Starting a drone business is much like any other business. This guide will provide you with information on each of the following topics:
- Researching and planning your drone business
- How to choose a business entity
- Choosing a drone business name
- Local licensing and permits.
We’ve also got separate guides on:
You’re welcome to skip around to sections of this article that are more applicable to you. This comprehensive guide was created to get you thinking about your business to help you succeed.
Get Your Part 107 License
If you haven’t gotten your commercial drone license yet, check out The Ultimate Part 107 Exam Guide (which is entirely based on what the FAA requires to pass the Part 107 exam. If you have, getting your Part 107 license is the beginning of starting a successful drone services company but it certainly isn’t the end. Just like any company, you will need to think about a number of questions for your business and these articles are designed to walk you through how to start a drone business, start to finish. (Here’s my obligatory disclosure: I’m an attorney but this website is NOT intended to provide legal advice. Here, I’m only providing research and educational information. I do not know your personal situation and contacting me does not create an attorney/client relationship.)
Also, this article has affiliate links in it but using them costs you nothing. I only recommend products and services that I truly believe in and I have found to be the best option for my businesses. If I’ve provided you with any value in this blog, this is a great (free) way for you to show your support. If you have any questions, here’s a link to my full disclosure.
Research and Planning Your Done Services Niche
Okay, so you know you want to start a drone services business… but have you thought about the market for your idea? Does anyone want the drone services you’re looking to provide? While every business owner starts out with the best of intentions, sometimes we get ahead of ourselves and end up playing the ready, fire, aim game (Yikes!). If you truly want to start out on the right foot, do yourself a favor and don’t skip this step. Ask yourself a few questions before you move forward. You’ll thank me later.
What drone services niche are you looking to fill?
The niches for drone services are seemingly endless, and continue to increase. If you have no idea, maybe you can get your idea juices flowing by checking out our ever-expanding list of drone uses for business. Once you’ve chosen your specialty, or maybe a couple of related specialties, write them down. Maybe you specialize in aerial video and photography because you have a background as a photographer and have some experience in editing video. Great, write these areas down.
While it is entirely possible to throw up a website and claim to do everything drone related, this tactic rarely works and honestly, you’ll end up doing a lot of things but not doing them very well. Think about the skills that you already have and see if there is a good way to incorporate those skills into a potential drone services niche. Better yet, could you partner with someone that brings another set of skills to the table? That’s what I did. My business partner is a really skilled photographer and web designer. His eye for good photography/videography along with his design chops have made for a great partnership. I provide the drone pilots skills, he frames up our shots and sets up the camera for awesome footage.
No matter what you choose to do, don’t make it mediocre. Focus on an area and work to be great in that area. I promise you that there is enough crappy drone work out there that if you do it right, yours will stand out to the right clients.
Who are the potential clients for your drone services?
Next, we need to know who would be interested in purchasing your services. Come up with a list of at least 3 groups of people or types of companies that would potentially need your drone services. If you can’t come up with at least 3, you may need to expand your focus just a bit. Go back to the previous question and see if you can expand. Not a lot, just enough to make a list of at least 3 possible.
Continuing with my example above, if you are looking to get into aerial photography and videography, maybe your list includes realtors (check out our article on pricing your services for realtors), construction companies and home builders. Think about the applications of your drone services and come up with a solid list.
Is there a need for your drone services?
I’m not talking about whether you think there is a need, I’m talking about whether a need actually exists. Remember that list of potential client you just wrote down? Go back to it and reach out to some companies or people that would be on that list. Get an idea of whether or not they would actually be in the market for your type of drone services. If so, how often do they need these services? Once a year? Twice a month? Do they already have a drone services provider? Or are they looking for one? Get as much information as you can from these potential clients, without annoying them of course. What I’m NOT telling you to do is to call up a bunch of companies and pitch them your services. Right now you’re just asking questions. You need information to determine if there is a large enough market to sustain a drone business.
