Unstable 9 #1 July 12, 2003 This is a question that has been bugging me since day one of my participation in the Sport - i don't expect any definative answers, but Maybe someone wiht some more experience can point me in the right place. How does a Dropzone work? Financially. I've only jumped at 4 dropzones, and all i hear about is "breaking even" I can see a Single Cessna DZ operation itself with low margins, as with the Case of my home DZ, KSUPC, running loads of experienced Jumpers, the occasional FJC and students. What I Just don't seem to understand is how a Single Cessna DZ can ever grow to the point where the can gainfully operate 2 Cessnas, a Small Turbine, or even a fleet. Realalistacally, I don't see how Licenced Jumpers can turn enough of a profit to create growth. Even small "tandem factories" seem to get stuck at that 2-cessna barrier. Economic growth in this sport comes in such huge leaps, i just can't imaging any DZ Ever able to positivly grow without sustaining substantial debt. Maybe i just need to spend some time going through some DZ's books, but that seems like priority Information that will not be redily given out. Does somebody have any reasources i cna look to for how a DZ can financially sustain itself to the point it can break even or even possibly see a growth?? I am no finance major, but i do have a VERY strong math background being in Actuarial Sciences. I try to play with the nubmers i find from different sources, just doens't seem to fit.=========Shaun ========== Quote Share this post Link to post Share on other sites
mattacl 0 #2 July 12, 2003 Although I cant give you exact #'s the way I've seen thru working manifest has been what your students bring in is profit everyone else is just filling seats on the plane. To give you some #s to work with a lease on a turbine aircraft will run around $10-15 per seat add fuel to that and possibly pay for pilot. Fuel for King Air 90 is 30 gals load at around $1.50 -$2.00 per gal whole sale jet a. Pilot is $50-$80 a day. The other sources to consider are gear store (New Gear, used gear being sold thru DZ, rigging, and depending how much the DZ is part of the airport you might have fuel sales hanger rent and tie downs.) For expenses look for manifest staff, insurance, electric, leases on buildings, water, sewer, heating, advertising, gear maintenance (tandem rigs/student rigs), load organizers, ground crew, building maintenance. Most of this gets absorbed by the students. (Thats a lot) and don't forget to pay the instructors. A quick break down on students: TDM Jump seats for 2 @ $20.00 = $40.00 Gear rental (covers mtce and packing) = $35.00 Instructor Pay = $40.00 Manifest Staff 0.5 hrs @ $8 = $4.00 -Time spent with student for paper work money --- -and video training Cost to DZ =$119.00 Cost to Student =$199.00 Drop zone puts $80.00 toward all those expenses AFF First Jump Course Instructor = $30.00 AFF Instructor 2@$35 = $70.00 Aircraft Seats 3@$20 = $60.00 Radio Person = $6.00 Gear rental (See above) = $35.00 Manifest = $4.00 Cost to DZ = $265.00 Cost to Student = $315.00 DZ gets $50.00 Video Aircraft seat = $20.00 Videographer Pay = $35.00 Film (35mm and VHS) = $5.00 Cost to DZ = $60.00 Cost to Student = $79.00 DZ gets $19.00 All of these figures will vary DZ to DZ. I cant open up the books for you but if you start applying principle to anything the DZ does this business is a lot about love for the sport and just survival.Safety briefing: Dont Die! Quote Share this post Link to post Share on other sites
rickjump1 0 #3 July 12, 2003 I know one little DZ was started so people would not have to drive half way across the state to jump. Profit is still not the issue here. Sure, they will most likely never get a turbine aircraft, and some of the jumpers leave once in a while to jump one, but they are there if you need a place to jump. Not many skygods hang here.Do your part for global warming: ban beans and hold all popcorn farts. Quote Share this post Link to post Share on other sites
Rdutch 0 #4 July 12, 2003 You want to know how to make a small fortune in the skydiving industry? Start with a Large one! Ray Small and fast what every girl dreams of! Quote Share this post Link to post Share on other sites
Yoshi 0 #5 July 12, 2003 any dzo that says the experienced jumpers dont give any profit are full of it.. at least in most cases where the majority of jumps made are by experienced licenced skydivers I would love to hear of any dzo that believes that they would come close to surviving without them. licenced skydivers may have the least amount of margin for income and the least amount of profit per person, but with the volume of jumps made it (in most cases) far outweighs the income from students... just my .02 -yoshi_________________________________________ this space for rent. Quote Share this post Link to post Share on other sites
