As your business expands and you start offering other services, hiring more employees, scheduling more client meetings, and generally experiencing growing pains, you have to finally realize that your home office or that workbench in your garage or the back of your pickup truck just won’t cut it anymore.
It’s time to finally find your company a home of its own not just to contain your burgeoning enterprise but to give your clients the good first impression that is so important to them. Many remodelers and contractors spend years without a proper office. However, if you’re meeting with the typical homeowner, they will more than likely be more impressed by a professional setting rather than simply leaning against your battered work truck or standing on their front porch to discuss options for their upcoming remodel.
Another advantage to having your own space is the ability to brand your business — an opportunity you might not have if you’re subletting space or have office space as part of a co-op. Just like being the “king of your own castle,” having an office with your signage, logo, etc., on it for clients and competitors to see can be a boon in its own right for attracting new business, vendors, subs, and more to your company.
Can You Afford It?
If you’re looking to rent your new space or even to buy a building, you need to take a good look at your balance sheet and see how well work is flowing in because you are about add one heck of a new line item!
That line item should include utilities and office furnishings (which don’t necessarily have to be new, think eBay, Craigslist, etc.). And don’t forget to include equipment — everything from computers and printers to a coffee maker.
The important thing to consider is whether you and your business can take the hit to your profits that a new office space will entail. If you have a steady flow of work and the future looks bright, then now might be the perfect time to upgrade to a new space.
But if money is tight, there are other options.
Sublet: If this is your first office, consider subletting a space. With the constant contracting and expanding of the economy, you might have your pick of spaces with companies that have had to cut back in recent years.
You could get the same amount of space you’d normally get, but for a portion of the monthly rent you’d pay. More than likely, utilities would be included, aside from your phone and Internet services. If that’s the case, that would be one less line item each month.
Join a co-op: Another option is a “co-op” environment — an office community where several businesses rent out a space and share some common amenities such as reception, janitorial, maybe even accounting and bookkeeping. It never hurts to ask. It’s possible you might find a space that has more amenities than you had planned on — a lunch room, on-site gym, covered parking, access to mass transit, etc. You could even use these new amenities as fringe benefits for potential new hires.
The bottom line is, if you’re running your business in an efficient, professional manner, you likely won’t have any issues finding the right commercial space for your company. Then again, if there are a number of foreclosures in your area, you might find a good deal on commercial property to purchase.
What Are Your Needs?
The first thing you need to determine is exactly what type of space you need. A lot of this will depend on the number of full-time employees you have. For a small to medium-size remodeling company, all you will probably need right away are just the basics: your office, a showroom (that could double as a conference room), an office for support staff (bookkeeper, receptionist, etc.), and maybe even a warehouse or small construction shop.
Once the size of the office is determined, you will need to think about location. Your goal is to not only have a productive work environment that can accommodate your business, but an environment your clients won’t be afraid to come to if the need arises.
Many times office space with attached warehouses/workshops is located in more industrial parts of the city. This might not be so much of an issue if you’re doing more replacement work, but if your company is keen on higher-end remodels, you’ll definitely want to find an office on the “right side of the tracks” so clients will feel comfortable visiting you.
Zoning, Loans, & DIY
One more thing you’ll need to consider, according to Shawn McCadden, REMODELING contributor and industry expert, is zoning (just like any remodeling job, right?). “When I was looking at space for my business many years ago,” McCadden says, “I became aware that there were many zoning regulations to consider regarding how I used the space, what we stored there, and the number of vehicles and signage,” he says. “Renovations might also become a zoning consideration.”
Peggy Mackowski, vice president at Quality Design & Construction, in Raleigh-Durham, N.C., decided to stay close to home with her business and purchased space in the same building her company was leasing. She does, however, offer this advice: “One word of caution: If you look at Small Business Administration loans, be careful of prepayment penalties. I wish I knew more about that when we purchased, but we are over that now.”
What Mackowski is referring to is that, essentially, a penalty is charged to the small-business owner if an SBA 504 loan is prepaid during the first half of the loan (first 10 years). The penalty is equal to 100% of one year’s interest during the first year, declining by 10% per year (to zero) after 10 years. Similarly, the penalty for 10-year loans is equal to 100% the first year, 20% each year thereafter, and zero after five years. There is no prepayment penalty after the 10th year.
Duane Oglesby, owner of Oglesby Construction, in Portland, Ore., decided to simply create his first office in his home. “When I started my business and went full time in 2000, I could not afford to lease office space or move, and I still can’t,” he explains. “I knew, however, that in order to run a construction business, I needed an office and shop. I chose to remodel my house and add a 20-by-60-foot shop to the first floor and an office and master suite to the second floor.”
Just a few months ago, Oglesby continued the renovations by converting part of his shop into another office and showroom. He admits that it was a fairly expensive undertaking 12 years ago but it has been well worth it ever since. “I don’t have a monthly lease and can write off some of the space,” he says.
Maybe there really is no place like home.
—Mark A. Newman, senior editor, REMODELING.