• Traditional operating expenses – rent, insurance, staff, marketing, systems, etc. are all relatively small for a DSAB business. One standout however is liability insurance. Make sure you have adequate coverage for the inevitable mishaps.
Capital Expenditures There is good news here. Most DSAB businesses don’t require a lot of capital to get started. You will probably only need to invest in one or two drones to start, and you need to have post processing software to create end products for your customers. You can build administrative functions as the need arises, so it is best to keep your ongoing expenses low to start. Hire a bookkeeper, rent some inexpensive space or work from home, and as you grow expand from there.
Mitigating Risks
In Part 1 of this series we identified several risks: • Is the market over-hyped? • What about regulatory risks • What are the disruptive DSAB risks on the horizon?
Over-hyped Marketplace Last time we discussed how much expectations are exceeding our ability to deliver actionable solutions. You can help mitigate this phenomenon by creating a clearly defined service, ie what exact service you will perform, what outputs you will deliver, when it will be completed, and how much it will cost. Then document your service in a clearly defined contract with your customer. Putting deliverables in writing up front will help you avoid many future problems. Finally, do your absolute best to “OVER DELIVER” on your results. Find a way to add a little extra and your customers will reward you with testimonials, referrals and overall goodwill.
Regulatory Issues Depending on what country, or state or province, you probably will be subject to some form of regulation. Furthermore, almost all drone regulations are going to change as the technology gains wider marketplace acceptance. So it is imperative for you to not only follow the rules, but also make sure that you find a way to keep current with them. One good way is to find legal counsel with direct industry involvement and pay them a small retainer to keep you updated. Next, it is also important to speak out to regulators, especially in the US. Your voice is very important in providing balance to the public news stories and private lobbying that is a threat to all DSAB providers. I'm not suggesting that you become an activist, but it is important to have your voice be heard and to support industry associations that share your point of view.
Future Risks to the DSAB Business Model This is a large topic that we will address more fully in another article. For now, I would look for several key trends:
• First there will be a significant number of new entrants once the FAA in the US publishes commercial drone rules. That will create new competition, there will be pricing pressures, and getting your message to your prospects will become more costly. We’ll develop this more fully in a future article. • Next, look for major advances in software analytics. Right now there are very few tools that actually deliver true “ROI solutions”. You will need to continuously upgrade your service offering by investing in new developments as they come to market. We have barely scratched the surface of big data predictive and proscriptive analytics and will be important for you to stay current with new capabilities.
• Third, look for continued improvements in both drones and sensors. In particular, improvements in ‘ease of use’ will cause you to change your business model. As drones become easier to use, your value proposition will move from being a data gatherer to become a subject-matter-expert in interpretation of the data. Once again, we’ll discuss this in more detail in the future.
• There are many more risks and opportunities on the horizon that we will discuss in future articles.
What do you think? Feedback is appreciated, email me at [email protected]. I promise to provide an update with your good suggestions included. Thanks go to Doug Andriu at SkyData Pro for his valuable insights.
What’s in the next article? In the next instalment we’ll go through some case studies and respond to your feedback.
About Event38 Event 38 designs and manufactures drones, specialized optical sensors, and a cloud based Drone Data Management SystemTM for small and medium sized businesses. Today we have customers in 55 countries using our products for agriculture, surveying, construction, environmental preservation, and other applications. Please contact us at www.event38.com