Are you ready for a feasibility study?
Starting a new business or growing your existing one is an exciting prospect filled with questions about so many different things from, what products or services you will offer and what daily operations will look like, to identifying your target market and ideal clients.
One question we find entrepreneurs often struggle with is how to accurately plan for the physical spaces their business may need. Whether you’re renovating existing spaces or building new ones, capital investment in facilities is a huge portion of start-up costs and determining how you will grow over time. Answering these big questions on your own with inconsistent construction cost data and a complex and confusing regulatory environment can be a recipe for disaster.
A feasibility study is a low-cost option to evaluate your business’s space needs and layout all the requirements for the growth to come. A quality feasibility study should do all the following:
- Establish a clear vision and goals to guide the project.
- Analyze your existing or proposed site and/or facilities.
- Outline your current and future space needs.
- Review zoning, building code, and other state and local regulatory requirements.
- Establish preliminary construction budgets and schedules.
- Create development scenarios to guide decision making.
How much does a feasibility study cost?
Developing baseline ideas around the use of your existing space and potential new spaces to accommodate your plans will provide answers to questions about the financial feasibility of your vision. It will also help you realize how quickly you will see returns on your business investment and can help secure financing from a financial institution or investors who want to see a clear timeline of return.
A study like this usually ranges in cost from $1,000 – $10,000, depending on the complexity and scope of your project. To better understand what you get for this investment, the following is an overview of the typical aspects of a feasibility study.
Vision and Goals – Defining your business
This is an easy step to overlook but a clear project vision and concrete goals form the bedrock of any successful project. It’s invaluable to sit down and review your brand identity, your clientele, what sets you apart and where you’re headed. From this material, we’re able to distill a few abstract statements that provide the guiding light for the project. Along with abstract vision, it’s also critical to set concrete goals that we can use to measure the project’s success as it evolves through the process.
Existing Site and Conditions Analysis – What resources do you have?
A building professional will conduct a site visit and, if applicable, review site conditions including grade, solar exposure, views, vehicular access, utilities, septic conditions, and stormwater control. For some clients, it will be critical to inspect a buildings exterior envelope understanding the conditions of the roof, siding, and windows. Whether you own your own building or are leasing out a small tenant space, it’s critical for the majority of our clients to understand any issues with the buildings structure and the adequacy of the spaces mechanical systems. These services are often of most value before you commit to a space.
Physical Space Program – What do you need?
Our team will review your company structure, operations and growth plans to determine current and future space needs and establish a project program. A program outlines:
- Different space types and quantities of each needed.
- Target areas for each space.
- Critical adjacencies between spaces.
- Technical requirements for that space.
This is often presented as a range of sizes for spaces and, when combined with a budget and zoning study, is a critical tool for evaluating what you think you need or want versus what you can afford or what the town will let you build.
Code & Regulatory Review – What hurdles will you face?
A critical step in the process is outlining town zoning, building code, state Department of Health (DOH), Department of Transportation (DOT) & Department of Environmental Conservation (DEC) requirements. Clients often find this aspect of planning the most opaque and daunting.
- Zoning Analysis will often explore allowable uses, site setbacks, maximum buildable area, maximum building height, and parking requirements. Understanding allowable use is critical because getting a zoning variance, or exception to town zoning law can be a major hurdle to moving forward. With our regions focus on the preservation of water quality there are also many nuanced local stormwater management laws to navigate.
- Building Code Analysis focuses on understanding a few primary variables with large cost implications including determination of occupancy classification (space use) & construction type (structural material). This, along with building size and height, will determine fire protection requirements (sprinklers), total building occupant load (number of people) and, in turn, the number of restrooms needed to support occupants.
- State & Local Regulations can have significant cost and schedule impacts. The department of health controls septic system design and approval, along with review and approval for commercial kitchens and bars. The department of environmental conservation reviews protected species and bodies of water and will dictate stormwater management procedures for large projects. The department of transportation requires coordination for any site work that might affect state roads. Finally, agriculture and markets is a critical contact for any farm businesses looking to grow.
Budget & Schedule – How much and how long?
As business owners ourselves, we recognize that budget is the most important deliverable of the feasibility study. Budgeting at this stage is done on a dollar per square foot ($/SF) basis. Those numbers are generated by our history combined with industry cost data. We often approach budget by looking at the low end and high end space needs generated by the physical space program to outline minimum and maximum budgets.
Along with hard construction costs, it’s also important to consider things the industry deems soft costs outside of building construction costs. These can be 30-40% of your overall project budget and often include site acquisition costs, design and engineering fees, furniture, audio/visual/tech and moving fees. Along with understanding the budget and having a realistic design, regulatory approval and construction schedule is critical to any planning effort.
Scenarios – What are your options?
Based on all the information gathered in the previous sections of the study, the team will lay out possible scenarios for project development. On the small and simple scale, it may make sense to limit exploration to one obvious scenario described in writing. For more complex projects we’ll often explore two or three scenarios prioritizing different aspects of the study. One scenario may sacrifice program to prioritize budget, while another may stretch the budget to show the desired program. In these larger studies, we’ll often illustrate these scenarios with conceptual level site plans or diagrammatic floor plans.
“Scenario” is the keyword at this stage. The goal here is not to solve the design problem and provide detailed site plans or renderings. The goal is to illustrate how all the design parameters can be combined to prioritize different goals in different ways. This allows you to focus on what’s important and generate a more precise list of project requirements.
We understand the challenges of starting and growing a business. It doesn’t make sense to leave your facility plans to chance. With a focused and well-executed feasibility study, you will have the tools you need to evaluate your options, determine the financial feasibility of your growth, and take the next step with confidence.