Starting a new model rocket company
 

I am curious, if you were to start your own model rocket company, what would you do? Who would be on your board of directors ? Who would be your department heads?

In today marketplace, in what direction would you take your new company.

Keeping in mind, this has nothing to do with any past or present companies, this is a totally new company, of your own, in the 21st century.

How much money do you think we have, to start a company with a board of directors and department heads in place at the very beginning?

I don't think even the larger hobbyist-oriented model rocket companies have all of those positions.

I'm not sure even how to begin to answer this question without further information.
The most important piece being how much capital do I have to work with and is it all cash-on-hand or is it in the form of a credit line.

Well, everything would start with a good business plan and model for the company you wish to start. Business plans are not easy since a good part of it, especially the "financials" are sometime based on speculation and ideal business conditions. Entering the rocket market could be difficult, but if you have a good plan in place with some cool, different designs and other different product offerings then it could be possible. Also, you wouldn't have to have all of the capital start up money - with a good plan it is possible to find potential investors to help offset costs in the beginning, including startup costs.

Marketing would take a BIG chunk of your fund in the beginning. Surveys and other information gathering would have to take place in order to see if a new rocket company would be worth starting up. I dont' think that you would need a board or anything for such a small company, but I would have the minimum of a President, VP-marketing and sales, VP-operations, office manager, administrative staff, and warehousing/shipping. Design engineers and manufacturing could be handled in-house or contracted out, especially the manufacturing.

There are numerous other things to consider but these are the top things I could think of off the top of my head.......

What I am curious about is, if anyone, wanted to start a new venture in this 21st centruy, how would you go about it, who would you have and what would your objectives be.

None of the above, actually. The first course of action is to seek out a niche within a given market, where there is a measure of demand but no one filling that demand. Figure out what is required to fill that need. Determine what portion(s) you can easily handle, as well as what you still need to "farm out". Seek out suppliers and pricing schedules for a "ballpark figure" on regular per-unit costs. Also seek out whatever capital equipment you will need to produce any special parts to get your "one-time" investments. Add into this mix the costs for legal work, accounting, shipping, advertising, and "contengency funds" (having enough money in reserve to cover the first months of operation, before you start to see real sales). Now you can start working out your "business plan" to take to the bank (or other SBA lender). There may be additional things that are needed before you can get funding.

Listen to the lender for any suggestions to smooth out the process, and to avoid the pitfalls that other would-be SBOs have fallen into...

The first big mistake is in trying to fill too many niches at one time. The second big mistake is trying to become a big business before you become a small business.

I agree with that but...none of the niches in this hobby are large enough for you to make a decent living.

Possible niche catagories;

Scale models

Super Scale (very accurate very expensive)

Futuristic Sci-Fi. There's a niche with a lot of existing players.

School market (everybody does that. BMS, SEMROC, Flis, Estes...)

Competition engines, Man, that will take a conciderable investment with little return.

Big box stores (Wal-mart, K-Mart) good luck getting in that door with a start up company.

Export market...forget that, too much paperwork! No big profit there. :rolleyes:

Competition models. How many NAR members compete compared to the total membership. Face it, when you are talking competition you are talking NAR. No other organization has a rocketry competition.

Sorry, I can't see any niche large enough to justify a corperate structure.

Four cheifs and one or two minimum wage indians stuffing kits in bags.

Don't quit your day job! ;)

What do you think the future of the hobby will be, maybe that would be a better approach. Will the market be there to support a new venture?

The prospects for any new model rocket company depend on the growth the hobby is seeing. That may really be the first question to ask: Is this hobby growing, shrinking, or stagnant?

If it is growing, it means there is an increasing customer base to sell to. Find what a large enough fraction of the whole wants, but is not getting, from the established companies, and serve that need. As more people join the hobby, you'll likely have more customers over time.

If it is stagnant, then with each new company, you have smaller and smaller slices of a fixed-size pie. You have to do what no one else wants to do to get a larger slice. This is also when you need to determine if starting a rocket company is worth the effort. Can you, as an individual, stimulate growth in the hobby when the "big box companies" cannot?

If it is shrinking, it may simply be time to cut bait. If the "big box companies" cannot hold on to an existing customer base, let alone generate new customers, you almost certainly won't, either.



Which makes the above question more important. Are we in a shrinking hobby, with fewer potential customers each month? Are we in a stagnant hobby, and would we be trying to fight for a smaller share of this pie instead of just offering something unique? Are we seeing growth in the numbers of first-timers?

Does anyone have good numbers to show?

I was talking this over with some rockets buds at lunch today. Actually, we were talking about odd-ball sport motors, not competition, but it sort of still applies.

One key problem with the boutique motor market is longevity. Given the present supplier base - essentially Estes and Held - a vendor has to order a significant quantity, then sit on the inventory for years until it's low enough to re-order. And this is done under the threat of having the motors declared OOP since they're not actually being produced, but merely being warehoused.

A key to protecting the investment is for the motors to be certified for a much longer period of time. The NAR seems to be moving in the right direction in this regard. The window has been extended to 5 years past end of production, up from the previous 3 years, as I understand it. And they have a program to study the feasibility of certifying OOP motors. Both these measures would protect the makers and users of boutique motors.

I'd buy a crate of B14-0's (hypothetical example) if I knew I could fly them at club launches for years to come. Knowing this, a potential supplier of those should be more willing to make them. So fringe motors - high thrust, low thrust, long delay, etc - would be made more viable by these longer cert periods.

In a nutshell, certification policies seem to be a key to us getting niche motors.

As for competition, a similar situation exists - small volumes and fringe characteristics. But the added requirement of ready availability will not be met, except during the period right after a production run.

Nevertheless, I'm hopeful that the slowly evolving OOP rules will ultimately enable us to get motors that aren't otherwise available.

Doug