If you have found that your small business is in an upward swing and you think it’s time to expand, congratulations! That’s a big step for any entrepreneur, and one that can put you in a position to reach your goals (and then some)! However, the decision to make your small business bigger is not one to be made lightly.
Here are three things to think about before calling in a contractor:
1. Building type
Since money is likely your primary concern, it pays to look into various building types and materials. You may be surprised at the different options available. A standard commercial office building averages approximately $160 to $170 per square foot. If you work in a high-priced real estate zone, such as New York or San Francisco, you can expect to pay much more.
As a small or medium-sized business, you may not have to go the full commercial route, especially if you only wish to add office space, a workshop, or warehousing. A metal building is a smart option when expanding for any of these purposes. South Dakota-based Brown Wegher Construction estimates that a metal warehouse building will cost around $70 per square foot on the high-end, while a metal office building starts at roughly that price point.
A steel structure is not only less expensive, but is faster to erect. This type of building typically only requires a slab foundation and may be customized in shape, size, and strength. According to Armstrong Steel, today’s steel buildings are built to comply with energy standards that include commercial insulation and other features that can help you meet LEED requirements.
2. Ongoing expenses
Your next consideration when trying to determine whether to physically expand your small business is the expenses involved beyond construction. You must also factor in the added cost of utilities, property taxes, and new employees to fill the space. Furnishing your new office is going to cost money as well. United Corporate Furnishings estimates that a 2,500-square foot office will cost approximately $21,500 to outfit with entry-level furniture. High-end furniture for an office of the same size can run $30,000 or more.
If you plan to finance your expansion, be sure to do your research and choose a loan product that meets your needs but also offers some flexibility should the project exceed expected costs. It may be in your best interest to finance the structure and the furnishings/equipment separately, since there are many loans available specifically for office equipment. Don’t forget to factor in the cost of marketing, another operational expense that you may need to prioritize so that you can bring in additional business to support your new size.
3. Potential growth
Finally, you must make plans for growth with the future in mind. If you plan to nurture your business beyond its current level, it will be financially responsible to prepare for that expansion now. The Turner Building Cost Index illustrates that construction fees rose more than 5.6 percent between 2017 and 2018. If you believe your business will continue on an upward trajectory, adding a few hundred extra square feet to your building now may save you a considerable sum later, and having added space means you will be less likely to experience business-disrupting growing pains.
Any time you have an opportunity to grow your small business is a time full of excitement and hope for the future. However, before you make any rash decisions, you must ask yourself if it’s really in your best interest. Consider your plans carefully and, as business expert Jared Hecht suggests to Inc., find a mentor who’s been through the process who can give you guidance and wisdom along the way.
Remember, your goal is growth and financial success. By looking at your expansion plans objectively, you give yourself an opportunity to identify issues that might prevent you from achieving your initial goal. Calculate costs, and plan ahead – your small business depends on it.