SkydiverRick 0 #6 July 12, 2003 QuoteI would love to hear of any dzo that believes that they would come close to surviving without them. just my .02 -yoshi QuoteHave you ever heard of Skydive Las Vegas? never pull low......unless you are Quote Share this post Link to post Share on other sites Casch 0 #7 July 13, 2003 QuoteHave you ever heard of Skydive Las Vegas? Pfft, they don't count Quote Share this post Link to post Share on other sites Unstable 9 #8 July 14, 2003 Adding these up would generate a smal profit- but how does a DZ get the kick in the pants to move from 1 or 2 cessna's to a small turbine? Thats a huge step......=========Shaun ========== Quote Share this post Link to post Share on other sites Unstable 9 #9 July 14, 2003 I can think of some DZ's that were started so some wealthy person could just have a DZ to their own - they had the $ to make all the initial investments. Does anybody think that this could be a stepping stone for growth - or just a rich kids toy?=========Shaun ========== Quote Share this post Link to post Share on other sites SkydiverRick 0 #10 July 14, 2003 Quote I can think of some DZ's that were started so some wealthy person could just have a DZ to their own - they had the $ to make all the initial investments. Does anybody think that this could be a stepping stone for growth - or just a rich kids toy?Every business has plateau that you must cross. It's a big step from 2 Cessnas worth 40k each to a turbine for a million dollars. never pull low......unless you are Quote Share this post Link to post Share on other sites mikkey 0 #11 July 14, 2003 I think it is a worldwide fact that DZ's are not a very profitable business venture. I think cost structure is quite similar in OZ. I had a chat with an insider and the way it was explained to me is: - Income from sports skydivers only covers cost in most cases. - Profit margins are achieved with students and tandems. - Additional margin is achieved by having professional video facilities and get most first time AFF and Tandems to pay for the video. - Gear hire is also profitable. Cost of rental gear ~ 300 jumps to pay for the rig. So if the DZ looks after it and maintains it and it gets utilised (i.e. lots of students), it is good business. - Additional income can come from gear dealership and rigger services - If DZO or staff is qualified, higher margin activities can also be created from being able to do training courses for ratings and do other courses and workshops (e.g. camera, canopy control etc.). Key is to invest enough from the start. Example: if you "only" have a C-182 you will struggle to make enough money to upgrade to a turbine. Why? It is more difficult to "attract" and "process" enough volume of high margin business to both pay fixed and variable cost - plus accumulate funds to invest in bigger planes. Example: If you have a larger plane, e.g. a Caravan, you can easily process 20 AFF students on one course over a weekend with the first jump on the Sunday. Probably not possible with a C-182. Better to invest in a larger, faster plane from the start IF you have good marketing skills and are located ina decent "market" (enough population within driving distance for your AFF and Tandem "pipeline"). IF you can attract enough AFF and Tandems you will turn a profit and the sport skydivers will help filling the plane and create the right atmosphere at the DZ. Also, with a larger plane it is easier to be able to "process" students and Tandems AND have sports skydivers on board on the same lift. If you try to do both with a small plane you are sure to piss somebody off because they can not get on a lift. Larger planes aslo allows you to do "group specials" and attract the corporate market etc. and greater revenue stream allows more marketing and better facilities in order to attract more volume etc. It is that easy and that difficult - basically you need enough volume of high margin business constantly. However, the higher the initial investment, the higher the risk. Anyway, that is how I've got it explained. But even successful turbo DZO's with lots of students and tandems are not rich people, but they can probably make a reasonable income. So it is a type of business you only want to be in for the love of the sport. Edit: PS: And in regard to how to get from a small Cessna to an expensive turbo - you do not buy one - you lease one. But you have to be sure to have the volume or you will be broke very quickly....