January 26, 2016

Starting a Brick and Mortar

In a departure from my usual blogs about video conferencing, this is about starting a brick and mortar business. I routinely get asked questions about owning a commercial building so I thought I would put as many thoughts down as possible and just point people here. This is mainly to help those who are considering buying or building a place for their business. These are my experiences only and may not represent  those of anyone else. I'll update this regularly as I think of anything.

In 2008, we designed and had built a 5,000 square foot veterinary hospital on an acre of bare land. I learned quite a bit about the building process, but more than that I've learned so much about the ongoing cost and problems associated with building ownership.


 Turns out those windows were stupid expensive


Monthly costs
Be prepared for everyday costs to be higher than they are for residential. That was kind of a shock to me as it turns out "business class" products, while not necessarily any better, tend to have higher costs associated with it. This is everything from the water service to electric service to internet and telephone, etc. Also, contractors charge more to businesses as a general rule even if your building has consumer grade equipment.

Typical monthly costs include:
  • Electric
  • Water
  • Internet
  • Phone
  • Lawn care
  • Alarm system 
  • Added 2-1-16 HVAC maintenance contract.
Note: When choosing your phone system and phone service provider, it may be a smart move to go with one company. We didn't and had a lot of finger pointing on whose problem (whatever) was. They tried to both charge me hourly rates to come out because each was convinced it was the other guy's issue. I say "tried". Another thing you need to be diligent with is overcharge attempts. If you don't pay attention, you could get hosed quick.

Non typical costs
Having a bad year of snow and ice in the Midwest gets expensive. In the beginning I used to hand shovel our 35 space parking lot due to lack of money/unwillingness to pay someone to plow. If you own the building, you own the parking lot and you don't want to be facing a lawsuit because someone slipped on a patch of ice. During a heavy period of snow it's entirely possible to have a plow out 2-3 times during the course of the day. Prices are typically by the hour for the plow and operator and salt prices are by the ton (or fraction of depending on how much was used).

If you have a parking lot, you may have light poles. Ours are 35 feet high and incredibly expensive to have bulbs changed. Mainly you're paying for the truck to come out. A good practice is to have the lights on a timer so they aren't on all night. Ours are off from 10pm until 6am saving 8 hours of use every day. Looking back, we should have opted for something different. A shorter fixture that I could reach by standing on my truck for instance would have been a smarter move.

The Little (and not so little) Gotchas
Here are some examples of things you won't be ready for. Some you can plan ahead for so at least keep these things in the back of your mind.
  • Any equipment that needs inspected. For us, it's the X-ray machine.
  • Yearly fire extinguisher maintenance/inspection
  • Yearly backflow preventor test (required by law in our county)
  • Random increasing in fees (can be for any utility or monthly service)
  • Property tax. That twice a year money laundering operation. Municipalities love to haggle and are proud of providing a tax abatement. I got literally laughed at when I asked about it after giving a swag about how many employees we would have. Local municipalities want to hit home runs and bring in hundreds of jobs at once. For these companies, they can get an abatement. For small businesses, forget it. 
  • Shit breaking. Things break, like the toilet. When it happens it sucks. Find a plumber before it happens so you know who to call in an emergency. 
If you're buying an existing building inquire about the age of the roof. If you're building new, you should get a two year warranty on the materials and workmanship. Don't be afraid to call the contractor to get things fixed.
Hours of Operation
One thing to keep in mind if you're wanting to transition from a home based business to one in a commercial building are the hours you intend to be open. Some people rush to open a store front and it's later that they realize they need to be open all the time for customers to come in. A decision then must be made to either suck it up and work every hour of the day or hire employees. For this article I won't go into hiring employees or the benefits and bad points about it. Just keep in mind that your store needs to be open for customers to come in. The more that they see you closed at various times of the day, they less they think you are reliable.

1 comment:

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