Being a weekend I have been taking it a little easy waiting for the MSU Penn State game (yes, I am an MSU graduate). I received a comment from a young lady regarding my post about Chinese students coming to the US to receive flight training, and how that was benefiting those flight schools.
In here comment she noted that some of these flight schools that have trained Chinese pilots are not getting paid for that training until some 90 days after the Chinese students return to China, and how they are struggling to stay afloat. While this is certainly a problem, no doubt exacerbated by the current economic crisis, for those of us in Michigan we are well aware of how big companies like GM pay their suppliers.
If you do business with GM you better be prepared to wait 60-90 days before you will get paid. This is very common amongst these companies, and suppliers build that cost into their price to the manufacturer. An additional risk, of course, is that the company you are selling to will go bankrupt while you are waiting for payment.
The moral of this story is that sometimes when you chase what looks like good business on the front end you absolutely need to be prepared for what might happen on the back end. At least you can be confident the Chinese government won't go broke, considering how much US Treasury paper they hold. But the credit crunch really makes it tough to survive the wait times.
If you operate a flight school get enough money up front to carry you past the conclusion of the training until you can get that final payment. It is still good business, and will continue to grow considering how many new aircraft and airports the Chinese are building. Take heart, be smart and keep looking for this kind of good business.
Until next time keep your wings straight and level Hersch!
When it comes to testing new aircraft or determining maximum performance, pilots like to talk about "pushing the envelope." They're talking about a two dimensional model: the bottom is zero altitude, the ground; the left is zero speed; the top is max altitude; and the right, maximum velocity, of course. So, the pilots are pushing that upper-right-hand corner of the envelope. What everybody tries not to dwell on is that that's where the postage gets canceled, too.
— Admiral Rick Hunter, U.S. Navy.