--------------------------------------------------------- When people look like ants - pull. When ants look like people - pray. Quote Share this post Link to post Share on other sites Unstable 9 #12 July 14, 2003 Thanks for that information - It helped a lot. Seems like it never made sense to me, but i guess it doesn't make that much sense in the first place - from the perspective of a DZO. Probably not a profession that i want to pursue. =========Shaun ========== Quote Share this post Link to post Share on other sites tictoc 0 #13 July 14, 2003 Another thing that you must consider is leasing. I do beleave that is how alot of them bridg the gap. I knowthat are DZO has a seperate biss. were he leases his aricraft 1 otter and 2 caravans (1short and 1 long) plus we have are aircraft.-------------------------------------------------------- Some one must go to the edge for others to be able to find it. But if you go be sure you can make it back. Quote Share this post Link to post Share on other sites Pubwoof 0 #14 July 14, 2003 Haven't seen concessions mentioned yet. Most mid to large size DZs have snack bars, vending, t-shirts/hats, and the like. All of these things, presumably, contribute to the bottom line at least somewhat, or there probably wouldn't be any. A few larger DZs even have a bar, another reliable stream of revenue (with the right gang around of course). Some DZOs also run the FBO at their respective airport, although I have no clue how lucrative a business that is. As for the part of the equation the experienced jumpers fit into...it probably isn't the 'profitable' one when looking only at profit-per-slot. On several occasions after most of the students have gone for the day, I've personally witnessed manifest using a calculator to figure out how many experienced jumpers they needed to break even on the next load. The load never has to be put on call until manifest is sure they're not going to lose any money. Outside of the calculus that goes into the loads themselves, I'd bet that the experienced jumpers contribute a lot more than the students do when it comes to the concessions/gear/etc. revenues. All in all, the most profitable thing for the DZO is to bring a new student all the way through training, licensing, and their subsequent gear purchases. At the end of this trail, you end up with a living, breathing advertisement/ambassador for your DZ who'll more or less pays for themselves. The experienced jumpers are going to be the biggest reason your typical first-time students will ever want to become experienced themselves (thus feeding back into the cycle). I'd speculate that the 'profitable' DZs (if there is such a thing) use business models that are geared towards making as much money as they can from the 1st jump through the last gear sale. But, alas, I've never been so blessed as to own my own DZ, so I can't know for sure. The glass isn't always half-full OR half-empty. Sometimes, the glass is just too damn big. Quote Share this post Link to post Share on other sites Rixterman 0 #15 July 16, 2003 Just ask Gene Paul Thacker former owner of Reaford DZ. He started out with one Cessna and look at his inventory when he sold it to his son Tony.TREE CLIMBIN, PARAFOIL HOOKIN, SLIDER STOWIN MO FO Quote Share this post Link to post Share on other sites feuergnom 29 #16 July 16, 2003 QuoteI can think of some DZ's that were started so some wealthy person could just have a DZ to their own - they had the $ to make all the initial investments. Does anybody think that this could be a stepping stone for growth - or just a rich kids toy? If it's just a toy for some rich person it'll go down faster than you can imagine. especially if he/she is not rreally involved. it's definitely not enough to put a nice plane to a landing field and start business. from what i know this has never worked. to start a DZ and to bring it to prosper u have to deal with a lot of people not involved in skydiving and who follow very different goals. you have to make agreements with the other pilots who are just into flying. you have to make arrangements with the neighborhood of the DZ (noise etc). you have to bring experienced jumpers to the place and give them something they cant find anywhere else (or not within a certain area) all in all you should be really talented in communication - i you're not forget it. i've seen it and right now, "mr i'm rich so i run the place" is broke and the rest of the bunch is trying to restore business owning or running a DZ on a non-profit base is imho the best way to do it. if it turns out you actually make some extra dough - congrats!The universal aptitude for ineptitude makes any human accomplishment an incredible miracle dudeist skydiver # 666 Quote Share this post Link to post Share on other sites Join the conversation You can post now and register later. 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Casch 0 #7 July 13, 2003 QuoteHave you ever heard of Skydive Las Vegas? Pfft, they don't count Quote Share this post Link to post Share on other sites
