Fit-out is a necessary investment irrespective of whether you own the premises or rent. Implement tight budgeting and working capital management strategies to finance your fit-out.
The budget for an office fit-out, relocation and refurbishment comes with a heavy financial commitment. If you're opening a new bar, restaurant, store front or waiting room a significant portion the working capital is required upfront before the first customer comes through the door.
In addition to finding the right location and securing the lease, managing your budget, would typically include the following costs:
1. Occupancy cost
- Lease deposits, bank guarantees
- workers compensation and public liability insurance must be confirmed prior to starting fit-out work
- fire and environmental services
- Securing licenses and permits
2. Capital costs
- New fit-out or refurbishments
- Signage and graphics
- Purchasing or upgrading equipment
- Security systems
- Telecommunications and technology
3. Advisory fees
- Legal fees
- Property agent fees
- Accountant fees
4. Soft Cost
- Lost business
- Venue marketing and branding
- Initial supplies of products or food
- Staff uniforms
- Hospitality management software and POS hardware
Apart from the cost of the initial store fit-out, store owners have an obligation as part of their shopping centre's leasing conditions to totally redesign or upgrade their store to align with the Centres' image; while attracting new customers and enhancing their experience. Store owner must adhere to the Centre's Fit-out Guidelines, included in the Lease Document.
First impressions are lasting impressions
As online shopping is eating into the conventional brick-n-mortar model, the storefront is still important for branding and building the company's unique image.
Some trends for 2017 - 2018
- LED lighting
- Polished concrete floors
- Recycled timbers and green walls
- Building a social wall
- Increased ceiling heights
- Merging your online and offline store activities
- Chatbots and artificial intelligence
- Mobile wallets
- Lights, colour, action through interesting demos and sampling booths to draw customers in
- Today's customers want more engagement and education on products and services
According to the '2017 Australian Hospitality Industry Survey by Impos'; the top 3 investments planned for hospitality are;
- People – 72%
- Marketing - 65%
- Furniture and fit-outs – 56%
How to finance your store fit-outs?
Business owners who have insufficient trading history and or collateral do not qualify for bank lending loans. Other than dipping into life savings, borrowing from family and friends, and using credit cards to fund your fit-out, alternative lending is growing in popularity, albeit more expensive over bank loans for new entrepreneurs to cover setup costs. These facilities are based on business turnover and the underlying product purchased, such as:
- Merchant cash advance
- Unsecured working capital
- Unsecured Line of Credit
- Insurance premium finance
- Equipment finance
If the business has been trading for 12 months plus, you can leverage against existing business assets such as:
- Supplier and customer invoices
- New and used equipment
- Business turnover
- Long-term contracts
In most unsecured lending scenarios, additional insurance through personal guarantees is required to secure the amount borrowed.
Fit-out is a necessary investment irrespective of whether you own the premises or rent. Good budgeting and working capital management is important, and the cost of finance is as important as the cost of establishing a business.
Accessing working capital through alternative finance can provide many benefits to businesses with speed, simplicity and flexibility terms and pricing are the prime benefits. A vital pitfall to avoid is not commencing the fit-out work before your required working capital is totally covered.