RENOVATION

Renovation describes a series of planned changes and updates made to a facility where business is conducted. Office and building renovation is a common undertaking in today's competitive business environment, as businesses endeavor to keep up with infrastructure needs (especially those sparked by technology use) and provide aesthetically pleasing settings for customers.

Small business owners and consultants agree that a well-conceived and carefully planned renovation effort can revitalize a business and provide it with much-needed room to grow in the future. But they also note that renovation periods can have a negative impact on productivity and profitability. Often, the inconveniences associated with office and building renovation projects make it a practical impossibility for businesses to maintain the exact same level of operations that they met during non-renovation periods. But experts indicate that small business owners—whether they are building tenants or building owners—can take several steps to ensure that the negative aspects of renovation are minimized.

SMALL BUSINESS TENANTS AND RENOVATION

Many small business owners are co-tenants of a building with other businesses. These entrepreneurs may well find themselves faced with an impending renovation. This is especially true if they are operating their businesses in older buildings. Sometimes these renovations take place within the physical space of the business itself; on other occasions, the renovation may be limited to common areas—lobbies, outer building areas, stairways/elevator systems, etc.—that are shared by all the tenants. In either case, the impending arrival of a renovation crew should signal a period of preparation on the part of the small business owner.

"Tenants are usually very pleased with the modern conveniences and new environments that are created after a major office renovation project has been completed," wrote Lawrence Hearn in the Journal of Property Management. But during the period when the renovation is actually taking place, small business owners may find themselves feeling everything from anxiety to deep anger about the impact that it is (or seems to be) having on their company. The most effective way in which small business tenants can minimize these negative emotions is by establishing and maintaining good lines of communication with the building owner before and during the renovation process.

Hearn stated that good communication between building owners/managers and tenants is a priority whether the renovation is a minor capital improvement or a comprehensive rehabilitation project. "Almost any physical change in the work environment can be disruptive and potentially threatening to the tenant's business," he added. "It is management's, and ultimately ownership's, responsibility to make sure tenants are kept informed every step of the way during construction."

Hearn noted that smart building managers will take the initiative in talking with their business tenants so that they are more likely to "feel as if they are part of the renovation process, instead of becoming victims of the procedure. Retail tenants are particularly sensitive to signage and good access to their space." But if you are a small business owner and you feel that the facility's ownership is doing an inadequate job of informing you of renovation issues and schedules, it is entirely within your rights to demand more information and input. Business owners should make sure that they thoroughly review their leasing contract, soliciting legal assistance if necessary, to make sure that they are being treated fairly.

Some business owners inhabiting facilities that are undergoing renovation adopt a fatalistic sort of attitude toward the process, surrendering meekly to renovation strategies without offering any workable alternatives to plans that might unnecessarily hinder their operations. Other entrepreneurs, meanwhile, err on the other end of the spectrum by making unreasonable demands that may ultimately drag out the renovation process for several extra days or weeks. Small business experts counsel owners to instead adopt a middle ground. They have to recognize that renovation efforts almost inevitably bring about some measure of inconvenience for tenants and their customers, but that they ultimately increase the value of the location for business operation. On the other hand, if a business owner spots a problem during a review of upcoming or ongoing renovation plans, he or she should bring it to the attention of building management. A renovation strategy that would render a key loading dock unavailable during a big delivery period, for example, should immediately be brought to the attention of the landlord.

Small business owners should recognize that many facility managers want to help tenants out in whatever way they reasonably can. After all, they do not want to lose tenants and go to the trouble of finding new ones. As Hearn pointed out to facility owners, "although it may cost more, it is sometimes wiser to schedule work in high service areas at night or on the weekends. The same holds true for heavy pounding or other work that requires large equipment. You will certainly make up the cost difference if you keep your tenants happy and away from the construction headache as much as possible."

RENOVATING PROFESSIONAL OFFICES

Office and facility renovations may also be undertaken by small business enterprises that either own or are the sole tenants of the building in which they operate. Business owners that provide professional services are especially likely to renovate to meet changing internal demands, attract new clients, and keep existing ones. Indeed, doctors, dentists, attorneys, architects, engineers, and the like recognize that the appearance of their offices can be a significant component in their overall success. "With competition up and reimbursements down, a medical office that's shabby, impedes productivity, or can't accommodate expansion plans can be a big liability," cautioned Laura Clark in Medical Economics.

Analysts note that professional offices are more likely to renovate rather than relocate for two fundamental reasons: cost and client retention. Even a major renovation of an existing facility is likely to be considerably less expensive than the total costs associated with relocating to another facility. Perhaps even more importantly, existing patients and clients are accustomed to finding the office at a given location. "If you move, they may not follow you," warned one consultant in Medical Economics.

Renovation strategies can vary considerably, depending on the needs and concerns of the office in question. A medical practice or architectural firm may be amply equipped to integrate new technology with existing operations, only to recognize that its growth has been hampered because it is saddled with an unattractive waiting area. In this situation, the renovation may amount to little more than some new carpeting, wallpaper, and furniture. Other firms, however, may find that only a major rehabilitation effort will be sufficient to correct long-standing problems with infrastructure such as an ineffective floor plan, poor wiring to support information technology needs, or cramped office space.

Clark pointed to several other concerns that professional service firms (and many other businesses) have to consider when weighing renovation plans as well. For example, businesses have to be in compliance with the Americans with Disabilities Act of 1990. Much of the renovation work that took place in the early 1990s was undertaken specifically to address this law, which called on facilities to become fully accessible by widening hallways, installing ramps, and adapting drinking fountains and bathrooms for use by people in wheelchairs. Most buildings are now in compliance with the ADA, but building owners looking to renovate need to make sure that their new plans adhere to ADA parameters. In addition, professional service firms need to factor in their attractiveness to recent graduates when weighing their renovation strategies. "Young men and women coming out of residencies are going to consider the attractiveness and efficiency of your office," one renovator told Medical Economics. "They're simply not going to want to come to work in a dingy, 1940s-style medical building."

Finally, before committing to a major renovation effort, professional service firms should discuss matters with appropriate experts, including architects, accountants, and lenders. Selecting a contractor should be done carefully as well; business owners are urged to check into the contractor's reputation for quality, timeliness, and financial soundness before making an agreement. Finally, firms should call in legal representation before signing a contract. As one renovation expert indicated in Medical Economics, "[attorneys] should write all kinds of ceilings and floors into your contract so you don't get burned. Believe it or not, you can force your contractors to stay on schedule and within budget—or pay a penalty—but you've got to show them you're very serious about that right up front."

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