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Business Plan
1
Executive Summary
This report is the analysis of Threshold Aviation and its business
processes. Observations and analysis were conducted to gain insight
on bottlenecks in the company’s daily operations and ways to
improve dated practices. After an initial interview, the business team
from California State University, San Bernardino visited Threshold
Aviation at various times to interview and observe employees take
part in their daily routines. After eight weeks of observations, it seems
that communication is an issue as is the company’s tendency to
acquire projects at an “at-will” basis. Projects should be chosen
carefully and focus should be limited to those with highest priority.
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Table of Contents
Executive Summary ……………………………………………………... 1
Business Overview …………………………………………………...…..3
Market Analysis …………………………………………………………...4
Competitive Analysis ...………………................................................7
SWOT Analysis ...……………………………………….........................9
Critical Risks and Success Factors …………....................................11
Recommendations and Projected Costs ……………….....................13
Appendix A .......................................................................................16
Appendix B .......................................................................................17
Appendix C .......................................................................................20
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Business Overview
Threshold Aviation is ran by Mark DiLullo and caters to many areas of
the aviation sector. Services they offer are: Flight charters,
maintenance, interiors, sales, and acquisitions. Threshold is located
at Chino airport and is a FBO (fixed based operator). With two
enormous hangars, it is easy to see upon entry the vast majority of
aircraft they work with. The clientele ranges from business executives
to recreational flyers. Threshold has a tendency to be chaotic in its
way of completing tasks with work being usually completed later than
expected or costs exceeding original estimates by great variations.
With their great variety of services, it is hard to see what their biggest
strength is and where they make the least amount of revenue. One of
the biggest issues that they face are the reviews pilots leave amongst
each other so that needs to be addressed. Employees on the line feel
communication is a huge issue and that it is very hectic and unclear
on what is required each day given that there are no set goals that
are adhered to on a constant basis.
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Market Analysis
Upon first glance when entering the facility of Threshold Technologies
I was amazed at how large their operation really was and the diversity
of work they actually perform on aircraft. When I continued to learn
more and more about the company I realized that there seemed to be
a lack of focus on the operations that were generating the most profit.
I found that they do have low operating costs and they are able to
remain stable at a pace where all employees are being paid and the
company is somewhat profitable. The things that the company needs
to focus the most on would have to be buying and selling of aircraft
and plane maintenance and restoration.
They have a large number of employees, which comes out to
60 total, and a large customer base that reaches over 300 customers.
A majority of their customers are repeat customers with maintenance
and upgrades. Threshold as a company has many strengths and
opportunities over the competition. So far the biggest advantage they
have is their pricing over the competition with fuel, services, and
maintenance. They are able to provide better prices due to the lower
operating costs they have. They also have an advantage with their
quality of service and customer service and prompt work. The
operations are typically running smooth enough to provide the
customers with a reliable timeline of completion. The customer has a
say of when they want their work finished. Also it is difficult for
competition to arise due to the large amount of money it takes to start
up.
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I think that the best way for them to begin to move forward out
of the current form of stagnation or recession they are in is to invest
time and money into branding, marketing and capitalizing on their
current customer service reputation by offering more services. Also
with their low operating costs, they should be able to see more profit
if they take the risk and even their prices with the competition.
The biggest contributor to thresholds struggle was the
economy. In 2008, they saw their best year. Their gross revenue was
the highest it had ever been and the company was moving forward
quickly. Until the recession began, when the recession began, luxury
items and services for them became too luxurious to afford. In an
economy that is in a state of recession a company like threshold is
one of the firsts to feel the effects in their revenues. Along with being
vulnerable to the economy, they are also very much affected by
government regulations that change often and require them to attain
new certifications and licenses that are very expensive.
When I first arrived at Threshold I had remembered the note
that they have a bad reputation because of the foul smell from the old
dairy farms that surround it. As I arrived at their location in Chino, I
remember thinking to myself that it couldn’t be that bad, I was wrong.
The smell was very bad to the point that someone who wasn’t familiar
to the area would be offended. Besides the smell that cannot be
avoided, I also noticed a lack of focus on the operations and general
direction of the company. The operations were stable, but there
seems to not be enough focus on what is actually pulling in the most
profit and that is flipping the planes. As the general direction of the
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company goes, there needs to be a stop in new creative ideas for
earning money and buckle down and just focus on the skill they have
at hand. By doing that they are setting themselves up for success
down the line. It may not be immediate, but they will see profit.
Threshold is a company that holds a massive amount of
potential. The company has a large customer base with substantial
customers that are willing to spend money. They have great prices
and to their advantage, can hold them there. The best route I think
that threshold should be able to use without any risk involved is to
just focus more on perfecting the operations they have been going
through all along and slowly build profits. When they are finished
getting all the profits they need and are in a comfortable position, they
should be able to focus on expansion and generating new money
making techniques and services. It just seems like there is a general
lack of focus.
