How will you plan and prepare your location for business?

Posted by on October 5, 2009 · 1 Comment 

By: Mike Byrum, Mainsail Development Group

Last month we discussed the decision-making process involved in choosing where to locate your small business. If you recall, the most significant issues involved in that choice were the experiences of your customer, your employee and you.

Now that we have grasped those concepts, we are more capable of transitioning to the next phase of successfully starting up our business. This round of decisions includes selecting the correctly sized space for your business, the planning and preparation of that space for business, and the challenges that often come up along the way.

The first determination you should make in selecting a particular space is the amount of square footage that you need. The most important factor in this decision is ensuring that the size of the space allows you to operate your business efficiently. More clearly, you want to use every square foot in your space to contribute to the operation of your business. For a retail user, efficiency is measured by revenue per square foot; for an office user, efficiency is measured by the relationship between the number of employees needed to operate their business profitably and the amount of space each employee needs to perform their jobs.

After determining the most efficient square footage for your business, the next decision you should contemplate is the sequence of planning and preparation to get your business up and running.

Initially, you will want to meet with an architect to craft a space plan for your location. This process will consist of an initial meeting, where you and your architect determine how your space needs will fit into the location you have selected. Several meetings will likely follow where you and your architect make revisions to each subsequent site plan he presents to you until you have a site plan that sufficiently addresses your needs.

Once you settle on a site plan, your contractor will prepare construction drawings (“CD’s”) for the build out of your space. The preparation of the CD’s normally takes about three weeks. Upon completion of the CD’s, your contractor will submit them to the county or city in order to get a building permit. Obtaining a building permit for a small user (less than 5,000 square feet) can take between two to five months (more on this later).

After your contractor has obtained a building permit to build your space, he will then begin the construction of the space. This represents many new responsibilities for you, because you then must constantly monitor your contractor, the project budget and schedule, and inspections once the work is complete. You can expect the construction of a small space to take three to four months.

Finally, after all work is done and inspections are passed, you are ready to install all furniture, fixtures, and equipment (“FF&E”) and bring in any supplies or inventory you will need to open for business.

It is important for you to keep in mind the most common challenges small business owners have throughout this process so that you may avoid them the next time you face the endeavor of opening / relocating a business. Most often, small business owners underestimate two things: the amount of time it will take to completely build out their space, and the cost of construction. As mentioned earlier, CD’s take three weeks to create, permitting takes between two to five months, and construction takes three to four months. Taking the least of these ranges, the fastest you can expect to be open is nearly six months.

Because of their unfamiliarity with construction costs, business owners who are new to the construction process rarely allocate enough capital for build out of their space. Build out costs for small spaces can range from $50 per square foot to $100 per square foot. Consequently, the least expensive budget you should have for the build out of a 2,000 square foot space is approximately $100,000, for example.

Now you have addressed the “experiential” aspect of your business and properly planned and prepared your location for business. Next month, we’ll examine the myriad of occupancy costs you will incur in operating your business.

Filed under Real Estate