Do you want to start drone business?

Are you thinking about starting a drone business? Well, starting this business is very easy and extremely profitable since UAVs (or commonly referred as drones) find their applications in many industrial and non-industrial fields.

The first thing you should do is to develop a comprehensive plan for your business. The business plan will not only help you in startup but it will also help you in taking important decisions for your company over the next years. In case you don’t know how to write it, we are providing a detailed business plan for a drone business startup ‘DroneCo’ to help you avoid the trouble of making a plan yourself.

Executive Summary

2.1 The Business

The Drone Co. will be a licensed and insured FAA authorized commercial aerial drone company in the United States. The company’s main office will be located in the main commercial district of Chicago.

2.2 Management

DroneCo will be solely owned and operated by Ronald Mike who is a passionate photographer and has extensive experience in this industry. Mike will hire a small team of operators, assistants, sales executives, technicians and graphics editors for his drone startup business.

2.3 Customers

Our target customers are the individual consumers, agricultural sector, industrial sector and print and digital media companies based in Chicago.

2.4 Target of the Company

Our company’s target are as follows:

Drone Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

DroneCo will be solely owned by Ronald Mike, a professional photographer who has been in this industry for more than 10 years.

3.2 Why the Business is being started

Mike has been with country’s biggest magazines as the lead photographer including National Geographic Magazine. His photography skills are well known across the US. He decided to start his own venture to explore the photographic industry as much as possible by contributing to all niches of photography.

3.3 How the Business will be started

Traditional methods of photography have now been replaced with drone photography. Drones can be used for a variety of purposes, but out of all drone business ideas, drone photography became their biggest business application. Considering the advantages drones can provide in the photography business, DroneCo will be started as a commercial drone company. The company has forecasted following costs for the start-up:

Drone Business Plan - Startup cost

The detailed information about the start-up is given below:

Start-up Expenses 
Legal$55,300
Consultants$0
Insurance$32,750
Rent$32,500
Research and Development$32,750
Expensed Equipment$32,750
Signs$1,250
TOTAL START-UP EXPENSES$187,300
Start-up Assets$0
Cash Required$332,500
Start-up Inventory$32,625
Other Current Assets$232,500
Long-term Assets$235,000
TOTAL ASSETS$121,875
Total Requirements$245,000
START-UP FUNDING$0
START-UP FUNDING$273,125
Start-up Expenses to Fund$11,875
Start-up Assets to Fund$15,000
TOTAL FUNDING REQUIRED$0
Assets$23,125
Non-cash Assets from Start-up$18,750
Cash Requirements from Start-up$0
Additional Cash Raised$18,750
Cash Balance on Starting Date$21,875
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$332,500
Investor 2$0
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$695,000
Loss at Start-up (Start-up Expenses)$313,125
TOTAL CAPITAL$251,875
TOTAL CAPITAL AND LIABILITIES$251,875
Total Funding$255,000

Services for customers

It is very important to decide what services will you provide with your drones because the planning of all subsequent stages depend on it. So, make sure to think it through, before you start thinking about how to start a drone business.
DroneCo will provide professional aerial photography and video service using the latest technology drones. Our UAVs combined with state of the art camera stabilization will capture super-smooth footages. We will provide following services to our customers:

  • Aerial filming & photography
  • Agricultural inspection
  • Mapping, surveying & industrial inspection
  • Drone selling & repairing services

Marketing Analysis of drone business

Marketing analysis is an important component of an effective drone business plan because it helps us in developing an effective drone business model. If you are wondering how to carry out marketing analysis prior to starting a drone company, you can take help from this drone business plan sample.

5.1 Market Trends

Drones or Unmanned Aerial Vehicles (UAVs) were built for military applications that’s why they weren’t being utilized for any commercial purposes. Considering the advantages offered by drones in various commercial industries especially their application in aerial photography, construction, and agriculture the Federal Aviation Administration (FAA) allowed their commercial use in 2015. Since then, this industry is increasing at a rapid rate. The sales of drones are expected to surpass $12 billion in 2021, which is up by a CAGR (compound annual growth rate) of 7.6% from $8.5 billion as of 2016.

