $60,931Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00%
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Lansing Aviation, LLC
Chart: Profit Monthly
$0
$200
$400
$600
$800
$1,000
($200)
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Profit Monthly
Chart: Profit Yearly
$18,000
$20,000
Profit Yearly
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Lansing Aviation, LLC
Chart: Gross Margin Monthly
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Gross Margin Monthly
Chart: Gross Margin Yearly
$50 000
$60,000
Gross Margin Yearly
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Lansing Aviation, LLC
7.4 Projected Cash Flow
The following cash flow projections show the amounts anticipated from the first few monthsduring the student accumulation period through the company's rental saturation.
Cash flow is critical to our success, for payment of the insurance and aircraft loan payments as
well as the fuel costs required to operate and the hangar to house the airplane.
Chart: Cash
Net Cash Flow
Cash Balance
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Cash
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Lansing Aviation, LLC
Table: Cash Flow
Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales $49,068 $54,007 $55,392 $50,776 $60,931Subtotal Cash from Operations $49,068 $54,007 $55,392 $50,776 $60,931
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0Subtotal Cash Received $49,068 $54,007 $55,392 $50,776 $60,931
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations
Cash Spending $7,833 $12,000 $0 $0 $0Bill Payments $31,725 $32,873 $35,808 $44,540 $37,787Subtotal Spent on Operations $39,558 $44,873 $35,808 $44,540 $37,787
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $2,600 $3,780 $3,780 $3,780 $3,780
Purchase Other Current Assets $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0Subtotal Cash Spent $42,158 $48,653 $39,588 $48,320 $41,567
$ $ $ $ $
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Lansing Aviation, LLC
7.5 Projected Balance Sheet
The balance sheet in the following table shows some very important information regarding ourshort-term and long-term financial goals.
Table: Balance Sheet
Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $7,210 $12,564 $28,367 $30,823 $50,188Other Current Assets $0 $0 $0 $0 $0Total Current Assets $7,210 $12,564 $28,367 $30,823 $50,188
Long-term Assets
Long-term Assets $36,000 $36,000 $36,000 $36,000 $36,000Accumulated Depreciation $3,300 $6,900 $10,500 $14,100 $17,700Total Long-term Assets $32,700 $29,100 $25,500 $21,900 $18,300Total Assets $39,910 $41,664 $53,867 $52,723 $68,488
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $2,966 $2,678 $2,967 $3,723 $3,050Current Borrowing $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0Subtotal Current Liabilities $2,966 $2,678 $2,967 $3,723 $3,050
Long-term Liabilities $29,800 $26,020 $22,240 $18,460 $14,680Total Liabilities $32,766 $28,698 $25,207 $22,183 $17,730
Paid-in Capital $10,450 $10,450 $10,450 $10,450 $10,450Retained Earnings ($6,550) ($3,306) $2,515 $18,210 $20,090
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7.6 Business Ratios
We expect to see flat ratios of profitability during the first year while we build our customerbase. We expect these ratios to improve in the second and succeeding years. The following
table shows the projected ratios for Lansing Aviation. The Industry Profile comes from Standard
Industry Code #8299, Schools and Educational Services.
Table: Ratios
Ratio AnalysisYear 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth n.a. 10.07% 2.56% -8.33% 20.00% 9.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 45.60%Total Current Assets 18.06% 30.16% 52.66% 58.46% 73.28% 62.40%Long-term Assets 81.94% 69.84% 47.34% 41.54% 26.72% 37.60%Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.43% 6.43% 5.51% 7.06% 4.45% 43.30%Long-term Liabilities 74.67% 62.45% 41.29% 35.01% 21.43% 17.30%Total Liabilities 82.10% 68.88% 46.79% 42.07% 25.89% 60.60%Net Worth 17.90% 31.12% 53.21% 57.93% 74.11% 39.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Gross Margin 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%Selling, General & AdministrativeExpenses
81.12% 75.41% 73.39% 102.00% 72.25% 73.80%
Advertising Expenses 60.14% 58.82% 57.35% 62.57% 57.35% 5.00%Profit Before Interest and Taxes 15.70% 20.14% 43.80% 9.15% 48.91% 3.20%
Main Ratios
Current 2.43 4.69 9.56 8.28 16.45 1.33Quick 2.43 4.69 9.56 8.28 16.45 1.11Total Debt to Total Assets 82 10% 68 88% 46 79% 42 07% 25 89% 60 60%
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Lansing Aviation, LLC
Sales/Net Worth 6.87 4.17 1.93 1.66 1.20 n.aDividend Payout 0.00 0.00 0.00 0.00 0.00 n.a
7.7 Long-term Plan
Our long-term plan is based primarily on the short-term future of the business. If the aircraft isable to support its expenses, then the future of Lansing Aviation and our long-term goal plan
can be successfully accomplished.
Our long-term plan contains the following elements:
Paying off the entire aircraft loan in the first three years of operation.
Acquiring partial ownership of a twin-engine aircraft for training and travel needs.
Avoiding accident, incident, and lawsuit through our entire longevity.
Providing present and future students and renters with a superlative aircraft for all of their
flying needs.
