The Nuts and Bolts of Starting a Commercial Drone Business
UAV Insurance, Regulations and Licensing for New Drone Service Providers
Give your commercial drone business a catchy name. Design a memorable logo. Network to find a solid base of customers. These are the fun parts of starting a drone service business. But along with this comes a few other tasks related to operations, like obtaining a business license, following regulations and purchasing drone insurance.
As a new drone service provider (DSP), it’s important to take a break from marketing to follow through with these nuts and bolts. After all, building a solid foundation will help set your business up for long-term success.
So how do you start a new commercial drone business? In an earlier post, we outlined tips for marketing, pricing and finding customers. Now it’s time to dive into the nitty gritty. Here are the basics to get you started with UAV insurance, commercial drone regulations, Part 107 Certification and more.
Get Legit: Certifications, Licenses and Forming Your Drone Business
If you are going to do this, and do it right, you first need to get legit. In almost any country, before you fly a drone commercially you must first get permission from the government. While jurisdictions like Canada and the EU are currently grappling with how to regulate the UAV industry within their borders, in the US it’s relatively straightforward to get certified and licensed as a commercial drone operator.
To remain above board, there are three essential actions you must take: obtain Part 107 Certifications for you and all pilots you employ, decide on your business structure and file for a business license.
FAA Part 107 Certification
Unless you spent the past year living under a log, you’ve probably heard about Part 107. This rule, passed in August 2016, made a clear path of certification for anyone in the US to operate a drone commercially. Unlike the old, cumbersome process, drone operators now need only to follow these steps:
Not sure if you will be flying commercially? Consider the advice of commercial helicopter pilot and UAV specialist Ian Smith. He points out that, in the eyes of the law, compensation is compensation is compensation. If you accept anything — no matter how small — in return for your drone services, you are considered to be operating commercially.
“By accepting that beer, or bus ticket, or few bucks of gas — you’ve been given compensation for operating your drone,” cautions Ian. “And if you accept compensation, then you’re operating commercially.” Likewise, anyone who uses a drone for their own commercial purposes, like a farmer who flies a drone as part of his agricultural operation, is considered a commercial drone pilot and as such, needs a Part 107 Certified to remain on the right side of the law. So if you are even thinking about operating your drone for commercial purposes, getting Part 107 certified is well worth your time.
Ready to study for the Part 107 knowledge test? DARTdrones offers a comprehensive online prep course.
If you’ve done any research into starting your own business, you’ve probably heard of the various business structures that exist. As a new business, you’ll need to spend some time deciding on your legal structure. Each country has its own regulations and series of business structures to choose from. As a starting point, Global Business Culture offers a straightforward explanation of each country’s business structure.
If you decide to operate as a sole proprietor in the US, you don’t need to take any special action other than filing for state and local business licences (and of course, your Part 107.) Although this may be the simplest route to take, it does have its drawbacks. As a sole proprietor, there is no legal distinction between you and your business. As such, your drone business’ liabilities are your liabilities, and its debts are your debts.
As a way to shield yourself and your family from financial and civil liabilities, you may want to form an LLC or a Corporation instead. This requires additional paperwork and filing fees, but it is well worth the extra legwork. Many drone businesses chose this option because of the extra protection it affords them.
You can form an LLC or Corporation on your own by contacting your Secretary of State, but most people choose to get a little help. Speaking during a recent webinar about building a drone business, Ed Schmalfeld of Dragonfly AeroSolutions recommends starting with a concierge legal service.
“Are you going to be a partnership, an LLC, a corporation? Are you going to need funding?” Ed asks. “There’s a lot to figure out, but there’s help and online resources out there.” For his part, Ed started with Legal Zoom, which provides affordable, online legal services for everything from formation documents to trademark registrations.
Register Your Business
Once you’ve settled on a legal structure for your drone business, it’s time to register your business. This starts at the state level, so the website for your Secretary of State will have instructions, and most likely an option to file online. Filing fees tend to be nominal, usually less than a hundred dollars, and all told the process is pretty simple.
Depending on where you operate, you might also need to register your business with the city or county. Your Secretary of State’s website can probably point you in the right direction. If not, contact your city or county clerk’s office for help.
