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PROPERTY ASSETS Assets you cannot afford to waste!
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Transcript of PROPERTY ASSETS Assets you cannot afford to waste!
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PROPERTY ASSETSAssets you cannot afford to waste!
Robert ChapmanRobert Chapman & Company
12th February 2004
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Property:the Cinderella of business strategy UK commercial property worth £400 Billion Property and construction contribute 12% of GDP Property represents 34% of total business assets Second highest cost after salaries Welsh businesses waste £1 Bn annually (UK £18
Bn) through inefficient use of property Putting this right would boost gross profits by
13%
Source: Property in Business: A Waste of Space?Roger Bootle, Capital Economics
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The Wasted billions:what goes wrong? Few companies integrate property into corporate
strategy Not using property as an enabler for business
objectives Virtually no chartered surveyors on boards of
major non-property companies 1 in 4 blue chips had not even discussed property
at Board level in three years (Boardroom blindness) “Dark properties” – many don’t even know what
they own Owner-occupiers see property as “free” and waste
space
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Missed Opportunities Sale and leaseback could release capital to
invest/reduce debt Surplus space could be sold or sublet Hot desking/tele-working can save money
and attract staff - and save £6.5 Bn A 10% reduction in FM costs is feasible and
would save UK businesses £1.3 Bn a year Owner-occupiers should emulate tenants,
using 12% less space per employee, saving £9.5 Bn
Rates appeals could save £300m a year
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Relevance to SME’s: context Entrepreneurship Action Plan
Create culture and environment SME’s represent 99.9% of 3.7M businesses In Wales: 99.9% of 144,000 businesses are
SME’s with approx. 76,000 VAT registered New firms important for job creation:20%
grow to 5 EE’s; only 2% grow to 50 EE’s Research shows that 66% of SME’s in Wales
have plans to growSource:Small Business ServiceNational Omnibus Survey Wales Autumn ‘02
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SME’s and Property Property issues are low on the SME senior
management agenda across all sectors Property ownership has both costs
(opportunity costs) and benefits Property ties up large amounts of financial
capital – money that could be more productively employed elsewhere
Managing property also ties up managerial time – its an SME problem
Source: SFRU
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Important constraints on growth (Source: SFRU)
0%5%
10%15%20%25%30%35%40%45%50%
Percent
FinanceSkillsPremisesTelecoms
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SME’S – property solution checklist Finding the right premises: it’s a jungle out there! Buy or lease? Building survey Insurance: getting the right level of cover Rates: possible reduction Service charges: are you paying too much? Rent reviews / lease renewals: what to do? Construction and alterations:manage cost, time & quality Planning:guidance through the maize Sales, assignments, sublettings: exploring flexibility Dilapidations: keeping the final bill down Tax allowances: not a lot of people know that
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SME’S – property solution checklist Millcroft Design Adco Print
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SME’s – property solution checklist On Screen Productions Omnia
Property
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Tackling Property IssuesWhat should senior managers consider?
Corporate strategy and vision Strategic fall-back plan Financial possibilities & constraints Details on current use of property Future accommodation requirements Ideas about FM and EFC Knowledge of the property market
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Business and property: the way forward Property needs to be put on the agenda –
not considered as an afterthought Good leaders ‘do better things’ Business education: MBA’s; business
studies degrees etc Not someone’s problem! Know what you don’t know Integrate into business planning Not rocket science but increasingly
complex
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Business and Property:Conclusion
It is important to seek good advice on those aspects of property that are not within the normal skills base of an SME manager
Remember the opportunity cost …………..repent at leisure!!!!
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PROPERTY: the missing link Thank you for your attention
Property Solutions: www.rics.org www.rchapmanandco.com
Robert Chapman & Company [email protected]