Planning for a commercial property or premises renovation can be an exciting project for any business. For some, it gives a new aesthetic to attract more customers, clients, or guests, while for others, it’s a vital upgrade for employee productivity and satisfaction. But before you tear down those walls or drill the ground, you’ll need to set a realistic budget first.
Depending on how big or small the project is, setting up your finances for the renovation can be a tough process. To guide you, we’ve listed some financial planning steps you need to take before starting your renovation project.
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Determine the project scope
The first step in setting a renovation budget is being specific about the details of the project. If you have a flexible budget, you can list down your must-haves. However, if you’ll be working on a tight budget, you need to focus on things that will either add value or increase the functionality of your property.
For instance, investing in plywood deck waterproof systems can keep decks in your resort or hotel functional all year long. Plus, it can even improve the aesthetic appeal and save you on repair costs. Or, you can upgrade the outdated kitchen in your rental or retail space to add value to the property.
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Estimate expenses to be incurred
The next step is to identify all your fixed expenses. These may include insurance, rent, taxes, targeted savings, and other essential bills that keep the business running. After making your fixed expense payments, you can now determine the discretionary money you’ve gathered. Discretionary expenses may include travel, marketing costs, entertainment, and other miscellaneous. Having a clear overview of all these expenses will allow you to easily make the necessary adjustments.
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Obtain quotes from contractors
Take note that different contractors offer different rates for their services. Other factors that may impact the offered rates include the contractor’s experience and quality of service. To help you get a more accurate budget, requesting quotes from multiple contractors. It’ll be better to meet the contractors in person and have them check your property.
During the in-person meeting, take note of the contractor who actually listens to your needs, possesses great knowledge, and has amazing ideas for the renovation. After all, price isn’t everything. Moreover, be sure to read the fine print on the contracts before signing anything. Only deal with licensed contractors.
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Have a contingency plan
After finding a good quote for the renovation, industry experts recommend adding at least 5% to the total estimate. If your situation allows it, you can go with as high as 10% to 15% of the quote. This will give you an additional fund to cover any unexpected expenses during or after the project.
Generally, such unexpected costs appear once your contractor has problems with building systems like electricity or plumbing. They can also occur when the business owner buys more costly materials than originally planned or decides to change direction midway during the renovation process.
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Keep the business running
If you can keep your business running during the renovation, it would give you more cash on hand to cover the expenses. Doing so can also ensure that the construction won’t be delayed. Talk to your contractor and confirm what areas of your business premises or office won’t be affected so you can stay open during the renovation. Be sure to maintain open lines of communication to prevent problems along the way.
If the renovation will take place in your actual workplace, consult your designer and decide whether to slow down operations or close for some time. Will the construction work scare away the clients or guests? Which cost is greater – the loss of business for six weeks or the slowed-down operations for 12 weeks.
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Plan your timing
For projects like this, timing is everything. Avoid rushing things and take your time in reviewing the final plan and deadlines, particularly if the renovation can disrupt your operations in any way. Take action only when you’re completely prepared.
Leaving yourself short on time or still uncertain about some renovation areas, you’re more likely to get stuck negotiating with suppliers on limited lead times. Having shorted lead times means higher costs. The more lead time you got, the bigger chance you can negotiate with your suppliers.
As a business owner, you don’t want to waste a dollar on renovating your commercial building or premises. Follow our tips here to ensure you won’t overspend when undertaking the project. Do you still find it challenging to come up with a realistic budget? Involve your team with the planning.