Educate Yourself About Regulations and Compliance
Odds are you’ll go your entire career without anyone taking notice of how and where you fly your drone. But why take that chance? As Justin Moore of Airborne Aerial Photography told a group of DSPs during our recent drone business webinar, your business’ reputation — and the reputation of the industry as a whole — depends on everyone doing their part to remain safe and compliant. “All it takes is someone in the local area flying into a building…and your business model is threatened,” says Justin. With so much at stake, it pays to stay in the know about local, state and federal regulations surrounding UAVs.
In its Part 107 rules, the FAA lists a number of circumstances under which drones can’t be flown, including at night, directly over people, from a moving vehicle and in controlled airspace. The good news is that it’s possible to apply for a waiver to operate your drone under special conditions. This can be done through the FAA’s website.
Likewise, make sure to research any local and state regulations that apply to your area. And never be afraid to ask pilot networks and communities for advice on practicing safely and legally. There is a wealth of knowledge out there, and many veteran drone operators are happy to help newcomers.
Not sure where to turn for advice? Check out DroneLife’s guide to the top drone forums.
All of this being said, never assume local law enforcement knows the rules about drones as well as you do. Chris Courtney, VP of Flight Operations at Measure, suggests carrying documentation along to every jobsite.
“Our guys show up with a binder that shows their certification requirements, insurance and any other necessary documentation so that they can show any law enforcement that they are legally authorized to be there.” — Chris Courtney, VP Flight Operations at Measure
Obtain Drone Hull and Liability Insurance
Insurance is another aspect of drone business not to be ignored. Having too little, or none at all, leaves you open to risk and can be enough to tank your business should an accident occur. There are two basic types of insurance that apply to drone service businesses:
Hull insurance: Hull insurance covers damage to the drone itself. It’s generally separate from liability policies. The cost to replace many standard drones doesn’t justify buying hull insurance, but it’s not a bad idea if you plan to operate an expensive system, like an I2 with an X5s or Z30, or a pricey XT camera.
Liability insurance: Liability insurance covers damage caused to a third party by your drone operations, including bodily injury and property damage. Most clients, especially larger businesses, require proof of liability insurance before ever letting a drone take off at their site.
So how much liability insurance should you carry? This is going to depend largely on the types of jobs you take on. Based on data from the DroneDeploy Mapping Directory, the average drone service provider carries a $1M liability insurance policy.
Learn more in our recent post, where we discuss pricing and insurance trends for the typical drone service provider.
If this sounds like a lot of insurance to carry, especially as you are just starting out, you might consider Verifly’s on-demand drone liability insurance, which is now available directly through the DroneDeploy App Market.
Level Up Your Drone Business with Additional Training
Training is an important aspect for any drone business, new or old. A well-trained fleet (or a fleet of one, in many cases) is less likely to make costly mistakes that can open up a whole host of liability concerns. This is especially important as you scale your operations and bring additional pilots on board. You will want a standard way to make sure everyone on your team is as well-trained as you.
Building your skill set will also help set your services apart from the growing crowd of commercial drone businesses. Take your services the next level up by regularly engaging in training and consultation services through companies like DARTdrones.
We are also excited to announce the launch of a national training program, made possible by a partnership with DroneDeploy and DARTdrones. This program aims to create a community of professionally trained drone pilots to meet the growing demand for quality drone mapping services. It launches in the fall with the first workshop, Aerial Mapping and Modeling with DroneDeploy.
Where to Learn More
Now that you’ve tackled the nuts and bolts, it’s time to start marketing your services. Read our blog post for pro tips on surviving and thriving as a commercial drone business. If you missed our webinar on building a drone business, you can watch it here.
If you are new to drones, and especially drone mapping, our Zero to Hero video series is a good place to start. Here, you’ll get advice on everything from unboxing your drone, to engaging in advanced flight planning.
For information on obtaining your Part 107 certification, check out commercial helicopter and drone pilot Ian Smith’s post outlining the process.
Get Started with DroneDeploy
Want to learn how DroneDeploy can help your business? Visit www.dronedeploy.com to start your free trial or request a consultation with one of our team members. The DroneDeploy mobile application is available for free download for both iOS and Android devices.