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Up, Up & Away

[ 0 ] Nov. 1, 2007 | SBO Editor

For years Walt Schoonard breezed along as a distributor of kits for radio-controlled model helicopters, but then he ran into a snag: He was selling the kits faster than the manufacturer could make them. Desperate to stay in business, Schoonard and his son Tim took matters into their own hands—literally and figuratively: They started manufacturing their own model helicopters.

After two years of sweat, frustration and trial-and-error—and most of their savings—the Schooners finished building a gas-fueled miniature helicopter, the X-Cell 60, and early in 1976 got it to market. Right off, they sold 1,000 kits and over the next 30 years their company, Miniature Aircraft USA, based in Sorrento, Florida, soared to revenues of $3.5 million a year. Sales of accessories account for 40 percent of revenues.

Walt died in 1991 but under Tim and his mother Florence’s direction, the company’s models and accessories are offered in more than 350 hobby shops in the United States, overseas, on the Internet and through mail catalogues.

Like many entrepreneurs, Schoonard’s business evolved from a hobby-flying radio-controlled (RC) model helicopters. Here’s how it happened. While flying a model helicopter at an air show in the late 1960’s Walt met Dieter Schlueter, from Nuremberg, Germany, a kindred spirit who was experimenting with gas-fueled model helicopters. “They hit it off, and became fast friends,” said Tim.

Two years later, Schlueter brought out the Helibow, an aerobatic model which, among other attributes, could fly inverted. Schlueter asked Schoonard to handle distribution of the kits. Walt called some flying buddies, got names of hobby shops and started contacting them.

The Helibow sold well—more than 2,000 kits a year, at $400 to $500 apiece—but after seven years Schlueter couldn’t keep up with orders. “There were only about 10 model helicopter manufacturers at the time and none made a model comparable to the Helibow,” recalled Tim, who joined the business after finishing school. “It was frustrating. Hobby shops were clamoring for kits and we didn’t have any.”

Walt had never studied engineering or technology but he knew model planes inside and outside and, as a flyer, he knew what aficionados wanted from their models—maneuverability, sturdiness, weight adjustment and tail rotor control response, for example. Out of desperation, Walt and Tim decided to design a prototype, get parts made at machine shops, out-source equipment like gas engines and radios, and assemble kits.

An attorney advised them that since model helicopters were not patented they were free to create their own brand.

Starting with a pencil sketch, Walt re-worked the prototype tirelessly for months. “Nothing worked the first time. Everything was iffy.”

But after two years—and the Schoonards’ cash outlay of $100,000—the X-Cell 60 passed rigorous flight tests and was ready for market. To introduce it, Walt flew to Toledo, Ohio, site of the nation’s biggest model plane air show, and demonstrated the X-Cell 60 to an appreciative audience of hobby store operators, distributors and flyers. Walt raced home and ordered a production run of 1,000 kits and notified his contacts in the industry that the X-Cell 60 was ready for take-off. The initial run sold quickly, at $500 per kit; the Schoonards recouped their start-up costs plus a tidy profit and ordered production of 1,000 more kits.

By the 1980’s revenues surpassed $1 million and as RC model popularity soared (Tim estimated it’s a $75 million to $100 million industry).

Predictably, Asia and Europe manufacturers jumped into RC model production—-they currently build 50 percent of the world’s RC models and the industry became hotly competitive. “In order to compete, we constantly must upgrade our technology,” said Tim. “We try to bring out new kits every 18 months.”

For example, last year the company introduced the X-Cell Ion-X, their first helicopter powered by electric instead of traditional gasoline mixes.

Their latest gas-fueled model, the Tempest Fury, which took two years and $100,000 to get to market, in Tim’s words, “is a flyer’s dream, easily adjusted and tuned to fit flyers’ styles.”

These new technologically advanced models contain 500 to 600 parts, compared to 999 parts in older ones. “Wings and blades were made of wood,” explained Tim. “Now everything is made of carbon fiber.”

Parts aren’t handmade at machine shops; now they are produced by injecting hot plastic into heavy steel molds.
To market products, Tim dispatches 50 professional RC helicopters pilots to air shows worldwide.

As for his customer base, Tim said model plane devotees are a cross section of society-including many professionals, doctors and attorneys of all ages. “It’s not a cheap hobby,” Tim acknowledged. “A basic X-Cell can start at $500 but adding accessories like high performance engines, special gears and upgraded batteries gets expensive,” said Tim. “It’s not unusual to have $2,500 tied up in a model.”

Looking ahead, Tim plans to beef up his mail-order business and expects his website to generate greater sales.
For more information, contact Miniature Aircraft USA by writing to the company headquarters:

31713 Long Acres Drive,
Sorrento, FL 32776.
Phone: 352-383-3201
Fax: 352-383-3204
Visit the website at: www.miniatureaircraftusa.com

Category: Magazine, Small Business Opportunities, Small Business Opportunities Nov 2007