In reality, you are looking for a “pain point” for these clients. Is there a sticking point in their business that your services can help deal with?
In my example, a construction company may be having issues keeping up with each of its construction sites and whether certain sub-contractors have delivered materials, begun work or how far along they may be. Recurring drone photos could be a great way to allow a construction company to keep up with its sites without having to send someone to each site. Maybe you are their solution!
What does your competition look like?
This one can be a little more difficult. Right now it can sometimes seem like everyone and their brother flies a drone. And in some drone services niches, this is true. This is why you need to do a little bit of research on your competition.
Staying with my example above, it should be no surprise that pretty much every Part 107 drone pilot starts out offering some kind of photography or videography services. It is just the easiest thing to do when you have a new drone because they all come with a camera attached. Despite this, don’t make the mistake of thinking that everyone with a drone is capable of getting the same footage or producing the same quality product. They aren’t. I’m not going to call any drone operators out or anything but we’ve all seen content where the pilot couldn’t even be bothered to set their gimble settings and every turn they make is jerky. Not to mention the fact that the jerky move made the final cut.
My point here is not to point out the bad producers, but to help you recognize your competition. It may in fact be pretty crowded. I just hired out for a non-local job on a drone job website (Droners.io) and almost immediately got about 30 responses back. But upon further inspection, there were only one or two pilots that even had a decent demo reel uploaded. My point? Stand out. Put in the time to get the quality jobs you want. Your work will speak for itself.
Asking yourself these questions will undoubtedly put you at the front of the group. Preparation is half the battle. Front load your business efforts by asking these questions.
Done here? You’re ready to choose a business entity! Thrilling, I know. I promise not to make it too boring.
Choosing a business entity
While the types of business entities available could be an article unto itself, I’m going to provide a quick overview (keyword being quick) of a few of the most common business entities and provide some information on choosing a business entity. Basically, choosing a business entity comes down to three main factors: liability, taxes and record-keeping. Each entity deals with these issues in a somewhat different way.
Types of Business Entities
Sole Proprietorship
Already doing business for yourself? Congrats, you are a sole proprietor. You may still choose to have a business name, other than your personal name. Some states call this a “DBA” or “doing business as,” others call it a “fictitious name.” The rules vary by State but you should be able to look up what your State requires on the Secretary of State’s website if you choose to use a name other than your own when doing business.
You will also likely need to check with your local city and/or county to determine whether you need a business license where you will be operating. This may seem a little odd since you won’t necessarily be bringing clients to your place of business (especially if that is your home) but someone in your local government should be able to provide some guidance on what you need as a service provider similar to a photographer. Call and ask.
Finally, even though your business won’t technically be a separate entity (which is part of the downside we will talk about in a minute), you will probably want to set up a business checking account. Call your bank of choice and see what it requires when opening up a business bank account for a sole proprietor with a DBA name. This will provide you some clarity when it comes to any business expenses. The last thing you want to do come tax time is have to separate out a bunch of business expenses from personal expenses. You may also need a Federal EIN, which this article talks about below.
While being a sole proprietor is the simplest route to starting a business, it also has its own drawbacks. There is no distinction between you and your business. Its liabilities are yours and its debts are yours. If something happens while you are doing business, you can be held personally liable. Crash into a building and cause damage? You will likely be paying for it yourself. Open some kind of service account that costs money so that you can do business? You’re responsible.
That may not seem like the worst thing in the world at first, the more business you conduct, the more you can potentially be held liable for. Without any separation between you and your business, this may not be a risk you are willing to take. If you have a lot of assets or a business partner, it may just be worth it to set up a separate entity from the beginning. This is a choice you will need to make. The purchase of an insurance policy (no matter what entity you choose), can also help you with any legal risks you may face. So, while becoming a sole proprietor may seem like the easiest choice, it doesn’t come without some drawbacks and risks.
