Making the Move

[Croft]

At what point did you decide to leave your garage/basement to lease or buy in a commercial area.
 
Myself I am very conservative/cautious but I have 1000sq' shop and were packed in. Lease building on average in my area start around $8+ per square foot for factory district type areas.
 Were currently in the $200-$300K in sales which are mostly "contract" so my material costs are pretty low. I have 3 employees including myself. I seethe move into town as a plus to look more professional but there are higher overhead costs involved.
What advantages / dis-advantages did you realize in your move?
 
I feel I might be in a " S*!t or get off the pot" type situation

[T Shirt Farmer]

Lease building on average in my area start around $8+ per square foot for factory district type areas.

Is that a typo $8.00 a sqft or did you mean $0.80 per?? IMO the first number would be a challenge but the latter is very doable especially if it is a gross lease with no additional fees. Go for it,moving forward with commitment is a good thing.

[blue moon]

My thought would be to have some numbers put together and some sort of a plan that you are implementing. If all of those are done, the question becomes "How reliable are my predictions?" rather than when should you move. . .

pierre

[JBLUE]

Where I live you cannot run production out of your garage in residential areas. So when the other printers started seeing our work out and about they were looking hard to see who was doing it. One day I got a comment from someone that works for the city asking if I was the guy that is printing out of my garage. That was my green light to get into a industrial building.

[Inkworks]

It's never an easy decision, and there will always be some "leap-of-faith" involved. I moved when lack of space was beyond silly. We'd sometimes have to walk all the way around the shop to get to a doorway 5' away, and were constantly shuffling product around to get at things.

From your sq. footage and sales numbers I suspect you are in a similar situation. We're in 3000sq' now, and it's starting to get crowded again, but throwing a 12/14 large auto in the mix eats up a lot of space. I'm not moving again if I can help it, the next step is to buy the building and build on an addition. I have no ambitions to get too much bigger, just better.

[Croft]

Lease building on average in my area start around $8+ per square foot for factory district type areas.

Is that a typo $8.00 a sqft or did you mean $0.80 per?? IMO the first number would be a challenge but the latter is very doable especially if it is a gross lease with no additional fees. Go for it,moving forward with commitment is a good thing.

Leases are based on per year so $8.00 per sq' a year, so 2000sq' is going to cost $16k per year. There are only 2 available right now at $8 and are  considered the cheapest .

[mk162]

what's included in your rent?  Are you responsible for building repairs?

How long is the lease?

[Croft]

It's never an easy decision, and there will always be some "leap-of-faith" involved. I moved when lack of space was beyond silly. We'd sometimes have to walk all the way around the shop to get to a doorway 5' away, and were constantly shuffling product around to get at things.

From your sq. footage and sales numbers I suspect you are in a similar situation. We're in 3000sq' now, and it's starting to get crowded again, but throwing a 12/14 large auto in the mix eats up a lot of space. I'm not moving again if I can help it, the next step is to buy the building and build on an addition. I have no ambitions to get too much bigger, just better.

Exactly usually for june-Aug I borrow trailers from friends and have them lined up at the shop door, last year it was 1 car hauler, and a 7'x14 just with unprinted pieces.  We have always run lean all jobs come and go within days but larger 2 or 3 side prints are killing us.

[Croft]

what's included in your rent?  Are you responsible for building repairs?

How long is the lease?

building repairs/ snowplowing are a portion and  that portion can change , Like this winter I'm sure snowplowing cost will be way up.

[Croft]

My thought would be to have some numbers put together and some sort of a plan that you are implementing. If all of those are done, the question becomes "How reliable are my predictions?" rather than when should you move. . .

pierre

As for my predictions I can only say I won't loose business and feel a $20 increase in sales probably won't be a problem. As it stands I usually have a pretty good bank balance by the new year that crosses over to the spring,

[ebscreen]

We're a bit more per sf around here, $0.65 ain't bad for 2000sf, but depends on where you are and your local market.

BEWARE COMMERCIAL REAL ESTATE BROKERS!

Everyone around here is old buddy buddy, in our new spot we met my broker, the owner and his broker,
and come to find out both brokers are pals and work on deals together all the time. That doesn't exactly
spell out me getting the best deal, and indeed, their first offer was ridiculous at best. I had to counteroffer
several times until we came to something reasonable. And apparently all commercial real estate brokers
are like 7+ feet tall.

There are distinct benefits of both styles (home based or commercial based) but I would say if you are
angling towards a commercial spot go for it. For me it was a mere matter of not waking up at my workplace
every morning!

[Inkworks]

It sounds like you have your figures all worked out, and just need that nudge. 

My advice is, if you do the jump be aware of how gross profit margin generally shrinks with growth, and how along the way there will be "steps" of growth that are hard to get through successfully. Keep a close eye on the bottom line and maintain efficiencies as you grow. If you've worked for shops that went through growth, you're likely aware of the pitfalls. Positions that don't really earn money can grow to become full time jobs, like Purchasing, HR, IT, Accounting, Reception etc. all can bite you in the a$$ and many people end up growing to a size where they are working twice as hard and doing twice as much Gross sales for less take-home.

I'd also keep in mind a goal for how big you want to get. Having that vision can help you make the right decisions along the way. A goal of unlimited growth would lead to much different decisions that a set size. An end-game exit strategy is a good thing to have also, as it helps put things in focus as you take steps like the one it sounds you're about to take.

good luck! It's fun doing something you love for a job and it's great being the boss as long as you don't let growth kill the passion.

[Screened Gear]

I bought an auto used and put it in storage for over a year because I was not ready to move into a shop. My goal was to make enough in my garage to cover the rent and expenses. I needed to make an extra $1500 a month for 6 months before I would even think about it. I was already making enough to pay for a shop. That means I needed to increase sales in my garage about $1500 more. This way I new I was making enough. I have heard many guys say you will increase sales from exposure with your shop to cover the costs. I even had a guy tell me that you will get business from other suites in your complex to cover rent. This was not true for me. You also need money set a side for unexpected costs. It cost me over $10,000 to more into this shop. everything for the auto being installed and fixed to wire being run and a darkroom being built to code. I also had a week and a half of down time. You need to put that into your costs also.

One thing I want to point out here is going from a garage into a shop is more than the rent and expenses. Since your not working from home now you can't deduct your home on taxes. You will also be driving to the shop, so gas and miles on your car that can't deduct on your taxes either. Yes you can but technically you are not suppose to.

For me being a one man shop having a location is good. I get away, I can be as loud as I want at all hours of the night. I can also print discharge and stink up the entire shop. Customers do take you more serious but they still are cheap.

Like Pierre said you need to figure out if you need a shop then figure out the real costs. Only then can you see if the move is worth it.

I hope this helps...

[tonypep]

Once you have figured out the move cost all you need to do is double it! Trust me.

[Croft]

Once you have figured out the move cost all you need to do is double it! Trust me.

Yes exactly, so far costs I have started to tally up.

-Machinery mover for auto/dryer/manual/ exposure unit $2000
-hydro New account $500 security deposit
-alarm system $800 plus monitoring (no contract)
-internet $80
-phone not sure I think I may go with voip  $40 month
-electrical  ? Guessing $2000,  shop i think I'm going with has lost of hydro  3phase 600V 200amp , luckily it had a couple of CNC machines in and they left all the electrical intact
-Heating not sure ? current shop propane and smaller so maybe only $700 a season , new shop bigger, gas , electric office
-signage can do myself have sign stuff
-has been painted but will probably seal floor so maybe another $400
-Can't more than a week in setup because once march comes well be busy

Any other surprises you had?