By Mark Batea specializes
Intro paragraph
*1) Does your company have more than one location?
If NO Move to Question #2
If YES Add 5 points for each location that meets the criteria below.
a) Is one or more location in a different city or state (more than 200 miles away)?
b) Are any future locations planned for a different city or state?
Key Considerations
Companies with more than one location face a variety of challenges not experienced by single location businesses. One of the most costly challenges is the hiring of effective managers and executives at new locations. Depending on the industry, there are many instances where complete staffs are duplicated in each location. The increased payroll costs, reduction in effective management and decentralized chain of command can be extreme. These challenges are even more pronounced during the opening of a new location.
The use of a business aircraft allows the company to have almost immediate and sometimes daily interaction with new facilities and locations. The ability to get key managers from the home office to new locations and back within the same working day can help the company immeasurably. Using business aircraft eliminates the need to recruit, hire, train and place a completely new management team in a new location. The expertise and experience of the company’s existing management can be used to bring new locations on-line quickly and efficiently. The business aircraft can make even remote locations seem like they are only across town. The reduced cycle time to bring new locations on-line can fuel explosive growth and allow the company to fully reach its potential.
Case Study
About 18 months ago, a technical service company here in Los Angeles acquired a similar company in Arizona as part of a regional expansion. Although the acquisition went smoothly, the standardization of management principles and administrative issues was taking much longer than planned. The management of the Arizona company was used to doing business one way, and the Los Angeles company wanted common standards. The decision was made to have one of the Senior Los Angeles managers commute back and forth to Arizona to bring the new company in line with company policies and practices. Since there are no direct flights from Los Angeles to Flagstaff, the commute always took over 5 hours each way, necessitating overnight trips and wasted days. After a month, this manager was frazzled and virtually ineffective when in Los Angeles, and the transition was still moving slowly in Arizona.
The president of the company called a jet charter company to see if there was a practical and cost-effective means of shuttling the manager to and from Arizona. After numerous discussions and a thorough analysis of the company’s needs, the decision was made to utilize a King Air (twin-engine turbo-prop) once or twice a week. After two weeks, this manager was traveling to Arizona with a team of 4 other managers. The trip took about an hour and a half, allowed more people to travel (since they would only be out of the Los Angeles office for 1 day) and the Arizona office was quickly brought on-line and made profitable. The company eventually signed a block-lease for the King Air and has since expanded to Las Vegas, Northern California and Oregon. They use the King Air for trips under 2 hours and occasionally have the need for a Westwind. Even though the King Air and Westwind charters are more expensive than airline fares, the company avoided hiring new management teams for each new location and is able to bring new acquisitions on line much faster than otherwise possible.
2) Does your company have one or more MAJOR customers located in a different city?
If NO Move to Question #3
If YES Add 5 points for each customer that meets the criteria below.
a) Is the customer located in a city or state more than 200 miles away?
b) Are you currently pursuing business in another city?
c) How important is on-site customer service to your business? (Scale of 1-10: 1=Not important, 10=Vital to the success of the business). Add your answer.
Another challenge for growing and expanding businesses is customer service for customers located in different cities. Most businesses have ongoing programs to enhance and improve customer service, and business aircraft allow companies to have immediate access to key customers regardless of their location. Having a customer service team arrive in a business jet makes the customer feel important and well served. A business aircraft can even bring the CEO on-site more often for important face-to-face meetings that otherwise would not be possible.
A highly regarded computer software engineer from the Silicon Valley struck out on his own and set up a software consulting firm in the San Fernando Valley. He designed his new company to design and troubleshoot computerized manufacturing systems. With a small staff of programmers, he was quickly able to establish a profitable venture. The challenge was that most of his company’s success was a direct result of his talents and skills. As his client list grew, so did the demands on his time. Even trips to San Francisco and San Diego required him to remain overnight. Much of the technical work could be performed by one of his employees, but whenever he sent one of them, he received comments from the customers who felt that they were no longer important enough for his attention. Since they specifically hired HIM, they had grown accustomed to seeing him provide the service.
