Unfortunately, many business owners don’t do the necessary preparation before investing in a commercial property. And this eventually comes back to bite them. To help you avoid such misfortunes, we list out the seven things you should consider before you decide to construct a commercial building.
Spend some quality time planning and budgeting the project. You need to think about what size the building needs to be, what size should the work area be, how many rooms should the building have, and so on. Plus, you will also have to take the future expansion into account. When you grow over the coming years, can your building be expanded to accommodate more workers? If not, where will you host the excess employees? Such questions need to be answered before you finalize on the construction.
Another important thing that needs to be done is budgeting. Be as detailed as possible and list out all the expenses that will be incurred for constructing the building, right from the big expenses like cement, equipment rentals, wages etc., to the petty expenses like stationery expenses and such. The more thorough you are with the budget, the better you will be at keeping the expenses within the budget. It is also recommended that you maintain an extra 10% of the allocated budget as a reserve in order to meet any unforeseen expenses that will arise during the construction phase.
When hiring a contractor, inspect their licenses and make sure that they are properly registered as per the various government laws. If possible, contact their previous customers to check whether they are trustworthy and punctual. You should also look into the construction methods used by the contractor. Modern construction methodologies will create a stronger building. But if a contractor is still stuck with using construction methods that are decades old, then it will be better for you to avoid hiring them.
Arrange the financing well in advance so that you have the necessary funds in the account as soon as the contractor is ready to start the construction. You will have to provide the balance sheet and P&L account of your business to the banks to be eligible for a loan. The land and the building will most likely be considered as collateral for the loan. And coupled with your strong finances, you should be able to get a loan at competitive interest rates. Make sure to approach multiple banks to find the best offer. You will have to make a down payment for the loan, which normally comes to 20% of the total value of the property. So, make sure that you have the down payment amount ready before approaching the banks.
Check the architects and interior designers, and pick those who are experienced in designing commercial buildings. While the building must definitely look attractive, the layout of the building should be easy to navigate. Make sure that the building is not filled with too many rooms and passageways that it becomes confusing for people when they start working there.