"why that first helicopter you owned was sucking every penny you had?"

Hey, it's Kenny with Helicopter Land Ground School and I want to answer a question from one of our viewers. Great question. Can you make a video on why the first helicopter you owned was sucking every penny you had? I hope to start my own business someday doing work in an R44. Would like to know about some of the pitfalls in starting a business like that. Okay, great question. And over the years I've talked about helicopter ownership and how horribly expensive it can be. I didn't have a good experience with it. Anybody could have a different experience. So my disclaimer is, your results could vary anywhere you're at in the world, what you choose to fly, what your business plan is. Let me give you some numbers. I just jotted this down real quick off the top of my head for the first year of owning a helicopter. Okay, so the helicopter payment was $2,000 a month. Okay, so that's $24,000 helicopter payments. My insurance was $18,500. Now that was so I could do instruction, I could let my students rent the helicopter. I was able to do pretty much anything that I wanted to do. And later on I found a better quote and got a cheaper policy than that. But my first year was $18,500. Okay, annual inspection, $10,000 every year. The annual was a minimum of 10. And if that's just with normal wear and tear, okay, hangar fees was 250amonth. That's $3,000. Website. You know, you start a business you're going to need a website, right? I think back then I paid like 600 bucks for a website. Anymore a person could build a website basically for nothing but just throwing out some numbers there. How did a cylinder head go bad in that first year? Oh, that was $6,000. Had a mixture cable go bad, that was $1,800. So there is a total for the first year in business of $63,900. Okay, so let's say that's what it cost me to operate the helicopter for a year. So you got to generate that 63,900 just to pay those expenses. So how many hours are you going to have to fly this aircraft in order to cover that? 63,900. Just off the top of my head. There's other figures going to go in there. Are you going to pay a pilot or an instructor? Are you going to pay someone to answer your phone? Are you going to get a phone line? Are you going to hire somebody to do your office work? How are you going to do your accounting? Are you going to do your accounting and book work on your own or are you going to hire a bookkeeper and then are you going to pay an accountant? Are you going to do all this yourself? So there's even more expenses that you can throw. On top of that, I'm giving you the hard numbers that I can just give you off the top of my head. So how, how much would you have to fly that helicopter just to cover the expenses? I said in the 63,900, let's use $350 an hour. Okay, Pretty, pretty close rate to what a lot of people could be charging today in the year 2021. Could be more, could be less, but let's just use the number of 350. So you would have to fly that helicopter 182 hours. So if you divide, you know, 63,900 by 350, you have to fly the aircraft 182 hours. Okay, just to cover those expenses. But then we got to add a little more to that number because during that 182 hours of flying, you're buying fuel, or 180 hours you're buying fuel. At that time, fuel was costing me around 80 bucks an hour for that aircraft. So 180 hours times 80 per hour in fuel, that's another $14,400. So that just brings my total for year one. $78,300 is what you're going to need to cover those expenses. I listed not including the other stuff that I threw in there, accounting offices, other things, other maintenance. Everybody's situation can be different. So let's say we flew that helicopter 182 hours is what I've got marked down here at, at 350, you just generated $63,700. At 182 hours or so in that general vicinity, I've just lost money. So obviously the helicopter is going to have to fly even more of that just to break even. So I was operating and just flying it myself. So I wasn't really paying instructor. Occasionally I pay a part time instructor a little bit, but most time I was doing it on my own, but I was having trouble making it. And of course, you know, the way it's sucking the money. I also go back to work flying, doing an actual EMS gig for a while. Well, so I'm trying to struggle between my time managing the business and flying on my days off and then flying at my full time job. And of course a lot of times you'd have to work over because of the Pilot shortage at that time, a lot of times you were working over. So again, in my instance, yours could be different. We had the economy tank. After I bought my helicopter. When we were going through the process, we were doing all the numbers. I wrote a business plan to impress the bank and I had some wealthy guys helping me that were flying with me a little bit in an aircraft owned by someone else. And they're all going, oh, yeah, start your own business, man. Oh yeah, we'll fly with you. And they were paying me good money and that was great. But in the time it took to get the business plan approved, get the loan, get the helicopter bought, get it back home, in that short amount of time span, the economy tanks. So even the wealthy guys at that time, they all pulled back and go, oh, man, we're going to wait and see what happens with the economy. You know, everybody was scared and nobody wanted to spend any money. So at whatever point in time you decide to start your helicopter company, what's the economy doing, you know, what's it doing right now in July of 2021? And what's it going to do for the next three and a half years? The next five years, the next one year? We don't know, right? So I just wanted to answer this question to give a person an idea of the real expense involved, okay? I wasn't a wealthy guy, so I had to borrow the money. You know, I didn't have a lot of excess money in the bank. I had a little bit of stuff, okay, a little bit of money. So I kept the helicopter for four years. So a little more of why the thing basically took everything I had because as I continued on, you know, fell in love with the helicopter, right? In the beginning, let me tell you this. In the beginning, we had a get together at the airport, you know, hey, come check out our helicopter and see what we do here at the helicopter business. And had a big meal, a lot of people showed up. And this gentleman starts talking to me and he goes, hey, Kenny, let me give you a piece of advice. Don't ever fall in love with your helicopter. The minute that it starts costing you too much and, you know, it becomes a problem, don't be afraid to ditch that thing. Well, once you commit yourself and you start doing it, you tell yourself, I can do this, I can do this, right? So you gotta consider I'm in northern Indiana. So the wintertime, you have a lot of