In 1848, a man named Elias Thorne sat in a narrow counting house in London and he watched the docks. He was a merchant of tea and he was a man of strict habits. The crates came off the ships and the men carried them on their backs and Thorne recorded every ounce in a leather book.

One spring, the crates were fewer and the ledger showed a decline. Thorne walked down to the Thames and he stood in the mud and he screamed at the dockworkers. He told them they were slow and he told them they were lazy and he threatened to dock their pay.

The workers looked at the river and they said nothing. They knew the truth but Thorne did not want to hear it. The ships from China were fewer because the ships from India were more and the market had moved to the other side of the city.

Thorne focused on the men and he ignored the map and he lost his fortune by the following winter. He blamed the people who did the work but he failed to see the structure of the trade.

The Bright Red Marker

Gary Pruitt stands in front of a whiteboard in a small office at the airport. The whiteboard is stained and the eraser is old but the red marker is bright. Someone has written the fuel totals for June and the numbers are lower than the numbers for May. Gary is the owner of the FBO and he is a man who likes results.

Four line technicians stand in the room and they wear reflective vests and they stare at their boots. The air conditioner hums in the window and the room is small.

“We are going to fix this,” Gary says.

He taps the board with the marker and the sound is sharp. He tells the men that they need to move faster and he tells them they need to smile at the pilots. He says that the competition at the field across the county is winning because they have better service.

He posts a new sign by the door and the sign says that the customer is the priority. He looks at the men and he looks for a weakness. He wonders which of them is the reason the gallons are down and he thinks about who he might let go if July is the same as June.

The Ghost in Hangar 3

Twenty yards away, Hangar 3 sits empty. The door is open and the wind blows a dry leaf across the concrete floor. There is a single oil stain on the floor where a Challenger 300 used to park. The jet had been there for eleven years and the owner of the jet had bought thousands of gallons of fuel every month.

In April, the owner of the jet had a disagreement with the airport authority about the lease and he moved the plane to the next airport. He took his fuel business with him and he took the profit of the FBO with him.

Gary knows the hangar is empty but he does not talk about it at the meeting. He talks about speed and he talks about smiles. He treats a structural shift like a performance failure and he punishes the men for a risk he built into the business years ago.

The habit is comforting for a manager because it gives him something to do. If the problem is the staff, the manager can lecture or he can hire or he can fire. These are actions and they feel like progress. If the problem is the customer mix, the manager must admit that the business is vulnerable.

He must admit that his success was tied to one man and one airplane. That is a harder truth to face and it requires a different kind of work.

Hiding the Foundation

I recently met a man named Marcus and I googled him after our meeting. He had a background in maritime logistics and he told me about the way captains blame the sea for the mistakes of the navigator. We talked about how people hide the truth behind a digital curtain.

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“Pierre J.D., a virtual background designer I know… spends his days creating images of mahogany bookshelves and sleek modern offices for people who are sitting in messy spare bedrooms. He told me that a good background is not about what it shows but what it hides.”

– Marcus, Maritime Logistics Expert

Gary Pruitt is doing the same thing. He is using a “customer service” background to hide a “tenant concentration” problem. In the world of aviation business, the numbers often lie if you do not know how to read them.

An owner sees a drop in volume and he looks for a person to blame. He thinks the line crew is the variable. But the line crew is a constant and the customer base is the variable. When a business is built on a small number of large accounts, the business is not a solid structure. It is a house of cards and one card has just been pulled from the bottom.

The Lumpiness of Revenue

If you look at the data across the industry, the reality is plain but it is often ignored. A sophisticated buyer will look at an FBO and they will look at the “lumpiness” of the revenue. There is a specific way to measure this risk.

In a typical independent FBO, losing a single tenant who provides more than 20% of your total margin is not a service issue; it is a terminal event for your current valuation. If you lose 10% of your volume, you do not lose 10% of your stress.

You lose nearly all of your sleep, yet the math shows you only lost one relationship. The impact is magnified because the fixed costs of the airport do not move. The lease payment stays the same and the light bills stay the same and the line crew stays the same. The fuel margin from that one jet was the money that paid for the profit. Without it, you are just trading dollars and hoping the wind changes.

Punishing the Constant

Gary continues his lecture. He tells the men that they are the face of the company. He says that every pilot who lands should feel like a king. One of the line techs is a young man named Jax.

Jax knows that he worked ten hours on Saturday and he knows he fueled every plane that landed. He knows that he smiled until his face hurt. He also knows that the Challenger in Hangar 3 is gone because he saw the moving trucks.

He wants to say something but Gary is shouting about the red marker. Jax looks at his boots and he feels the weight of a failure that is not his own.

This is how organizations decay. They punish individuals for outcomes that are produced by the structure of the business. The staff did not create the risk of tenant concentration. The owner created the risk when he stopped looking for new business because the big jet in Hangar 3 made life easy.

He relied on the easy gallons and he let his sales muscles go soft. Now the jet is gone and the muscle is not there to find a replacement. He blames the line crew because he cannot admit that he stopped being a salesman five years ago.

What the Buyer Sees

When a buyer looks at a business like this, they see the empty hangar before they see the new customer service sign. They see the risk that Gary tried to hide. They know that a business with one large tenant is a business with a shadow over it.

They will push back on the price and they will ask for a discount. They will say that the EBITDA is not as strong as it looks because the foundation is narrow. Gary will be furious when he hears this. He will say that his staff is the best in the state and he will point to the smiles on the ramp. He will miss the point again.

Fixing the Flowers

The Monday morning meeting ends and the men go back to the ramp. Gary stays in the office and he stares at the red marker. He feels like he has done something important. He has “addressed the problem” and he has “set a new standard.”

He sits at his desk and he opens his computer. He does not call the flight departments at the neighboring airports. He does not look for a new tenant for Hangar 3. He looks at a catalog for new uniforms for the line crew. He thinks that if they look more professional, the gallons will come back.

The sun comes up over the field and the heat begins to rise from the pavement. The wind moves through the empty hangar and the oil stain stays where it is. The stain is a ghost of a business that Gary used to have.

He will spend the rest of the summer chasing the staff and he will spend the rest of the year wondering why the numbers do not move. He will never realize that he is screaming at the dockworkers while the tea is being unloaded on the other side of the river.

The discipline of a manager is often a mask for the fear of an owner. It is easier to be a critic than it is to be a strategist. It is easier to demand a smile than it is to build a business that can survive a departure.

The line crew will eventually leave because they are tired of being blamed for the empty hangar. They will find jobs at the airport ten miles away where the Challenger now parks. Gary will be left with his whiteboard and his red marker and a new crew that he will also fail to lead. He will wonder why he cannot find good people and he will never look at the map.

In the end, the value of the operation is what remains when the easy wins are gone.

If the owner does not understand the difference between a performance issue and a structural risk, he will continue to punish the people who are helping him stay afloat. He will trade his best workers for a sense of control and he will find himself alone on a ramp that no longer has a reason to be busy.

The red marker will stay on the board and the numbers will stay small and the world will continue to move to the other side of the river. Gary will stay in his office and he will wait for a smile to save him but the smile will never be enough to fill a hangar. He will remain a merchant of a trade that has already passed him by and he will never know why the crates stopped coming.