5.2 Marketing Segmentation

A startup can only succeed if it properly markets itself to its targeted customers. An effective marketing plan can only be developed if you know your prospective customers. That’s why you must find out the marketing segmentation of your customers before developing the business plan for a drone company.
DroneCo will target both the residential and corporate sector based in Chicago. The marketing segmentation of our target audience is as follows:

Drone Business Plan - Marketing Segmentation

The detailed marketing segmentation is as follows:

5.2.1 Individual Consumers:

This group includes all those people who will acquire our services for personal or family purposes. This group is expected to use our aerial photography and filming services for their weddings and other events.

5.2.2 Print & Digital Media:

This group includes all print and digital media companies include filmmakers who will also need our aerial filming and photography services.

5.2.3 Agricultural Sector:

Drones are now extensively used for inspecting agricultural sites as well as to monitor the crop yield. Farmers and agriculturists can either buy drones from us or can just acquire our agricultural imagery services.

5.2.4 Industrial Sector:

Drones also used for surveying the construction sites and monitor performance, especially in the inaccessible places. They are also used for getting imagery for mapping purposes.
The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Individual Customers25%11,43313,34416,55318,74520,54513.43%
Print & Digital Media38%22,33432,34443,66552,54466,43210.00%
Agricultural Sector17%8,3229,45510,65512,86714,43315.32%
Industrial Sector20%10,65511,22112,86714,43315,48516.32%
Total100%42,08966,36470,87384,156101,4109.54%

5.3 Business Target

Our main business targets are as follows:

  • To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
  • To balance the initial cost of the startup with earned profits by the end of the first year

5.4 Product Pricing

Considering the market demands and the competitive aspects, we have priced our drones as well as the drone photography services in similar ranges as of our competitors.

Strategy

After marketing analysis, sales strategy is the second most important component of a business plan. Therefore, considering its importance, you must properly develop it before you think about how to start drone business. One can easily think of several attractive drone business ideas but the success of any such idea lies in a sound sales strategy so make sure to plan it before you start your own drone business.

6.1 Competitive Analysis

DroneCo will have various competitors still we hope to thrive due to our various competitive aspects. We will use latest technology drones which will be operated by highly trained and experienced operators. Lastly, we will provide unparalleled customer service to ensure maximum customer retainage.

6.2 Sales Strategy

  • We will advertise ourselves in magazines, newspapers, TV stations, and social media
  • We will build a strong online presence by developing a website and keeping it SEO friendly. The website will also be used for booking our services or finding information about us
  • We will offer a discount on our services for the first three months

6.3 Sales Monthly

Drone Business Plan - Sales Monthly

6.4 Sales Yearly

Drone Business Plan - Sales Yearly

6.5 Sales Forecast

Our forecasted sales are summarized in the following column charts:

Drone Business Plan - Unit Sales

The detailed information about sales forecast is given in the following table:

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Aerial filming & photography1,887,0302,680,3202,588,240
Agricultural inspection802,370815,430823,540
Mapping, surveying & industrial inspection539,3207702301,002,310
Drone selling & repairing services265,450322,390393,320
TOTAL UNIT SALES3,494,1704,588,3704,807,410
Unit PricesYear 1Year 2Year 3
Aerial filming & photography$140.00$150.00$160.00
Agricultural inspection$600.00$800.00$1,000.00
Mapping, surveying & industrial inspection$700.00$800.00$900.00
Drone selling & repairing services$650.00$750.00$850.00
Sales
Aerial filming & photography$2,149,800$2,784,000$3,383,200
Agricultural inspection$120,050$194,500$268,500
Mapping, surveying & industrial inspection$50,110$71,600$93,000
Drone selling & repairing services$139,350$194,600$249,850
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Aerial filming & photography$0.70$0.80$0.90
Agricultural inspection$0.40$0.45$0.50
Mapping, surveying & industrial inspection$0.30$0.35$0.40
Drone selling & repairing services$3.00$3.50$4.00
Direct Cost of Sales
Aerial filming & photography$989,300$1,839,000$2,679,700
Agricultural inspection$66,600$119,900$173,200
Mapping, surveying & industrial inspection$17,900$35,000$52,100
Drone selling & repairing services$19,400$67,600$115,800
Subtotal Direct Cost of Sales$1,294,100$1,699,400$2,104,700

Personnel plan

Personnel plan gives you an estimation of the required staff and their salaries over the next few years so make sure to properly plan it before you think about how to start a commercial drone business.