Unstable 9 #8 July 14, 2003 Adding these up would generate a smal profit- but how does a DZ get the kick in the pants to move from 1 or 2 cessna's to a small turbine? Thats a huge step......=========Shaun ========== Quote Share this post Link to post Share on other sites
Unstable 9 #9 July 14, 2003 I can think of some DZ's that were started so some wealthy person could just have a DZ to their own - they had the $ to make all the initial investments. Does anybody think that this could be a stepping stone for growth - or just a rich kids toy?=========Shaun ========== Quote Share this post Link to post Share on other sites
SkydiverRick 0 #10 July 14, 2003 Quote I can think of some DZ's that were started so some wealthy person could just have a DZ to their own - they had the $ to make all the initial investments. Does anybody think that this could be a stepping stone for growth - or just a rich kids toy?Every business has plateau that you must cross. It's a big step from 2 Cessnas worth 40k each to a turbine for a million dollars. never pull low......unless you are Quote Share this post Link to post Share on other sites
mikkey 0 #11 July 14, 2003 I think it is a worldwide fact that DZ's are not a very profitable business venture. I think cost structure is quite similar in OZ. I had a chat with an insider and the way it was explained to me is: - Income from sports skydivers only covers cost in most cases. - Profit margins are achieved with students and tandems. - Additional margin is achieved by having professional video facilities and get most first time AFF and Tandems to pay for the video. - Gear hire is also profitable. Cost of rental gear ~ 300 jumps to pay for the rig. So if the DZ looks after it and maintains it and it gets utilised (i.e. lots of students), it is good business. - Additional income can come from gear dealership and rigger services - If DZO or staff is qualified, higher margin activities can also be created from being able to do training courses for ratings and do other courses and workshops (e.g. camera, canopy control etc.). Key is to invest enough from the start. Example: if you "only" have a C-182 you will struggle to make enough money to upgrade to a turbine. Why? It is more difficult to "attract" and "process" enough volume of high margin business to both pay fixed and variable cost - plus accumulate funds to invest in bigger planes. Example: If you have a larger plane, e.g. a Caravan, you can easily process 20 AFF students on one course over a weekend with the first jump on the Sunday. Probably not possible with a C-182. Better to invest in a larger, faster plane from the start IF you have good marketing skills and are located ina decent "market" (enough population within driving distance for your AFF and Tandem "pipeline"). IF you can attract enough AFF and Tandems you will turn a profit and the sport skydivers will help filling the plane and create the right atmosphere at the DZ. Also, with a larger plane it is easier to be able to "process" students and Tandems AND have sports skydivers on board on the same lift. If you try to do both with a small plane you are sure to piss somebody off because they can not get on a lift. Larger planes aslo allows you to do "group specials" and attract the corporate market etc. and greater revenue stream allows more marketing and better facilities in order to attract more volume etc. It is that easy and that difficult - basically you need enough volume of high margin business constantly. However, the higher the initial investment, the higher the risk. Anyway, that is how I've got it explained. But even successful turbo DZO's with lots of students and tandems are not rich people, but they can probably make a reasonable income. So it is a type of business you only want to be in for the love of the sport. Edit: PS: And in regard to how to get from a small Cessna to an expensive turbo - you do not buy one - you lease one. But you have to be sure to have the volume or you will be broke very quickly....--------------------------------------------------------- When people look like ants - pull. When ants look like people - pray. Quote Share this post Link to post Share on other sites
