Which DRONE do I need for my Drone Startup Business?

Before we get into comparing drones for different missions, let’s take a step back and think about the business. After all, you won’t be in business very long if you spend all your cash on exquisite equipment, and then fail to make a profit. Keep reading to learn how to select the drone that is not only right for the job, but is also right for your business.

According to Robert Kiyosaki, an “asset” is something that puts money in your pocket, while a “liability” is something that takes money out of your pocket. Assets typically cost money up front (as in, you have to buy an asset), but it eventually gives you a return on investment (ROI) that exceeds its initial cost—this is profit. If you can generate an asset without any initial costs, that is a very sustainable business model. Liabilities may or may not have up-front costs, but they slowly bleed you of money without any promise of an ROI.

Let’s look at some practical examples.

• Linda has a baking business that she runs out of her home. In order to bake, she requires an oven. Her home oven worked alright, but she could only bake one batch at a time, and was limited to 2 batches a day so she could use the oven to cook for her family. At 2 batches per day, she was making $500 per week in revenue. When we consider the $400 Cost of Goods Sold (COGS) that includes the ingredients and her own labor, her weekly profit was $100.  In order to meet her customer demand, she required a large oven with sophisticated temperature and timer controls. So, she purchases a $5,000 oven that she uses strictly for her baking business.  While the up-front investment was significant, this oven allows her to bring in $1,000 of revenue each week from selling her baked goods. Her COGS is approximately $700 each week (same proportional ingredient costs, but less labor now that she can bake simultaneous batches). Her $300/week profit means that she will break even on the new oven in about 17 weeks. Once she hits the break-even point, she will continue to gain a $300 profit each week throughout the lifespan of the oven (about $15,000 each year). If the oven lasts 10 years, her total ROI will be approximately $150,000. If we look at it a different way, Linda made an extra $200/week profit with the new oven over the old oven. Over the course of 10 years, her old oven would have earned her $100,000, while the new oven earned her $200,000 profit. Linda spent $5,000 up front, and gained an extra $100,000 profit over the next 10 years.  Linda’s oven was an ASSET.
• Tim is a contract food delivery driver who uses his personal vehicle to make deliveries. His current vehicle gets the job done, but he feels that he would make better tips if he drove a cooler car. So, he spends $15,000 on a used sports car. It turns out that Tim was right: within the first 3 months of owning his new car, he averaged $20/month higher tips than with his old car. Unfortunately, there were several recurring costs that Tim neglected to consider. One was the fuel efficiency—his sports car got 20 miles per gallon (mpg), while his old car got 33 mpg. Tim drove about 100 miles each month for food delivery, so he ended up paying an extra $7/month in fuel. Next, his vehicle insurance rates also went up: he used to pay $140/month in automobile insurance, but his sports car instantly raised him to $150/month for insurance. Tim is now paying an extra $10/month for insurance. Finally, Tim’s sports car requires synthetic oil, which is more expensive than conventional oil; it also requires a higher quantity of oil, due to the larger engine. Tim used to pay $60/year in oil changes, but now has to pay $160/year. On a monthly basis, his oil costs went from $5/month to $13/month—Tim is paying an extra $8/month for oil! Overall, Tim is making an extra $20/month in tips, but his sports car is costing him an extra $20/month than he was previously paying. Tim spent $15,000 up front, and lost around $2,500 more over the next 10 years. Tim’s sports car was a LIABILITY.

What is the difference between Linda and Tim? Both had up-front expenses, but Linda made a huge ROI, while Tim slowly drained his bank account. Both had higher revenue with their new equipment, but Linda was more successful than Tim in managing her recurring and non-recurring costs. Linda stayed in business, while Tim had to move back into his parents’ basement—at least he had a cool car to show for it.