He began using jet charters when his largest single client threatened to find a local service provider since his system was particularly large and complex and was experiencing numerous problems. The client was located in Northern California. To make matters worse, the drive to the factory from San Francisco took over an hour each way. By chartering a jet, he was able to be at the customer’s location an hour and a half after leaving his office. He was able to provide the service that this important client demanded in the normal course of his workday. This success also allowed him to pursue other companies in the same area. The retained revenues from that client alone have more than outweighed the additional cost of charter service, and the increased business in that area has made the investment pay off many times over.
*3) Does your company have executives and/or managers ($100,000/year or more) that travel for more than one day at a time on company business?
If NO Move to Question #4
If YES How often do they travel? Add the points indicated for each executive who travels.
a) 6 times a year (About once every two months) Add 3 points for each executive
b) 12 times a year (About once a month) Add 6 points for each executive
c) 24 times a year or more (Twice a month or more) Add 10 points for each executive
*4) Would your company benefit from top executives traveling more for customer meetings, trade shows and sales meetings? Add 50 points You can immediately benefit from chartering business aircraft.
Key Considerations (Questions 3 & 4)
Some traveling executives end up spending the equivalent of weeks or months out of the year sitting in airports during business travel. While the travel itineraries themselves are grueling for the executives, many people do not realize how much this down-time is actually costing the company in lost productivity and executive “burn-out”. An executive making $250,000 per year is paid around $1000 per day*. Airline schedules sometimes require two travel days for each workday on the road. If the executive was on the same schedule at the office, it would equate to a two day workweek.
Business aircraft allow for near total flexibility and efficient scheduling for traveling executives. The benefits are multiplied when there are teams of executives traveling or when technical personnel would benefit a presentation. This flexibility can also reduce or eliminate “post-flight fatigue”, which often results in poor productivity at the office immediately after late night airline schedules. Morale also will remain high when executives are able to spend more time at home with their families and friends, further increasing productivity.
Real World Example:
A medical equipment manufacturer was challenged by the gradual erosion of sales throughout the country. Two years ago, the CEO decided to put three of his top executives on the road to visit former, current and potential clients around the country. The executives traveled with their assistants and were scheduled to spend from 100 to 150 days out of the year on the road. While they were racking up frequent flier miles by the thousands, two of the assistants quit and the other developed health problems. For all of this effort, revenues improved only marginally.
The frustrated CEO called a charter company and received a detailed Business Travel Analysis. The analysis revealed that the executives were costing the company twice as much as they were bringing in. The main reason was that their travel schedules were so inefficient on the airlines that they were averaging 1.7 days on the road for every 8 hours of meetings. The company was paying them to sit in hotels and airports!
This is one of the more complicated issues involved with travel by business aircraft: The value of employee time. There are two important parts to determining what an employee’s time is worth to the company. The first is the actual dollar value of the employee’s compensation package. The other, which is much more difficult to calculate, is the value of the employee’s contribution to the company. Clearly, if every employee in a particular contributed only enough to cover his or her salary, there would be no money left for profit, equity and growth. The fact of the matter is that we expect our employees to contribute more than their actual compensation. Even in the case of a commission-only sales representative, he pockets only a percentage of the revenues he directly generates.
In the case of executives, they often draw a hefty salary, but their knowledge, leadership and experience make them much more valuable to the company than their salary and bonus structure. In the example, three top executives were sent on the road to increase revenues, but were spending more time traveling than they were spending working. Their airline tickets and hotel rooms were less expensive than a business aircraft, but what was the real cost to the company? One of the executives was making around $500,000 per year in salary, bonuses and benefits. Based on a 50 week work year (52 weeks 2 weeks vacation), this executive was expected to work approximately 250 days (50 weeks X 5 days per week). His compensation package could then be calculated to be $500,000 divided by 250 days or $2,000 per day.
When traveling on the schedule outlined above, he was traveling for 1.7 days for one 8 hour work days’ worth of meetings. So, in effect, he was being paid at the ratio of 2.7 days (1.7 travel days + 1 work day) for every day of work performed. At the rate of $2,000 per day, the company was spending $5,400 per day of work performed (2.7 days X $2,000). And this only accounts for his DIRECT compensation, not his actual value to the company (which is some multiple of his salary). Even more frustrating is the fact that out of the 100 days he was on the road in that year, he traveled for approximately 58 days (1.7 travel days/1 work day X 100 days = 58 travel days), leaving only 42 productive work days. For the company, this would almost be like providing a two month paid vacation.
