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If you’re a business owner or operator that deals in aircraft parts, you’ve no doubt grown wary of seemingly endless, new rules and regulations or existing ones in constant revision. In fact, in my long memory of this business, I can’t recall a time that exhibited this degree of flux. Such foment can lead to non-compliance vulnerabilities that could at worst, ruin your business. These vulnerabilities are magnified by the emergence of what I’ll characterize as “Areas of Specialization.” Ignorance of these areas of specialization and your degree of vulnerability are directly proportional; the more ignorant you are, the more likely that you’ll suffer a fine, make the morning newspaper, be denied business opportunities, lose accreditations or certifications, lose financial support, or your industry credibility among others. These areas of specialization create formidable barriers of entry into this market.

Here is a partial list of the most conspicuous areas of specialization:

• HAZMAT
• Export Controls
• OSHA
• Quality Systems (including Aviation Regulations and Quality Standards)
• Federal Acquisition Regulations (for those of you doing business with the Government)
• Conformance to required Accounting systems
• Employment Laws
• EPA Laws
• Contractual and other business laws
• IT and Telecommunications systems

Enter the Specialist, a trusted person on your staff that is the oracle of such specialties. If you’re blessed to have such specialists on your staff, you’re likely to be a mid to large sized company. If you’re a small business, your CEO is seen to be frequently shaking his head and rolling his eyes at all the requirements being demanded of his company. If you don’t have such specialists, here’s Royboy’s counsel:

#1: Roll up your sleeves and learn the specialty yourself. Some years ago, my CEO came into my office with a ten-page questionnaire a prominent customer required we fill out (an Annual Representation and Certification). The questionnaire was replete with references to FAR’s. I looked at it and thought to myself, “Huh? There is no FAR 52 in our business…” Our CEO assumed that “FAR” meant Federal Aviation Regulation, not! It meant Federal Acquisition Regulation. I quickly learned that there was no one in our company familiar with this type of FAR or form. Guess what? I had to take ownership of the thing. After two weeks of research, I had the questionnaire filled out. Today I can fill one out in about a half hour.

#2: HAZMAT, Export Controls, and QA Systems: Trade Associations such as the Aviation Suppliers Association (ASA) offer continuous training in these areas. The training takes place during workshops, conferences, or training sessions dedicated to HAZMAT. A collateral benefit of membership is receipt of the newsletter to keep up to date on the latest issues regarding these subjects.

#3: Federal Acquisition Regulations: There are tons of literature available on the web to guide you and explain these very esoteric regs. Also, if you are doing business with the government, you are likely registered on the CCR (Central Contractor Registry). If so, the persons named as contacts on the CCR are likely regular recipients of mail from many persons seeking to sell you their training services and invitations to conferences that cater to businesses doing business with Uncle Sam. The Small Business Administration is a great source of information and training in this area, as well as various state and national government organizations.

#4: Contractual and business law: An internal specialist is fine, but keep a lawyer retained.

#5: IT and telecommunications systems: Hiring an internal IT specialist is money well spent. IT and Telecommunications will consume a big portion of capital and recurring costs. For big projects, use consultants temporarily.

#6: OSHA, EPA, and Employment laws: Unless you are a mid to large size firm, it’s best to use consultants, as you would not need constant or daily specialist input regarding these disciplines.

#7: Accounting Systems: The first time you consider a partnership with another firm, or seek external financing from banks, Venture Capitalists, or investors, you’ll quickly learn just how accurate and organized your accounting system is. We’re not just talking about whether to choose QuickBooks or Peachtree software, but instilling discipline to create and follow accounting processes and procedures, organization of data, reporting and budgeting. Royboy recommends that no matter what the size of your firm, hire a full time specialist in the form of an accountant or CPA.

The age of specialization has created a boon for consultants in all these areas. There will come a point when you’re spending so much for a consultant in a specific discipline that you’ll have to consider hiring an internal specialist. Let’s use an IT Manager as an example. You’ve determined that the market rate for that position is 60K. Here’s a rule of thumb: Add 30% to the salary (to account for benefits, furniture, etc.) resulting in $78,000.00. If you’re averaging more than $78,000 in annual payments to IT consultants, then now is a good time to consider hiring an employee. There are many variables that can influence your decision, but this is just a rule of thumb. This type of research falls into the classic “Make or Buy” analysis.

Finally, consider that it is in the consultant’s best interest to keep you as a customer, so you may be subject to their “The sky is falling” analysis of your operations; the better to lure you into perpetual retainment of the consultant (Did I mention I used to consult?).

1-30-08

Roy Resto - VP Technical Operations, FAA-DAR
Phone: 414 875-2191   Fax: 414 875-0200
royboy@mbtrepair.com

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