This will be a longish post. Read on if you've been contemplating starting your own LSA flight school.
As many of you know, I launched AvSport of Lock Haven in late January of this year. I spent six months last year (May through early December) researching, writing and massaging the business plan, meeting multiple times with my CPA, talking to the local FSDO, getting business permits and tax licenses, registering trademarks and service marks, designing a website, preparing curricular materials, negotiating a lease with the airport manager, making presentations to City Council, and test-flying various LSAs, before I ordered my (used) plane.
Preparing the plane for delivery (installing some additional equipment and getting a fresh annual) was supposed to take four weeks. It actually took seven. When I took delivery, I had only about two hours in type. So, I got five hours of dual from a CFI with several hundred hours in type, flew the plane home (3.4 hours), and with ten hours total experience in make and model, gave my first lesson in it the next day! I now have about 75 total LSA hours -- just enough to start being dangerous...
My total start-up costs were right around $100k, including aircraft purchase. I considered bringing other capital into the venture, but didn't want to relinquish total control (yes, to be successful in business, you really need to be a bit of a control freak) or compromise my standards. I was fortunate in being able to do this without partners or bank loans (by trading in another plane that was already paid for). Still, I expect it to take me 1 to 2 years to hit break-even,
excluding the purchase price of the aircraft (which will have to be amortized over several years).
The dealer from whom I bought my SportStar had several other planes for me to consider. There was a somewhat newer, much nicer, and better equipped one that I flew and really liked, but it would have cost me an extra $20k. I had the cash, but that would have left me strapped, without the cushion needed to cover expected operating costs and contingencies. The seller very generously offered to carry paper, at a most favorable interest rate -- and I seriously considered it, for a few milliseconds. Finally, I replied that, nice as the other plane was, it would be foolish to start a new business in debt.
I'm working on a series of articles for NAFI Mentor detailing what I went through in starting this business. I was well prepared for the entrepreneurial aspects, having started a Silicon Valley high tech company back in the 1970s, having run an international nonprofit and a larger engineering firm more recently, having gone through a full MBA curriculum while in grad school, taught college for 35 years, flight instructed for almost 30, and been flying since 1961. Still, I was surprised by a few of the realities of starting a flight school. Biggest hit was insurance costs.
Somebody on this thread mentioned that you really need more than one plane, and I agree. I am in the process of training a couple of adjunct flight instructors, personally training eight primary and two advanced students, and find myself working seven days a week. once the other instructors come up to speed, things will get a bit better -- and then, if I have enough graduates interested in renting, I'll consider purchasing a better equipped but nearly identical bird for that purpose, doing most of my instruction in the present plane. There will be economies of scale, training advantages, and maintenance convenience in having two of the same kind.
The majority of new small businesses fail within the first two years, primarily by being under-capitalized. Aside from having a good cash cushion, the best indicator of success is the level of detail in the business plan. It should be both thorough and formal -- even if you are not going for venture capital, others will read it, and a good document can gain you important allies. I'll be happy to share my Policy Manual with anyone else planning to start an LSA school -- I've tried to anticipate all eventualities, but of course I'm sure I've left a lot out!
Starting a flight school is a non-trivial matter. Be sure you're doing it for the right reasons. Don't expect this will get somebody else to pay for your flying pleasure. For every hour I fly, there's an hour of administration. If you don't really enjoy both teaching and managing a business, this is probably not the right path for you. But if you get your kicks out of creating something out of nothing, have a supportive family that doesn't mind you working seven days a week, and have a reasonable retirement income or other source of day-to-day living expenses, then the intangible rewards are substantial.
Yes, I could still go broke. So, the final advice I can give is: have an exit strategy. Pick a walk-away point, and don't be afraid to stick to it. Decide in advance how much you're willing to lose, and get out when you hit your limit. Business decisions should never be based upon sunk costs. Look forward, not back.
To paraphrase Kenny Rogers: you gotta know when to hold 'em / know when to fold 'em / know when to walk away / know when to fly...
Most important: have fun!