A Path for Better Facility Planning
One thing our regular visitors to the Tenant's Friendliest Place on the Internet have come to know about us is our constant nudging of our clients to PLAN...PLAN...PLAN. Real estate issues should not evolve around a once every five year shopping spree "in the market." Rather, you should spend anywhere from 12-18 months MINIMUM to plan how changes in your business over the next 3-5 years may be affected by your real estate and visa versa.
Who Should Plan?
The question that comes up more times than not is how big should a company be before formal planning is necessary?
The answer is simple-EVERY FIRM, NO MATTER HOW BIG OR HOW SMALL, NEEDS TO PLAN.
Is there a method one should follow?
Funny you should ask!!
Over the past several years, IN/House has developed our The Facility Planner©. It is a ten-step process we have our clients go through in the planning and implementation of a strategic facility plan. Does that sound like a monster? It shouldn't.
What the Facility Planner© does is several things. First, it forces our client to think about their business from several perspectives. Where are they? Where do they want to go? How are they going to get there? They start to think about personnel issues, marketing plans to increase business and financial planning to be sure the cost of any facility is in line with revenues. Secondly, it serves to record the process. This is particularly important if more than one person is ultimately involved in the decision process. "Exactly how did we come to take an additional 5,000 square feet and spend $30,000 on equipment?" And finally, it serves as a simple organizer. Anything having to do with the plan goes in the notebook.
Meat and Potatoes
During this and several other chapters of “WWhat They forgot To Teach You At Tenant School.” we will present a few of the ten steps we include in the planner and comment about each as we go. If you have any questions, feel free to e-mail us at jerryn@inhousecorp.com
Hang on. Here we gooooooooo!!!!!!!!!!!!!!!
Section 1
The Contracts and Letters
To you newcomer's to our site, this may seem an unusual way to start your facility planning. To most, a broker may be just a tour guide to show you "the market." However, you won't end up in the right facility unless your broker completely understands exactly what you need. The only way to achieve this goal is to get your broker involved at the start of the process.
Therefore, this should be nothing new to any of our longtime visitors. Make sure you work with one broker and you have a written contract with him. Taking the freedom to editorialize a little, we suggest you work with a broker who does not have an actual or perceived conflict of interest with any potential landlords you may be negotiating with. Yes, that does eliminate any broker who works for a brokerage house that takes ANY direct listings. Of course those listing guys will tell you what a great deal they can get for you because the "know the landlord REAL well." If you believe that's to your advantage, then you probably never went shopping for a car. "Let me check with my manager. I think I can GET YOU A GREAT DEAL."
Secondly, if you are working with a new broker (not the one who initially put you in the space) be sure to notify your landlord that you have signed a contract with a broker and that all discussions pertaining to your possibly remaining in your present space MUST be conducted through your agent. Of course the landlord or his agent will probably try to ignore your letter or try to intimidate you by saying something stupid like, "We will speak with your broker but you will have to pay any fees." (search other chapters for more on that). Of course you lawyers out there may recognize the landlord's agent may be interfering with contractual agreement or establishing unfair economic advantage. If you’re not a lawyer, ask one for further advice on that matter. We are not lawyers and do not give legal advice but have seen some interesting things happen.
Once you have your real estate team in place, you're ready to rock and roll
Section 2
Gathering Data
The first task in any planning process is figuring out what you have. Without establishing a base, it is virtually impossible to figure out where you want to go. It amazes us how often we speak to potential new clients about their business and all they can focus on is how much space they think they need. Those companies, we usually turn down as clients.
There are four initial items we recommend our clients research and document. They include the following:
- Establish a project timeline
- Analyze your present occupancy costs and summarize your leases
- Make a list of all general personnel in the company and key personnel who would have decision power affecting any facility plan
- Establish Goals and Objectives
Timelines will cover all major events outlined in our Facility Planner© and will cover the 12-18 month period. It will serve as a guide to make sure of two things: 1) you haven't left anything out, and 2) you don't get caught under the pressure of running out of time. Statistically, almost 60% of all companies end up in a "Holdover" situation. Even the smallest user can benefit from establishing a timeline.
Take a good look at your present obligation. Many decision-makers we work with are initially suffering from "Sometimer's" Disease. They sometimes remember facts about their present lease and sometimes they forget. Usually they remember the starting base rental rate but they forget the escalations, additional rent, parking costs, after hour utility costs, and other stuff one needs to include in your Occupancy Costs. Maybe there was something in the Lease that was important to your company that the broker needs to know will be important in any relocation or renegotiations. GET ALL THE FACTS OUT FRONT FIRST.
Get together a list of ALL company personnel and designate specific individuals who will handle certain tasks. The mistake too many small firms make is the Principal tries to do it all. Trust us, there are too many issues attached to a move. Let someone else do the nuts and bolts work in their area of expertise. As principal, you worry about the final decisions. Your broker should be available to all these people to advise. In one recent expansion we handled for a client, the firm president delegated the furniture planning to a capable individual. He did all his planning carefully. Unfortunately, he missed out on one detail that could have cost the firm about $50,000. Believe us when we say your broker has "been there---done that." Ask his advise on anything having to do with your facility.
Finally, establish firm goals and objectives. At IN/House we include Goals, Objectives, Givens, Assumptions, and Priorities. Have everyone sign off on final draft to be sure you're all on the same page.
Off We Go
Once you figured out where you were, where you are, and what you would like to see happen, you're ready to start figuring out how you're going to get there.
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