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PROPERTY ASSETS Assets you cannot afford to waste!

PROPERTY ASSETS Assets you cannot afford to waste!. Robert Chapman Robert Chapman & Company 12 th February 2004. Property:the Cinderella of business strategy. UK commercial property worth £400 Billion Property and construction contribute 12% of GDP

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PROPERTY ASSETS Assets you cannot afford to waste!

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  1. PROPERTY ASSETSAssets you cannot afford to waste! Robert Chapman Robert Chapman & Company 12th February 2004

  2. 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

  3. 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

  4. 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

  5. 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 grow Source:Small Business Service National Omnibus Survey Wales Autumn ‘02

  6. 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

  7. Important constraints ongrowth(Source: SFRU)

  8. 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

  9. SME’S – property solution checklist • Millcroft Design Adco Print

  10. SME’s – property solution checklist • On Screen Productions Omnia Property

  11. 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

  12. 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

  13. 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!!!!

  14. PROPERTY: the missing link • Thank you for your attention • Property Solutions: www.rics.org • www.rchapmanandco.com • Robert Chapman & Company • robert@rchapmanandco.com

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