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Appendix
Table: Sales Forecast
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Aircraft Rental 0% $693 $ 1,500 $ 3,000 $ 3,750 $ 4,500 $ 5,625 $ 5,625 $ 4,875 $4,875 $ 4,875 $4,875 $ 4,875Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Sales $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Aircraft Rental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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Appendix
Table: Personnel
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Owner 0% $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Name or title 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Name or title 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 0 0 0 0 0 0 0 0 0 0 0
Total Payroll $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
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Appendix
Table: General Assumptions
General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term InterestRate
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
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Appendix
Table: Profit and Loss
Pro Forma Profit andLoss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875
Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Gross Margin $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875
Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Expenses
Payroll $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Sales and Marketing andOther Expenses
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation $0 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300Fixed Operat ions Costs $0 $1,300 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Aircraft Upgrades 15% $0 $0 $0 $0 $0 $0 $0 $0 $500 $0 $1,000 $0Mainenance and Repairs $0 $0 $0 $200 $0 $500 $0 $500 $0 $0 $0 $0
Total OperatingExpenses
$0 $1,600 $2,923 $3,123 $3,756 $4,423 $3,923 $4,423 $4,423 $3,923 $4,923 $3,923
Profit Before Interest and
Taxes
$693 ($100) $77 $627 $744 $1,202 $1,702 $452 $452 $952 ($48) $952
EBITDA $693 $200 $377 $927 $1,044 $1,502 $2,002 $752 $752 $1,252 $252 $1,252
Interest Expense $270 $270 $270 $ 270 $270 $270 $270 $270 $265 $260 $255 $ 248
Taxes Incurred $127 ($104) ($54) $100 $133 $261 $401 $51 $52 $194 ($85) $197
Net Profit $296 ($266) ($139) $257 $341 $671 $1,031 $131 $135 $498 ($218) $507
Net Profit/Sales 42.73% -17.76% -4.63% 6.85% 7.58% 11.93% 18.33% 2.69% 2.76% 10.22% -4.48% 10.39%
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Appendix
Table: Cash Flow
Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875
Subtotal Cash from Operations $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Received $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Bill Payments $13 $433 $1,512 $2,851 $3,187 $3,047 $3,642 $3,299 $3,444 $3,428 $3,101 $3,769
Subtotal Spent on Operations $13 $433 $1,512 $2,851 $4,020 $4,047 $4,642 $4,299 $4,444 $4,428 $4,101 $4,769
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of CurrentBorrowing
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities PrincipalRepayment
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities PrincipalRepayment
$0 $0 $0 $0 $0 $0 $0 $0 $600 $600 $600 $800
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $13 $433 $1,512 $2,851 $4,020 $4,047 $4,642 $4,299 $5,044 $5,028 $4,701 $5,569
Net Cash Flow $680 $1,067 $1,488 $899 $480 $1,578 $983 $576 ($169) ($153) $174 ($694)
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Cash Balance $980 $2,047 $3,535 $4,434 $4,914 $6,492 $7,475 $8,051 $7,883 $7,729 $7,904 $7,210
Table: Balance Sheet
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12Assets Starting
Balances
Current Assets
Cash $300 $980 $2,047 $3,535 $4,434 $4,914 $6,492 $7,475 $8,051 $7,883 $7,729 $7,904 $7,210Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $300 $980 $2,047 $3,535 $4,434 $4,914 $6,492 $7,475 $8,051 $7,883 $7,729 $7,904 $7,210
Long-term Assets
Long-term Assets $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000Accumulated Depreciation $0 $0 $300 $600 $900 $1,200 $1,500 $1,800 $2,100 $2,400 $2,700 $3,000 $3,300
Total Long-term Assets $36,000 $36,000 $35,700 $35,400 $35,100 $34,800 $34,500 $34,200 $33,900 $33,600 $33,300 $33,000 $32,700Total Assets $36,300 $36,980 $37,747 $38,935 $39,534 $39,714 $40,992 $41,675 $41,951 $41,483 $41,029 $40,904 $39,910
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $384 $1,418 $2,744 $3,087 $2,925 $3,532 $3,184 $3,329 $3,326 $2,974 $3,667 $2,966Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $384 $1,418 $2,744 $3,087 $2,925 $3,532 $3,184 $3,329 $3,326 $2,974 $3,667 $2,966
Long-term Liabilities $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $31,800 $31,200 $30,600 $29,800Total Liabilities $32,400 $32,784 $33,818 $35,144 $35,487 $35,325 $35,932 $35,584 $35,729 $35,126 $34,174 $34,267 $32,766
Paid- in Capital $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450Retained Earnings ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550)Earnings $0 $296 $30 ($109) $148 $489 $1,160 $2,191 $2,322 $2,457 $2,955 $2,737 $3,244
Total Capital $3,900 $4,196 $3,930 $3,791 $4,048 $4,389 $5,060 $6,091 $6,222 $6,357 $6,855 $6,637 $7,144Total Liabilities and Capital $36,300 $36,980 $37,747 $38,935 $39,534 $39,714 $40,992 $41,675 $41,951 $41,483 $41,029 $40,904 $39,910
Net Worth $3,900 $4,196 $3,930 $3,791 $4,048 $4,389 $5,060 $6,091 $6,222 $6,357 $6,855 $6,637 $7,144
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