7.1 Company Staff

Mike will act as the Chief Executive Officer of the company. The company will initially hire following people:

  • 2 Administrators/Accountants for maintaining financial records
  • 4 Sales Executives for discovering new ventures
  • 3 Assistants for undertaking various tasks at the office and operate company’s website and social media pages
  • 4 Technicians for repairing/addressing problems in drones
  • 12 Operators for operating the drones
  • 6 Graphics Editors for processing photography and videos

7.2 Average Salary of Employees

 Personnel Plan   
Year 1Year 2Year 3
Accountants$85,000$95,000$105,000
Sales Executives$145,000$152,000$159,000
Assistants$87,000$94,000$101,000
Technicians$145,000$152,000$159,000
Operators$550,000$650,000$750,000
Graphics Editors$410,000$440,000$480,000
Total Salaries$1,105,000$1,242,000$1,389,000

Financial Plan

You must know all finances which you have at your disposal and which you will be needing for your startup before you think about how to start a drone company. DroneCo’s financial plan is as follows:

8.1 Important Assumptions

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%
Other000

8.2 Brake-even Analysis

Drone Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even5530
Monthly Revenue Break-even$159,740
Assumptions:
Average Per-Unit Revenue$260.87
Average Per-Unit Variable Cost$0.89
Estimated Monthly Fixed Cost$196,410

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$309,069$385,934$462,799
Direct Cost of Sales$15,100$19,153$23,206
Other$0$0$0
TOTAL COST OF SALES$15,100 $19,153 $23,206
Gross Margin$293,969$366,781$439,593
Gross Margin %94.98%94.72%94.46%
Expenses
Payroll$138,036$162,898$187,760
Sales and Marketing and Other Expenses$1,850$2,000$2,150
Depreciation$2,070$2,070$2,070
Leased Equipment$0$0$0
Utilities$4,000$4,250$4,500
Insurance$1,800$1,800$1,800
Rent$6,500$7,000$7,500
Payroll Taxes$34,510$40,726$46,942
Other$0$0$0
Total Operating Expenses$188,766$220,744$252,722
Profit Before Interest and Taxes$105,205$146,040$186,875
EBITDA$107,275$148,110$188,945
Interest Expense$0$0$0
Taxes Incurred$26,838$37,315$47,792
Net Profit$78,367$108,725$139,083
Net Profit/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Drone Business Plan - PROFIT MONTHLY

8.3.2 Profit Yearly

Drone Business Plan - PROFIT YEARLY

8.3.3 Gross Margin Monthly

Drone Business Plan - GROSS MARGIN MONTHLY

8.3.4 Gross Margin Yearly

Drone Business Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

Drone Business Plan - Projected Cash Flow Diagram

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$40,124$45,046$50,068
Cash from Receivables$7,023$8,610$9,297
SUBTOTAL CASH FROM OPERATIONS$47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$47,143 $53,651 $55,359
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$21,647$24,204$26,951
Bill Payments$13,539$15,385$170,631
SUBTOTAL SPENT ON OPERATIONS$35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$35,296 $35,489 $43,882
Net Cash Flow$11,551$13,167$15,683
Cash Balance$21,823$22,381$28,239

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$184,666$218,525$252,384
Accounts Receivable$12,613$14,493$16,373
Inventory$2,980$3,450$3,920
Other Current Assets$1,000$1,000$1,000
TOTAL CURRENT ASSETS$201,259 $237,468 $273,677
Long-term Assets
Long-term Assets$10,000$10,000$10,000
Accumulated Depreciation$12,420$14,490$16,560
TOTAL LONG-TERM ASSETS$980 $610 $240
TOTAL ASSETS$198,839 $232,978 $267,117
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$9,482$10,792$12,102
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$9,482 $10,792 $12,102
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$9,482 $10,792 $12,102
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$48,651$72,636$96,621
Earnings$100,709$119,555$138,401
TOTAL CAPITAL$189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL$198,839 $232,978 $267,117
Net Worth$182,060$226,240$270,420

8.6 Business Ratios

 Ratio Analysis    
Year 1Year 2Year 3Industry Profile
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets
Accounts Receivable5.61%4.71%3.81%9.70%
Inventory1.85%1.82%1.79%9.80%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Current25.8629.3932.921.63
Quick25.428.8832.360.84
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.