Hi, we're in the process of figuring out start-up costs and we're trying to figure how to come up with an estimate for a facility that we want to lease and most likely renovate to fit our business/services (the facility is only hypothetical so far). However, we have no experience in hiring contractors and we're not sure how to determine who is best suited for the job, how to find them, and how much information we'll need to have available for them so that an accurate assement can be made. Do we have to pay for a consult or do we pitch them the idea and wait for a proposal/bid.

Any advice would be helpful...

tx

To help determine start up costs for your build out or remodeling you will need to know the square footage of the space. You will need to determine what it is you want done. Do you need to knock down walls to open up the space? Do you need to add rooms? What kind of rooms? An office? Restrooms (plumbing?)? Kitchen (plumbing, gas lines)? Painting? Wallpapering? Flooring? Ceilings? Lighting/electrical?

It will be dificult to determine any of this if it is still just hypothetical.

Also, your specific needs will be determined by whether the space is in "vanilla box" condition (new build, unfinished) or an existing or previously used space (finished).

If it is already finished but needs remodeling, you need to know what needs to be changed.

So, while the concept is hypothetical and you are looking for ballpark figures you can use very general numbers. Assume for example that you will need to carpet 5000 sq ft. Determine your costs for that (you can get basic low, mid and high ranges from any home improvement or carpet store).

As for needing a consultant...that could get costly. If you have that much money to work with then go for it. However, if you don't have your own money tree in your backyard then you may only need a carpenter and/or painter and electrician. You should ask friends and associates for recommendations. Depending upon your needs, you may not need a general contractor.

For vanilla box spaces, often the owner/landlord will finish the space to your specifications. Sometimes at your expense, sometimes at theirs. It's all figured in the negotiation of the lease. They may absorb the costs, but build it into the rental rate. They may take care of some of the build out and leave the flooring to you. Everything is negotiable.

Hope this helped.

Thank you very much for your expertise. Your response raises another question, perhaps more to the point. If in fact we need to estimate the cost of the build-out to include in our business proposal, is it necessary to already have a specific facility picked out - which would seem premature since there's no finacing in place to secure it. Alternatively, if we decide on the space needed, say 3,000 sq ft, and based on the presumption that the facility will need some remodeling (say its a health spa, tanning salon, etc), then how do we know the extent of the work (demolition, rebuilding, etc) that will need to be done, if we don't have a specific place in mind?

em

It's ok to start looking at locations and asking to see the space prior to securing your financing. When applying for a loan you will need to provide details, including estimates of build out costs. So you should have a location in mind already.

It has been my experience when negotiating leases, that the owners/landlords understand that it will take time for the prospective tenant to get everything in order. They don't expect you to sign a lease immediately after showing you the space. Negotiations often take several weeks and then they have to have a specific contract drawn up which can take a few more weeks.

It may seem like a catch 22, but in order to turn in a completed business plan with solid financials for your loan application, you should have a specific location in mind with pretty accurate start up costs.

So go ahead and start looking for locations and asking to view them. You will have a much better picture in your mind of what your remodeling needs will be.