Limited Liability Company (LLC)
Most businesses choose to create a limited liability company, which is typically called an LLC. This typically requires a little extra paperwork, but because it creates a legal entity, it is usually a good way to shield yourself from financial and legal liabilities. Forming an LLC is usually done by filing some sort of articles of incorporation with the Secretary of State where you will be creating your business. You can also put together an operating agreement (which usually is not filed anywhere but is for your own personal use). If your business has more than one owner, you will likely want to come up with a short operating agreement so that you both understand how things will work. This document is basically the rules that you and your business partner or partners will use to govern your business and how things work. As a lawyer, you are taught to look at things from a worst case scenario, so when you are putting an operating agreement together, think of how you would both like things to be handled in the event that everything goes horribly wrong. How do you want to split everything up if you no longer want to be in business with your partner? At this point, it may be a good idea to get a licensed attorney to draft or review your operating agreement for you. They will be able to help you ask the right questions, and come up with good solutions to those questions.
The important thing to remember when creating a business entity is to keep some separation between yourself and your business entity. You want things to be run as though your business is its own person (because legally speaking, it kind of is). The following things are all great ways to show that your business entity is separate from you:
- An operating agreement
- A business checking account
- An insurance policy (or policies)
- Invoices with your business name on them
- A separate business address or P.O. Box.
While these things are probably not mandatory (check with an attorney licensed to practice law in your State), everything you can do to make it clear that your business is separate from you is a good thing. This is because creating an LLC is for the purpose of shielding you from personal liability, at least partially. But in order to do this, it really needs to be something other than just you using a business name. There’s nothing that says you can’t be sued personally, but the creation of a business entity should help with any liability you face.
Corporation
You might be thinking that creating a corporation is overkill, or you might think it would sounds cool to be a corporation. No matter what you think, you should know that a creating and maintaining a corporation is typically a lot more difficult than an LLC. Corporations are created differently, have a board of directors, are owned through stock issuances, are taxed differently, etc. This article on The Balance Small Business does a great job walking through the differences. As the Small Business article above also mentions, just to muddy the waters, you can also create an LLC and elect to be taxed as a corporation. While this may be helpful in certain situations, if your business requires a more complex business structure, I’d recommend that you talk to a licensed attorney or CPA about whether this is the best route for you.
As I said at the beginning, this guide to choosing a business entity is by no means comprehensive. There are a lot of other business entities, and even some of the ones discussed here include a lot of nuance. My point wasn’t to definitely tell you which direction you should go but instead provide some insight about the pros and cons of each choice. Once you’ve chosen your business entity, you are ready to choose a business name!
Choosing a Drone Business Name
Here’s the thing. If you’ve spent even more than 10 seconds choosing a drone business name, you know that pretty much every drone services company uses one of about 10 different words in their business name (think drone, aerial, solutions, services, anything bird or flight related, etc). My advice? Stay away from those common words, or pair them with something that helps you stand out from the crowd.
This isn’t always an easy task. Even my drone services company (513 Aerial) has the word “aerial” in it (which is another common one). But we didn’t exactly follow my advice here. And that’s okay. Your name probably isn’t going to be the thing that makes or breaks your business but it may help you expand where you need to.
There is also a website that may help you get the creative juices flowing if you need some help choosing a drone company name. This website even allows you to do a first check to see if the domain name is available! Woot!
This leads to my first main point:
The .com Should be Available for Your Chosen Name
The most typical way people will find your business is through an online search, so that obviously makes your website prime real estate. And while I’m not an SEO expert (not even by a long shot), my business partner (who also does web design for a living) highly recommends that you use a .com when buying a domain. This advice appears to be pretty main stream. If you’re already starting with a business name and need to make the domain name fit, do your best to come up with a solution that involves a .com. If you can’t, there is sort of a hierarchy of different top-level domains (.com is called a top-level domain) that you should follow.
If you’re still looking for a domain, you can check to see if one is available to purchase from Bluehost as a part of your monthly hosting package. A domain name comes free for a year with a Bluehost hosting package. Totally worth it.