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Competitive Analysis
Just like any other business, Threshold Aviation also faces fierce
competition. We are going to be taking a look at a few of them that
are located throughout the Southern California region. The three
companies we are going to be discussing are, Southern California
Aviation, West Coast Aviation and Clay Lacy Aviation. I would have to
say that Threshold’s biggest competitor from the list is Clay Lacy
Aviation. Most of these companies deal with management, sales,
hangars and charters. I was very impressed at the information I was
able to gather just through their website, each and every company
gave me a different impression about their business through it.
Southern California Aviation located in the city of Victorville is the
least worries of our competitors from the list. I was able to speak with
one of the employees and she let me know that they didn’t have a
fueling station at their location. Out of the three competitors I
compared this was the only one who didn’t have a charter license.
However, it seems that most of their business comes from
management and hangar availability.
West Coast Aviation has two locations; one is in Long Beach and the
other in Santa Ana. Just like the other competitors, they are open
24/7 as well. They have a very large charter selection for its
customers and they have a list of all the airplanes for sale on their
website. They have pictures of the airplanes with details about each
and every one of them with the price as well.
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Our last competitor, Clay Lacy Aviation, has two locations as well.
One of the locations is in Los Angeles and the other is in Seattle,
Washington. Aside from dealing with management, sales, hangars
and avionics, they also have an astro-vision team. This means they
are professionals at taking pictures of other airplanes in the sky. If
you need an airplane commercial, these are the people you would
want to seek. They also have their own interior department just like
Threshold.
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Threshold SWOT Analysis
Strengths
Customer Service
Quality of Work
Diverse Range of Services
Knowledge/Expertise
Weaknesses
Communication
Use of Information Technology
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Opportunities
Build Relationships
Public Relations
Referrals
Mobile Services
Threats
Environmental Regulations
Local Competitors
Public Perception of Business Aviation
Weak Economy
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Critical Risks and Success Factors
At the present time, providing a wide range of services is critical in
Threshold’s ability to create and retain customers. Although diversity
of services provided is one of Threshold’s strengths, it is imperative
that they focus on the area of the business that is most profitable. An
appropriate investment in information technology will help to facilitate
this.
Although Threshold seems to focus on the fact that they have the
lowest fuel prices in the area, a small survey of local fuel prices
revealed otherwise. In Appendix A, it is easy to see that Threshold’s
fuel prices are ether directly above (100LL) or directly below (Jet A)
the median fuel price in the area. Threshold’s fuel prices are
competitive, but are not the lowest. Due to the fact that there is a
small profit margin on fuel and other FBO services, it is apparent that
this is not a growth area for Threshold, but rather a means to attract
customers to other areas of the business.
There is nothing Threshold can do directly to control the economy.
However, they can take advantage of the investment opportunities
that are available as a result of the weakened economy. Although the
value of aircraft has declined, this also creates the opportunity to
purchase used aircraft at a lower price for the purpose of
reconditioning and reselling. Because of the large amount of profit
that is possible for these jobs in comparison to FBO services, I
believe that Threshold should focus their efforts in this area of the
business.
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With little to no advertising, Threshold’s customer base is primarily
built on word of mouth from repeat customers. Customer
recommendations are largely based on their reputation for very high
quality work. That being said, it is critical that they retain the skilled
labor necessary in order to continue providing the level of service that
built their reputation. According to a 2012 article, “As the business
aviation industry slowly and haltingly starts to emerge from a long and
deep recession, a search for labor begins to for skilled labor to fill the
growing number of openings” (Harrison, 2012). Implementing
realistic standards with possible incentives for meeting goals could
provide employees with the motivation needed to keep these jobs
within budget and on time. This would benefit Threshold by not only
allowing them to complete jobs faster and increase profit, but also
help them to increase employee morale, thus contributing to
employee retention.
Sources
Harrison, K. (n.d.). Retrieved from http://www.ainonline.com/aviation-
news/ainmxreports/2012-01-18/technician-shortage-key-issue-
aviation-industry
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Recommendations
Threshold needs to make an initial investment in information
technology in order better utilize the strengths within their
organization. The biggest deficiency in this regard seems to be the
need to share information among departments. The knowledge base
at Threshold is very spread out and there is no central database that
employees can use to gather information when working on a project.
Rather, the different departments seem to communicate this
information to each other upon request, whenever it is needed. At the
very least, they need to have a database that shares information
among billing, accounts payable, inventory and customer service.
However, although the database is the foundation, they also need a
program that will take care of integrating these departments and
hopefully provide some form of automation for invoicing, inventory
and accounts receivable.
The easiest way for Threshold to accomplish this would be to
purchase a pre-packaged system, such as Total FBO
(http://www.totalfbo.com). Total FBO has been around since 1987
and offers a business software package that utilizes a SQL database
with modules that will accommodate every facet of Threshold’s
business. Total FBO even offers a version that utilizes a web portal to
access the software, which takes the burden of network and
database management off of the customer. There are many different
packages available, but for a 5-user license, the initial investment
would be roughly $10,000. My recommendation would be to purchase
the web portal version. This would save Threshold money by not
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having to invest in any additional hardware to implement the system.
