Six Intangibles That Can Build Equity in Your FBO
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
Running a successful FBO operation requires attention to six intangibles. Reaching favorable terms and taking care of these intangibles the right way will help build equity in your business.
If you’ve ever gone to a bank to get a project financed, you know that it takes a savvy banker who understands the FBO business to get the project done. Most lending institutions can’t get over the first hurdle when they discover that an FBO doesn’t own the land where a proposed hangar is to be built.
To be sure, the FBO business is relatively unique. Often airports require FBOs to make major capital improvements as part of their lease, especially at time of renewal or in granting a request for a lease extension. Yet, at the end of the lease, none of the improvements are tangible assets that an FBO operator can liquidate. They are owned by the airport, which also owns the land.
Besides some ground service equipment, a typical FBO doesn’t have much tangible collateral. The real value bankers or investors are interested in is mostly the intangibles that help increase equity in an FBO enterprise. These include:
- A long-term lease with extension options.
- A favorable fuel supplier agreement.
- Advantageous/profitable hangar contracts/agreements.
- A sound balance sheet with consistent EBITDA performance.
- A strong Airport Minimum Standards document.
- A strategic business, operational and marketing plan.
In coming blogs, we’ll discuss each of these and make recommendations on how to improve the equity in your FBO.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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