Aside from the authority issues with other top-level domains, you run into the practical problem that people are so used to a “.com” that they could very well just add it to your domain name anyway. Obviously, if you don’t own the domain they enter, they may never get to your site. Yikes!
This kind of leads into my next point. A new and funky top-level domain may seem cool but could also pigeon-hole your business. While .aero, .flights, or .fly might seem novel, what if you wanted to expand your business into video editing or real estate videos? With that in mind…
Choose a Name that Allows You to Expand
One of the thing to consider is that you will want to use words to allow you to expand beyond just drone work. If you can brainstorm some words that allow you to do real estate photography or surveying, go that route.
A lot of your clients may not just be looking for aerial videos, but sometimes interior videos of properties or ground photography as well. So the term “media,” while kind of generic, would work in your favor. You then look more like a media company, and less like just a drone company that might not be able to do the whole job that a client is looking for.
Don’t hear what I’m not saying though. Don’t pick something that lets you do everything. Remember, you want to do your chosen niche really well (see the article on research and planning). Instead, in my example, we were choosing to possibly expand into things that dovetailed really well with our drone offerings of aerial video and photography. This could easily be tailored to a drone mapping pro partnering with someone licensed to do surveying. But this isn’t the only way that you could be pigeon-holed.
Is Your Name Available to be Registered in Your state?
Every State has different rules for determining if a business name is already in use by another company in your State. But no matter which State you are looking to register your business name, a great place to start is that State’s Secretary of State website. Googling “[your state] secretary of state business search” usually brings up a link to the right page.
In Ohio, I can navigate to this page to search for my proposed business name from the business search page.
Doing this will provide some insight on other companies in your State with similar names, but can also provide details about other companies as well. On Ohio’s Secretary of State website for example, when I searched for the word “drone,” I came up with 149 different results. And this is just in one State!
This exercise will also help you realize how important it is to pick something that stands out. Choosing something like “Aerial Drone Solutions” will leave you swimming in the sea of other companies from other States (or countries) using the same or similar name. Don’t do this.
In fact, on this point, my advice would be to come up with something that doesn’t have a lot of similar names. Don’t just look for an exact match. Look for something that has no (or only a few) similar names.
It may seem odd, but have you thought about incorporating an animal or some other object in your name? One of my favorite drone companies is called Wild Rabbit Aerial and while it uses the word “Aerial,” it is paired with something super memorable.
What about a Trademark?
When choosing a drone business name, a trademark may seem confusing. And while I’m not a trademark attorney, the idea of a Trade or Service Mark is that your business has the ability to use that name in its trade or service. This allows the general public to associate your trade or service with your work. Imagine what would happen if anyone could make something called “Coca-Cola,” no matter if they had Coke’s permission or not. You might pick up a bottle of “Coca-Cola” at your gas station to find that it is nothing of the sort!
While that would be a well known example, and your service may never become that famous (Let’s be honest, that’s a tough one to beat), when you register your business name in your State you receive permission from your State to use that name in trade within that State. Like I mentioned above, you cannot register a name that is already being used in that specific State. So, registering at the State level may be sufficient for your business because registering your business name will protect the use of that business name within your State.
If you plan on expanding nationwide, you may want to look into federal Trademark protection. I’m not going to get into the details of federal Trademark protection here. But suffice it to say that the application will cost $275 (plus fees for having someone prepare it, if you go that route) and can take up to a year to process.
If you choose to get a federal Trademark, speak to a legal professional beforehand who can give you advice on doing this and whether it is necessary.
Licensing and Permits
In addition to registering your business with the secretary of state, which we talked about in the last section, you will likely need to check and see what you need to do about licensing and permits.
This can run the gamut from a city or county business license, to sales tax permits, a federal employer ID Number or even an occupational license. This is a difficult topic to give hard and fast rules because, by its nature, it is a local issue. But your Secretary of State can probably give you a point in the right direction. While this article will not provide you with all the answers on licensing and permits for your situation, it will at least provide you with a start on specific things you will need to consider.
