Proposal to Purchase a Company Aircraft
Dear Miss Grim:
After reviewing our company’s past five year growth, I believe an opportunity to expand our business lies in reaching distant territories. Our company dominates the tax preparation business in southeastern Ohio. In order to continue to grow, we must reach clients outside of our region.
We can accomplish this goal in two ways. We can either hire more tax preparers to travel to different areas of the eastern United States -- or we can cover more area with our current employees by purchasing our own company aircraft. Personal costs are our largest expense. By hiring more preparers, we will incur expenses in additional salaries, benefits, and travel costs which include airline tickets, car rentals, hotels, and meals. With the purchase of our own company aircraft, we can cover a much larger area with our current preparers by flying them to multiple locations throughout eastern U.S.
Numerous small airports throughout the country can be reached easily by a general aviation airplane. Most of these airports offer courtesy cars to the pilots and passengers. A company aircraft will enable us to offer multiple tax clinics in various locations all within one day. Imagine the following schedule:
Plane departs home base at 7:00am
First preparer arrives in W.Va. at 7:45am
Second preparer arrives in Kentucky at 8:30am
Third preparer arrives in Virginia at 9:30am
Fourth preparer arrives in North Carolina at 10:30am
Preparers work a four- to eight-hour tax clinic, depending on location, and all preparers are back at the company by 6:00pm. We have just offered services in four different states in one day. With this plan we can eliminate the expense of commercial airline tickets, rental cars, and hotels, not to mention saving a huge amount on time in traveling.
After much research, I believe the best aircraft for our business is the Cessna Skyhawk. This is a high performance, low maintenance aircraft that has proven itself for many years. The Cessna Company is currently offering a 7% interest rate and a free two-year full-service warranty. The following specification information has been provided by Cessna:
The Skyhawk aircraft is an all-metal, single-engine piston, high-wing monoplane with a four-person seating capacity including a crew of one or two. Suitable allowance for luggage is allowed.
|
Avionics - Standard:
|
Avionics - NAV I (Standard Avionics Plus):
KLN 94 Color Moving Map GPS-IFR
2nd KX 155A NavCom with Glide Slope
KI 209 VOR/LOC/GS Indicator with GPS interface
MD 41-231 GPS-Nav Selector/Annunciator
NAV I Equipped Aircraft: $164,900
I would personally recommend adding a stormscope at the cost of $20,000. With the weather extremes in this part of the country, this piece of equipment will more than pay for itself in a short amount of time. Knowing where the storm systems are will allow us to fly more often and safely.
As an instrument-rated pilot, I can save our company an enormous amount of money by not having to pay for a pilot. Instead of paying a pilot to sit and wait on our preparers to finish, you will have me flying the plane and then being the fourth preparer to offer services at the final destination. Additional benefits of owning our own plane include acquiring a substantial asset while enjoying a large tax write-off in depreciation. We will incur expenses with our new plane such as fuel, hanger fees, and insurance--but they will be much less than the expenses we would have with hiring additional staff.
Below is a comparison of expenses for one year:
Aircraft payments $18,000
Hanger fees 1,200
Fuel 10,000
Insurance 6,000
Maintenance 2,400
Total: $37,600
Salaries for 3 additional employees $75,000
Benefits for additional employees 21,000
Hotel costs/meals 8,200
Car rental expense 2,200
Airline tickets 28,000
Total: $134,000
As you can clearly see, purchasing an airplane is much more cost effective than hiring additional staff.
Another benefit of owning our own company airplane will be the opportunity to offer it to our employees as a perk. Our employees are our biggest assets. In order to recruit and keep the best employees, we must offer something more than our competitors. During the off-season, we can reward our most outstanding people by flying them in our plane to their vacation spots. All costs incurred will be an allowable business expense our company can write off.
To continue to grow, we must expand. One of the most economical ways to accomplish this would be to purchase our own aircraft. A company plane will give us the competitive edge we need. I also believe that once you see how much our company benefits and grows from using a personal aircraft, we will want to purchase additional planes. Please let me know if you have any questions or would like more information on the Cessna Skyhawk. I would be glad to meet with you at your convenience to review my proposal and answer any questions you may have.
Thank you,
Traci Powell