bad weather, kind of in the middle of nowhere, no big cities nearby with a high concentration of people, the economy kind of tanks. There's a lot of reason why it was a very difficult business for me to run. And during that time I spoke with a gentleman flight school owner out in Colorado who's still in business and has a bunch of helicopters. He's the one that told me during that four years where I was trying to keep it going, he said, kenny, I think, you know, as a helicopter operator and we're doing well, but he said, you know what, I think you need to have at least two to three aircraft and you need to have multiple instructors and you need to have a maintenance guy on your own staff or somewhere nearby, someone you know and trust and can have available. Maintenance was another one. Every time I needed maintenance, I had to fly the helicopter to a location, you know, 20 minute flight, half hour away, hour by car. So you're always, every time you're going for maintenance, you're hauling the helicopter to the helicopter shop. And they got the expenses of doing that. It just, it keeps piling up and it keeps piling up one more time. Any one individual, you could have different experiences. You could have a helicopter that costs more or less. You could have insurance more or less. Your fuel can change. But just think, sit down and really think, you know, this gentleman asked about an R44. That R44 is a lot more to operate than this one as well. Let's not go down that rabbit hole. It would be more expensive to purchase. It'd be a more expensive helicopter than I was operating. I'm not gonna get into what, you know, which one would break more and what it would cost you, because that's a rabbit hole that, you know, we've never come out of. The idea is just to show a person, show anybody interested in buying one. You just need to look at what it's really going to cost you. What kind of revenue are you going to be able to make and how do you, if you're going to start a business like this gentleman says he's going to start, like to think about starting a business, you got to think about the marketing part of it. You know, are you in a location and do you have a large group of people, you know, that are just going to be able to be customers? If you do, that's great. But most businesses don't start out that way. Most businesses have to do a lot of marketing. Where are you going to get your leads? Where are you going to get your customers? How are you going to handle talking to those customers, you know, and again, let's go back to office. Office Space, you know, accounting, bookkeeping, the maintenance on a helicopter. If they tell you the. If the factory, whatever, helicopter. Let's just say ABC Helicopter says it's only $225 an hour, an hour to operate our helicopter, double it. It's just what I'm saying, in my 25 years around, in and around helicopters, if they tell you it's going to be 225 an hour to operate the helicopter, I would double it. Just a good general rule. Because they're gonna always make that number look really good to you. Right. But again, depending on what kind of work you're doing with the helicopter, you know it's gonna get abused if you don't have the right pilots in there and people aren't following, you know, the limitations of the aircraft. And there's just so many things to consider. So I just want to throw that out there today because I've harped on the expense of a helicopter for years, but I wanted to give you the hard numbers of what I experienced. Just to give you an idea of the kind of money you're going to have to generate to ever be profitable. Yes, there are helicopter companies that are out there that are profitable. Obviously they are, or they wouldn't be in business. But if you think about it, most successful helicopter companies, they probably have more than one aircraft. They probably have two or three or more. And they have a whole staff of people. So do your math. Any one individual can have a different experience. I just wanted to give you some numbers to make you really think about what this could cost you. Because we get people that ask me all the time. They'll email, hey, Kenny, you know, I'm looking to buy a helicopter. And they put. They tell me their business plan, but they're working another job, kind of like I was, and they go, if I fly this many hours and I fly this much, I always tell them the same thing. I don't want to burst your bubble, but if you're going to buy an aircraft, you better have money to burn. And maybe you have that if you've got the money to invest. Think about, you know, it would have been a little bit easier if I could have paid cash for that aircraft, but I didn't have that kind of money and most people don't. Point is, if you've got the money to utilize and you don't have to worry about making a profit right away because you can bankroll the business as you build it. Absolutely, you can do it. But the question is, do you have the money? So when somebody says, I know when they're scheming, well, I want to do this because I think I can, I can get my rating and you know, I can break even on the helicopter, I always go, you know, I say, you know what, just rent. Because when the aircraft breaks, it stops, it has a problem, it won't start. Whatever issue you have, maintenance wise, you notify the owner and then you get in your car and you go home. And whoever owns that aircraft or manage that aircraft, it's now their problem to take care of getting it fixed, taking care of that expense that goes along with it. It's just they're horribly expensive and that's the way it is. All right, I'm going to wrap it up. I am Kenny Keller, creator of Helicopter Underground School. We help people around the world. This is the hogs wall of fame behind me. Helicopterground.com below to check out our member services. We have a bunch of sign up, self sign up programs. You can sign up for any of our courses. There'll be a link down below for anyone looking for some special one on one packages where we cater a custom program for you. And Daniel Hasting is our member specialist that handles those. I'm going to put a link down below for Daniel as well. This is an online business, this is a digital business and it's, it's, how do I want to put it after operating helicopters and trying to do business that way, you know, years before that I also operated heavy duty towing service. So I've had two businesses where high insurance, high expenses, you know, things breaking. This is my third go around and I like the idea of a digital business much better than a brick and mortar business. And so we've built helicopter line ground school. We've been online 10 years and we help you with the knowledge to get through the training to get your helicopter rating. So we can help you with that down below. So thanks for tuning in and we'll see you next video. Peace out.