File for an EIN
EIN stands for Employer Identification Number and is sometimes called an FEIN or Federal Employer Identification Number. The easiest way to think about this number is that while you use your social security number to file your personal taxes, if you’ve created a separate business entity (other than a single member LLC) or have employees, you will need an EIN to file your taxes. It’s basically a social security number for your business.
If you are a single-member LLC or run a sole proprietorship (which we talked about here), you do not have to apply for an EIN but you may still want to. When you are doing contract work for other companies, they may ask you for a W-9. This is a tax form that will allow the companies you work with to correctly categorize the cost of your work. If you do not have an EIN, you will be submitting your W-9 to these companies with your social security number. Personally, I’d rather not do that. And if you’re opening up a business bank account, your bank may require it anyway.
Local Drone Ordinances
You’re probably going to want to determine whether the cities and/or counties that you are operating in have any ordinances against or involving drone operations. While it isn’t incredibly likely, since the FAA has made it pretty clear that it regulates the national airspace, there may local ordinances against flying drones close to places where it could be dangerous or just not a good idea. (think power plants, county jails, etc.). There may also be a State or National Park nearby, and you’ll want to be aware of the rules about flying there as well. The good news is that all of these types of places should show up on Airmap, so that you’re aware.
State Licensing and Permits
While filing your paperwork to create your business entity is usually enough to allow you to begin doing business in that State, you’ll want to make sure that this is all that is required in your State.
Additionally, you may be required to file paperwork in states near you if you plan on providing services there as well. Do you live in a tri-state area? Even though you might not have a new office in this second State, it may be a good idea to register there. This can be a very fact specific determination, but you should be aware that its a possibility (or maybe a necessity) based upon your situation.
Finally, every State categorizes products and services that are subject to sales tax differently. Some States do not tax services at all, while other tax some services. Wrapping your mind around this can be difficult in some cases. One example I’ve seen that complicates things is that providing a client with a physical print of drone photography could require you to collect sales tax on that portion of the transaction. Again, I won’t get into specifics because this is a very fact specific issue. But nonetheless, it is something to be aware of.
City or County Business Licensing and Permits
If you have a business location (even if it’s just your house), you’ll want to call your local city or county and see about any local licensing requirements. While a drone services business probably doesn’t require the same licensing that a business location would if it were open the general public, the city/county will probably still want to know that you’re operating in your location. They also want you to pay a fee for this right (naturally). The good news is that these requirements usually aren’t too strict and don’t cost a lot of money.
Keep Your Documents Available
Finally, do your best to keep your documents organized. This obviously isn’t a requirement to do business, but it sure does make things easier. As an example, our drone services company (called 513 Aerial), uses Google Drive to house all of our files. So, we have a specific folder that keeps all of our documentation, in case we ever need it. This allows me to have my documents on hand when I am flying, even if its not physical copies. These documents should include:
- Any insurance policies;
- Your EIN number document;
- Your Operating Agreement;
- Articles of Incorporation (or whatever your equivalent is);
- Any local permits.
While this list is not necessarily all inclusive, if I ever have an incident, or I am just stopped by police while operating my drone, I can easily show them that I am operating legally.
One thing that I do physically keep on hand is my Part 107 license and now that I’ve been re-certified, my renewal documentation. When you renew, you will not receive a new license. Instead, the testing center will just give you two copies of your test results (they will also emboss them. I keep one copy safe at home and keep the other with my backpack (which always goes with me). I’ve also taken a picture of this page, just in case I can’t find my physical copy. This would likely be the first thing I would show someone to let them know that I am operating legally.
Like I said at the beginning, this list probably doesn’t answer all of your licensing and permitting questions, but it should go a long way to getting you to ask the right questions. From there, you should be able to find answers to questions in your specific situation.