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Key Idea: Change When Margins Are Low

You must have courage to change. Reed Pigman grew up in the family business which was a flight school and an airplane charter service. For forty years his parents worked the business. After graduating from college Reed starting running the flight school however he did not enjoy it and there was very little cash flow.

Key Question:

A: 

Like Reed did, you may have to make a big change in the business model.

Q: How did Reed prepare for change?

A: He wanted to move back to Fort Worth so he went to Meacham Field and talked to pilots who were coming in to purchase fuel. They told him the service at Meacham Field was not so great. Reed saw that as his big opportunity. He knew he could service customers and bet all he had on that idea. On the path to his goal he ended up buying an aircraft sales company but he quickly discovered that he hated selling airplanes.

What I learned from Reed is, you can make a living doing anything but you can only be excellent at what you love. You can only be the leader of the pack when you are in the right place with your natural talents. While airplanes have been a constant in his life, Reed had the courage to face the facts and take action to improve his life. He had the courage to start from scratch in a new place. He had the courage to throw the little money he had and all of his life into an idea he believed would work.

Think about it

What needs to change in your business? What are you doing that doesn't produce cash flow? What can you do to find a new revenue stream?
 

Clip from: Texas Jet

Fort Worth, Texas: There are no lines. No crowds. No delays. Just red carpet treatment all the way. And, it is not just for the wealthy anymore. Here at Meacham Field and in 5000 other small airports around the USA, small business owners service, sell, own, and use private jets. This is the other airport in town.

This is the story of Texas Jet which is FBO, Fixed-Base Operation; they provide all the ground-based services required by aircraft owners and operators. The term, FBO, originated back after World War I to describe the first aviation businesses that developed a permanent base of operations to deliver services at airports. That name stuck. Here we open the door of private jets, charters, fractionals, and empty legs. With the help of the Internet bookings, you could easily be taking a little jet rather than drive your car.

Founder Reed Pigman says the pilots are his core customer base;  and, for many years now, these pilots voted Texas Jet to be one of the Top Ten Independent FBO's in the United States. So, out of 5,000 choices, pilots say Reed and his team are among the best. There's more. As a distributor for Phillips 66 Jet Fuel, Reed also takes the lead. Texas Jet has been recognized by Phillips 66 as one of a hand-full of distinguished partners among some 600 distributors. 

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Texas Jet

Reed Pigman, President

200 Texas Way
Fort Worth, TX 76106
8007764547

Visit our web site: http://www.texasjet.com/

Office: 8007764547

Business Classification:
Transportation

Year Founded: 1978

Change When Margins Are Low

REED: I grew up in the airplane business, around airplanes. My dad had a company that he started on Meacham Field here in the late '30s called American Flyers. It was a pilot-training school. During the Second World War, he trained a lot of American Airlines pilots because American lost a lot of their pilots into the draft. After the war, he bought some surplus DC-3s and started an airline charter business. Both those companies moved to Ardmore, Oklahoma, in the '60s. He died in '66.

My mother sold the airline portion of the operation in the late '60s. I ran the flight school part of the business in Ardmore when I got out of college in the '70s. And by 1978, I had decided that I wasn't wild about the flight school business. I really wanted to come back to my hometown here in Ft. Worth, so I sold the company.

It was a tough decision to make because--gosh, it'd been in my family for nearly 40 years. But, you know, the flight school was not doing well. It was losing money. And I had to make that decision, and that's, I guess, one of the decisions that I've had to make when I felt that, you know, `My back's up against the wall.' I'd look at the cash flow. The cash flow wasn't there. And I said, `I've got to change businesses.'

HATTIE: When did you think there's an opportunity in servicing the pilot rather than flying airplanes yourself or teaching people?

REED: Sure.

HATTIE: I mean, when did you get the light bulb, `There's really an opportunity here'?

REED: When I made the decision to come back to Ft. Worth, I looked around. I looked around the Ft. Worth, the Dallas area, what the airport situation was. And when I came to Meacham, it was the perfect place because there were two other operators on the airport at the time that sold fuel--and that's what my main business is.

I talked to a lot of the pilots around, and they'd say, `Well, we're just not wild about the service we're getting.' And so I said, `Wow, that's a great opportunity.' So there was a small, struggling aircraft sales company that had an option to lease the land where my first two hangars went. So I purchased that company.

I stayed in the aircraft sales business for a couple of years.

HATTIE: So you were selling airplanes.

REED: I was.

HATTIE: Was that your first idea, to sell airplanes?

REED: Well, I thought it would be fun. I grew up being in the flight school business and flying in small airplanes. And I said, `Oh, my lifetime goal would be to have a Learjet, to fly a Learjet.' I thought that would--`Boy, I'd be happy if I had a Learjet.'

HATTIE: You could just die and go to heaven in your own Learjet.

REED: And I'll be darned, that Learjet almost put me out of business.

HATTIE: What do you mean?

REED: Because I got in the sales business during the same time that I'd built these first two hangars, as an executive terminal, to sell fuel. The city of Ft. Worth would not let me sell fuel for the first year...

HATTIE: Why?

REED: It was due to political pressure from competitors on the airport. So I had two big hangars, basically, empty. You could throw Frisbees in the hangars because there weren't any airplanes to get in the way.

HATTIE: So we weren't succeeding right away.

REED: No, no, no. I had a lot of airplanes in our sales inventory that were floor planned at the bank. In 1980, interest rates were 21 percent. Values of the airplanes were dropping, and it almost put me out of business. But I sold the airplanes. I focused on fuel. I decided that my niche was going to be the executive terminal, selling fuel, taking care of pilots and hangaring airplanes.

HATTIE: When you were looking at your numbers, how did you figure that this was the best profit or revenue stream?

REED: Because I figured out that I was not cut out to sell airplanes.

HATTIE: What does that mean?

REED: Well, I lost a ton of money, number one. And I'm not a real hard-sell person. If somebody comes to look at Texas Jet and to see whether or not they want to base an airplane with me, I can do a darned good job of selling them on Texas Jet. But as far as selling this airplane, it's like, `Let me make you a deal on this beauty right here.' That's not me.
 

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