In reality, modern technology allows people to have some degree of productivity while on the road, it is often only a fraction of the productivity experienced when in the office or in meetings. The loss of two of three assistants and the physical and emotional drain of the travel schedule further reduce overall productivity. The following year, the company began mixing the use of business jets with the use of the commercial airlines and achieved much better results. Scheduling was much more efficient, allowing the executives to do more in less time and spend more time back at the office. The company’s revenues increased dramatically. Even the CEO, who could never get away from the office for out of town meetings, was traveling more often and achieving dramatic results.
Many top executives have expressed frustration at not being able to get out of the office more often to meet key customers, attend sales meetings and other key events that would benefit the company. The simple fact of the matter is that their time is too valuable to be spent in airports and hotels. The experience, credibility and importance of a visit from a top executive or CEO can close a deal on the spot, or communicate other vital messages without room for misinterpretation. Business aircraft can take your top executives and principals to a meeting across the country and bring them back on the same day. The benefits of their presence almost always outweighs the cost. Especially when you consider the fact that they can start the day in the office, have an important meeting on the other side of the country during the day, and be home early enough to get a good nights sleep.
5) Does your company participate in trade shows or conventions more than twice a year?
If NO Move to Question #5
If YES Add 3 points for each event your company attends as an exhibitor.
Key Considerations
For some businesses, their presence at trade shows and conventions is vital to their success. The ability to allow top executives to travel to and from key events for important industry visibility and support for sales teams can make a tremendous difference in the company’s performance throughout the year. Business aircraft can quickly and efficiently carry key personnel to such events without the worries of lost displays, damaged samples and all of the other difficulties experienced by airline travelers. All of these benefits lets your convention and trade show teams concentrate on bringing in new business.
Case Study
The same medical equipment manufacturer in the previous example also used business aircraft to greatly increase the effectiveness of the company’s trade show and convention appearances. The CEO was able to fly in to give keynote addresses, meet industry leaders and personally meet potential customers. In addition, the company was able to fly current clients to these conventions for personal testimonials. The airline schedules would make such appearances too inconvenient for these doctors and hospital administrators. Instead, they were able to fly in and out on the same day, enjoying the experience and making a great impression for the company.
*6) Would your company benefit from corporate “Roadshows” or “New Product Tours”? Add 20 points.
Corporate “Roadshows” and “Product Tours” are an effective way to launch new products, introduce new services, conduct public relations campaigns and introduce key executives to potential investors. A business aircraft allows your corporate team to travel to as many as 12 major cities in as little as five or six days. Schedules like this would be impossible on commercial airlines. A business aircraft allows efficient scheduling and a no-hassle itinerary that leaves everyone on the team awake, alert and at the top of their game to maximize the impact of their presentation. And, of course, these key players are out of the office for the least amount of time possible.
A local, high-tech manufacturing company developed a new manufacturing process for certain key computer components. The refinement of the process coincided with the company’s planned Initial Public Offering (IPO). Although the investment banker that was the underwriter of the IPO was relatively small, the decision was made to go on a corporate roadshow. The investment banker came up with a schedule that included 5 major cities and was planned for 10 days. The CEO and top engineers had other plans. They wanted to go on a product tour to speak directly to the major computer manufacturers around the country. In this critical juncture for their business, they could not afford the time to do both. The company’s travel agent called a jet charter company and began exploring some of the options available. After thorough discussions and joint planning between the company, the travel agent and the investment bankers, a 20 city tour was scheduled. This roadshow consumed only 12 days, and while the schedule was stressful, it was also wildly successful. The new process was adopted by many of the computer manufacturers visited, the IPO was extremely successful and they even managed to do several key interviews with technology writers, adding to the overall success of the tour. Needless to say, such a schedule would have required more than a month to accomplish using the commercial airlines. The overall success of the tour made the expense of using a chartered jet insignificant.
*7) How important to your company is industrial security? (Scale of 1-10. 1=Not important, 10=Vital to the success of the business) Add your answer.