Unstable 9 #12 July 14, 2003 Thanks for that information - It helped a lot. Seems like it never made sense to me, but i guess it doesn't make that much sense in the first place - from the perspective of a DZO. Probably not a profession that i want to pursue. =========Shaun ========== Quote Share this post Link to post Share on other sites
tictoc 0 #13 July 14, 2003 Another thing that you must consider is leasing. I do beleave that is how alot of them bridg the gap. I knowthat are DZO has a seperate biss. were he leases his aricraft 1 otter and 2 caravans (1short and 1 long) plus we have are aircraft.-------------------------------------------------------- Some one must go to the edge for others to be able to find it. But if you go be sure you can make it back. Quote Share this post Link to post Share on other sites
Pubwoof 0 #14 July 14, 2003 Haven't seen concessions mentioned yet. Most mid to large size DZs have snack bars, vending, t-shirts/hats, and the like. All of these things, presumably, contribute to the bottom line at least somewhat, or there probably wouldn't be any. A few larger DZs even have a bar, another reliable stream of revenue (with the right gang around of course). Some DZOs also run the FBO at their respective airport, although I have no clue how lucrative a business that is. As for the part of the equation the experienced jumpers fit into...it probably isn't the 'profitable' one when looking only at profit-per-slot. On several occasions after most of the students have gone for the day, I've personally witnessed manifest using a calculator to figure out how many experienced jumpers they needed to break even on the next load. The load never has to be put on call until manifest is sure they're not going to lose any money. Outside of the calculus that goes into the loads themselves, I'd bet that the experienced jumpers contribute a lot more than the students do when it comes to the concessions/gear/etc. revenues. All in all, the most profitable thing for the DZO is to bring a new student all the way through training, licensing, and their subsequent gear purchases. At the end of this trail, you end up with a living, breathing advertisement/ambassador for your DZ who'll more or less pays for themselves. The experienced jumpers are going to be the biggest reason your typical first-time students will ever want to become experienced themselves (thus feeding back into the cycle). I'd speculate that the 'profitable' DZs (if there is such a thing) use business models that are geared towards making as much money as they can from the 1st jump through the last gear sale. But, alas, I've never been so blessed as to own my own DZ, so I can't know for sure. The glass isn't always half-full OR half-empty. Sometimes, the glass is just too damn big. Quote Share this post Link to post Share on other sites
Rixterman 0 #15 July 16, 2003 Just ask Gene Paul Thacker former owner of Reaford DZ. He started out with one Cessna and look at his inventory when he sold it to his son Tony.TREE CLIMBIN, PARAFOIL HOOKIN, SLIDER STOWIN MO FO Quote Share this post Link to post Share on other sites
feuergnom 29 #16 July 16, 2003 QuoteI can think of some DZ's that were started so some wealthy person could just have a DZ to their own - they had the $ to make all the initial investments. Does anybody think that this could be a stepping stone for growth - or just a rich kids toy? If it's just a toy for some rich person it'll go down faster than you can imagine. especially if he/she is not rreally involved. it's definitely not enough to put a nice plane to a landing field and start business. from what i know this has never worked. to start a DZ and to bring it to prosper u have to deal with a lot of people not involved in skydiving and who follow very different goals. you have to make agreements with the other pilots who are just into flying. you have to make arrangements with the neighborhood of the DZ (noise etc). you have to bring experienced jumpers to the place and give them something they cant find anywhere else (or not within a certain area) all in all you should be really talented in communication - i you're not forget it. i've seen it and right now, "mr i'm rich so i run the place" is broke and the rest of the bunch is trying to restore business owning or running a DZ on a non-profit base is imho the best way to do it. if it turns out you actually make some extra dough - congrats!The universal aptitude for ineptitude makes any human accomplishment an incredible miracle dudeist skydiver # 666 Quote Share this post Link to post Share on other sites
