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Expert Answers to Biz Questions

Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.

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The Biz Question

I intend to start a professional garden for weddings and special events. It's very exciting and I'm having a blast preparing for it. The main problem that I'm experiencing is trying to complete the business plan. I'm not sure how to factor in construction costs and materials. The land for the garden still needs to be bought, so I am not able to offer the contractors specifics on what I will be needing from them. It leaves me in a catch twenty-two.

Nikki

Answer from our Guest Expert Kent Capener of Capener Consulting

Hey, Nikki,

Chicken and Egg? Cart & Horse? Catch-22?

Start with what you envision your facility to be and let that vision dictate the amount of ground you need.

So if one of your wedding spots requires a 400-square-foot stone building with lofted ceilings and a running waterfall making up the entire back wall, with arched portico over a red brick driveway where the couples arrive in a gold, gilded chariot drawn by a team of Clydesdales.......

Now here's the trick.

Approach a potential contractor -- not with a bid or quote request -- but with a contract built based upon your relationship and if you get what you need to move forward. Their part is to provide you with per square foot numbers. In other words, the rules of thumb as in: Running water falls run from $55 to $87 per square foot. Red brick driveways run from $22 to $55 per square yard. Stone buildings average from $47 to $123 per square foot (walls) and roof and support from $34 to $21 per square foot, etc. on and on.

Your part is to have something to present to the contract, so they know what to give you. They aren't committing to pricing, and if you and they get along, they will view you as a potential client.

Estimating the ongoing costs, like utilities, etc., can be done by using the power company's rate per ______ and estimating the amount of _______ you would use. Lighting is rated by kilowatt hour and can be calculated as to the total usage close enough to work in projections.

For the sound equipment, if you have a good enough presentation, you can show that to any professional sound engineer, in business, and they will gladly give you a whole list of what you need and the costs for same. It's wise to make a relationship here as well, as you'll want these people working on your sound systems in the future as well.

If you approach these people correctly, they will gladly help you. You can approach more than one as well. In fact, for the contractor, you are well served to deal with more than one at this stage. Contractors have a mind set that differs from contractor to contractor. Most are quote, bit, and budget conscious. They're also sticklers for money. So, provide them with a level of comfort in your financing in that you will move forward on the project, given the numbers work, and that they are one of a select group that you are talking to.

Another variation would be to hire an architect, if the budget allows. Let them take your vision and render it, create the elevations, and give you the approximate costs to build out. You can have more freedom here too with variations or alternatives. Instead of a waterfall that re-creates Niagara, maybe a bubbling brook in the corner would suffice (at less cost). These materials are a good presentation to contractors and to raise money.

When you put your numbers together, make sure you capitalize the building costs, and show the depreciation on the income statement, and make sure to put the asset in the balance sheet.

Nikki, I hope this gives you a road map out of the morass (smile).

Kent Capener, Capener Consulting

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