Key Considerations
Industrial security is a growing concern for many companies, especially in the high-technology industries. Business aircraft allow travel for key executives with absolute privacy and secrecy and no danger of lost or stolen luggage, industrial spies determining their destination or intentions and no chance of bystanders overhearing important information. Private boarding terminals, secure ground transportation and discreet flight crews ensure that no unauthorized or unwanted persons have access to your key personnel and trade secrets.
Case Study
A well known computer software company suspected one of its executives was negotiating with a rival company who wanted to steal his talents and knowledge. As one of the key executives, he possessed all of the sensitive trade secrets, customer lists and strategic plans of the company. Because the company was at a critical stage in a major merger, this problem loomed very large for the CEO. In order to confirm or dismiss the suspicions, the CEO hired a private investigator to follow this executive and find out as much as possible. After a few weeks, the private investigator’s report revealed that the executive in question was traveling to another California city (the headquarters of the other company) and spending the night and then traveling back early in the morning. On several occasions, the investigator was able to get onboard the flight and follow the executive. In the end, it turned out that the executive was not in negotiations with the competitor, but was involved in a long distance relationship with his fianc & #233;e, who had recently been transferred to the other city.
The CEO was relieved that his company was secure, but at the same time realized that if he could have one of his executives followed and tracked so easily, his competitors could do the same. The fiercely competitive world of computer software left no room to take industrial security for granted. Even his presence in another city could alert competitors to what companies he was talking to and what his company might be planning. He immediately called a jet charter company and instituted a company policy that all travel by corporate executives would be conducted aboard chartered aircraft. After chartering for less than a year, the company purchased its first business jet. The executive who started it all eventually got married and he credits the business jet with cementing his resolve to stay with the company indefinitely.
8) Has your company lost any key executives to a competitor in the last 12 months? If YES Add 5 points.
9) Has your company experienced difficulty recruiting and hiring key executives? Add 5 points.
Key Considerations (Questions 8 & 9)
The low levels of unemployment and highly competitive market for qualified executives has made it increasingly difficult to recruit, hire and retain key executives. All of the benefits listed above for the companies that utilize business aircraft can provide valuable incitements for key executives. An executive that has access to a business aircraft, even part of the time, will be able to maximize productivity, travel efficiently and more often and spend more time at home with family and friends. These direct benefits will help the company spend more time doing business and less time recruiting, hiring and training key executives.
Like the computer software company in the previous example, companies that utilize business aircraft for their executives and managers find it easier to recruit, hire and retain key employees. Another company that has recently down-sized due to industry pressures, requires the remaining executives to accomplish more in less time in order for the company to remain competitive. For some of the executives, this means traveling more often. By utilizing business aircraft, the extra demands of their positions are softened by their ability to spend more time at home with their families, even on days when they have to travel. One such company even invites executive prospects to lunch in Monterrey or San Francisco as a demonstration of the company’s resolve to hire and retain them. This short trip by chartered jet is less expensive than the process of recruiting, hiring and training new executives on a regular basis. And, more importantly, it clearly demonstrates that the company is serious about the time and productivity of its executives.
SCORE YOUR TEST:
Add up the scores from your test questions and find out whether you should explore using corporate or charter aircraft to help your business.
0-25 points
A score in this range probably indicates that your business does not rely heavily on travel and is therefore not losing a significant amount of productivity for its managers and top executives.
25-50 points
Your company might benefit from chartering an aircraft from time to time. A score in this range indicates that there are some important travel related issues that could be addressed by the judicious use business aircraft. If your company is poised for growth and/or geographic expansion, you might want to contact a jet charter company and receive an in-depth Business Travel Analysis to assist in maximizing the effectiveness of your plans.
50-100 points
If you are not currently using business aircraft, you are probably losing money. A score in this range indicates that corporate travel plays an important role in the success of your business. Few companies need to use business aircraft for every executive and every trip, but your score seems to indicate that traveling in business aircraft will increase productivity and offer returns that outweigh the additional costs.
Over 100 points
Your company probably has its own business aircraft or charters extensively. If not, you may very well be losing ground to your competitors because they are almost certainly using business aircraft.