It would also be possible to have a new system built from the ground
up, customized to Threshold’s specifications, but this would require a
much larger investment than a pre-packaged system.
Threshold could also make some smaller investments, such as
900mhz radios that would increase the effectiveness of
communication throughout their facility. These radios would facilitate
communication between employees that are working in different
hangars and/or different areas of the facility. A purchase of ten of
these radios would require and investment of roughly $1500 but could
greatly improve threshold’s level of customer service.
A computer workstation in the repair hangar would also be a wise
investment for the company. This would allow mechanics to access
electronic copies of the repair manuals that are essential to
Threshold’s business. A simple workstation, including peripherals,
could be purchased for approximately $ 2000. I would also
recommend that Threshold transfer all of their older repair manuals
that are not available in electronic form to PDF files. There are
several companies that will perform this service on-site without
having to ship the repair manuals anywhere. I believe that this is
critical due to the fact that many of these repair manuals are
irreplaceable. A service like this can run anywhere from two to eight
cents a page, depending on the level of difficulty involved in scanning
the manuals. The estimated cost for scanning a manual that is 500
pages would be $25.
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Projected Costs
Computer Software $10,000
900 mhz Radios $1,500
Computer Workstation $ 2,000
Scanning 30 Manuals to PDF $ 750
________________________________________
Total Cost For All Recommendations $ 14,250
* Due to a lack of financial information, a Cost Benefit Analysis
cannot be provided.
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Appendix A
COMPETITIVE ANALYSIS
FACTOR MY BUSINESS STRENGTH WEAKNESS COMPETITOR
A
COMPETITOR
B COMPETITOR C
IMPORTANCE
TO
CUSTOMER
Name Threshold Aviation
Southern
California
Aviation
West Coast
Aviation Clay Lacy Aviation
Price FBO-lowest in So-Cal
Very
Competitive
with their
prices
No fuel station available at
location
Fuel Services at both
locations
Quality
Charter
Selection
Charter- Gulfstream IISP
Gulfstream IITT
2 Citation IIs Falcon 10
Lear 55
Charter
selection is limited
No Charter
King Air
C90GT King Air 200
King Air 350
Cessna
Citation CJ3
Learjet 40XR
Cessna
Citation Excel
Hawker 900XP Challenger
604
Challenger
601-3A
Challenger
601
Premier 1A King Air
B200SP
Learjet 35
Gulfstream G400
Hawker800XPJet
Embraer Legacy
Gulfstream G200 Learjet 35
Hawker 800XP
Embraer Legacy
G200
Very
important.
Customers like
to have
options to
choose from
Service
Maintenance/Management Charter
FBO
Sales
Rental Cars
Interior
Hangars Available
Offer
numerous of
services that other places
don’t
Maintenance
Hangars Available
Charter
Maintenance
Sales Hangars
Available
Maintenance/Management
Charter FBO
Interior Departmet
Avionics Team Sales
Astrovision
Hangars Available
Reliability All services
available 24/7 No weakness
Services
Available 24/7 Available 24/7 Available 24/7
Stability
Expertise
Gulfstream,
Falcon, Hawker,
Cessna &
Challenger
Specialist
Learjets
Citations
Challengers
Astrajets
Falcons
Beechcraft Bonanzas
Beechcraft
Barons
Beechcraft King
Airs
Beechcraft
Premiers Hawker HS 125
Series
Company
Reputation
Great Safety
Record
FAA
FFA
EASA
Can store more than 300 aircraft
Award-winning
Class 4
maintenance
repair station
(FAA Diamond
Award)
The Wyvern
Standard
Location Chino, CA Slowly growing as a company
Only one location
Victorville, CA Long Beach and Santa Ana, CA
Los Angeles, CA and Seattle, WA
Appearance
Sales Method
Website has
page with
airplane pictures,
sales price and
other info.
Website has
page with
airplane pictures,
sales price and
other info.
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Appendix B
Source: https://www.airnav.com/fuel/local.html
Loca on FuelType-100LL FuelType-JetA
FullService FullService
ChinoAirport PricePerGallon PricePerGallon
Encore $5.75 $4.42
Threshold $5.84 4.47
FlyingTigers $4.43
OntarioInterna onalAirport
AVFuel $5.65 $5.65
CableAirport,UplandCA
CableAirport $7.06
RiversideMunicipalAirport
FreemanHoldingsofRiverside $5.52
MarchAirReserveBase
AmericanAirportsCorp $5.52
SanBernardinoInterna onalAirport
Epic $6.42 $5.62
Bracke FieldAirport,LaVerneCA
AVFuel $6.15 $5.20
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$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00
Encore
Flying Tigers
Threshold
AV Fuel
American Airports Corp
Epic
Guardian Jet Center
Price Per Gallon/
Full Service Jet A
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$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00
AV Fuel
Freeman Holdings of Riverside
Encore
Cable Airport
Threshold
American Airports Corp
Guardian Jet Center
Price Per Gallon/
Full Service 100
LL
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