CASE 15.3 Pet Airways Is a “Feel-Good” Business It’s great tolove the business you’re in, as do Alysa Binder and Dan Wiesel,co-founders of Pet Airways. They not only love their business, theyalso care for their customers, who happen to be furry andfour-legged. But Pet Airways, the only service devoted entirely totransporting cats and dogs around the country by air, is also abusiness—which means that Binder and Wiesel must pay attention tothe financial aspects of their company. “We’re doing somethingthat’s a feel-good, do-good service and it’s absolutely rewarding,”says Wiesel. But Wiesel knows that, without a thorough accountingof finances, any small business is likely to crash shortly aftertakeoff. Binder and Wiesel started Pet Airways based on personalexperience—they wanted a better, safer travel option for their JackRussell terrier than being stashed in the cargo hold. Withfluctuating temperatures and dark, cramped quarters, a trip aboarda commercial airline can be unsafe and traumatic for many animals.Binder and Wiesel, who both have backgrounds in business, decidedthey could do a better job than the passenger airlines by offeringpet owners a choice. As soon as they agreed on their business idea,Wiesel jumped into the financial questions. “I had to ask, ‘Is thisa viable financial enterprise? What would people pay for a servicelike this?’” recalls Wiesel. He researched such issues as how muchit would cost to retrofit the climate-controlled cabin of a planeto carry animals; how much it would cost to fly a plane from onelocation to another; and how much it would cost to staff thecompany. He also researched how much demand there would really befor a pet airline, and how many pets would have to be booked oneach flight in order for the trip to be profitable. He put all ofthese variables—and more—onto a spreadsheet so he could see what heand Binder would need to do for Pet Airways to take off. Wieselsays that financial modeling, financial spreadsheets, and goodresearch on costs and pricing can make or break the launch of anysmall business. “Accounting itself is an absolute full-time, bigjob,” he admits. He wants to “know how much money is coming in, howmuch is going out, and what’s the bottom line.” In addition thereare taxes, payroll, benefits, and other financial documentation.Wiesel advises that in many cases it’s a good idea for smallbusinesses to contract out their accounting to professionals. Heprefers this because outsourcing actually contains the cost ofaccounting. Running a business is a balancing act, observes Wiesel.“You have to be able to reconcile how much cash you have with howyou are going to spend it.” For example, as Pet Airways looks toexpand to more cities, the firm has to consider the cost of addingmore flights and more staff as compared to how many more customersit might attract. Binder points out that, while it’s exciting tothink about growing, they have to factor in the expenditures ofeverything from additional hiring to developing a moresophisticated Web site and online reservation system. All of thiscomes back to a sound financial plan, says Wiesel. “The financialplan is really the core of it because you can play the what-ifgame. You can look at the implications of certain decisions.” Forexample, if Binder and Wiesel want to fly to a certain city, theycan research which passenger airlines already serve that city. Ifit’s United Airlines, they know that pet owners will be charged$175 for an animal to fly beneath a passenger’s seat, or $250 tofly in the cargo hold. They can look at how many flights a daythese airlines fly to the city, and probably learn how many petsare booked. And they can find out which terminal Pet Airways woulduse in addition to any airport taxes and fees. They can plug allthis data into the financial plan and see if it works before makingthe final decision. Binder and Wiesel usually agree on theircompany’s goals and objectives. Wiesel says it all boils down toone question: “What’s it going to cost you to achieve your plan?”Recently, Pet Airways announced its merger with the firm AmericanAntiquities in a share-exchange agreement, a major step towardexpansion. “We are delighted to complete this transaction … andbelieve this event represents a significant step in implementingour business plan and continued expansion,” stated Wiesel.
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