Is your retail or shopfront looking a bit drab? Are running your business from a rented house in NSW or another state and need a change? Perhaps your offices need a bit of a makeover? If you own your own business premises, you can not only improve the look of your shop or office but also substantially increase its value through renovation.
If you are planning to exit the business and sell both the business and the property, you could increase the valuation of the property as far as the bank’s concerned without spending too much. Here’s how to improve your small business premises by making some wise and choice improvements.
What style of renovation is best?
There are two main variants of renovation – for residential and commercial properties alike. A cosmetic renovation, which works on the fixtures and surface-level elements of your space; and a structural renovation where tradespeople will transform the internal structure of your space into a novel configuration.
Cosmetic renovations are the cheapest – they may include new tiles, new paint, new furniture etc; you may even be able to keep trading while these renovations take place.
Structural renovations change the entire place and require extensive carpentry, plumbing, electrical, plastering, etc. work. A cosmetic renovation can dramatically increase your business property value without costing too much – perhaps a quarter or even a fifth of an equivalent structural renovation.
Get as many quotes as possible
Before settling on a contractor, get as many quotes as possible to ensure you’re getting a good deal. Using Bark or Service Seeking gives you an average idea of cost, so you aren’t paying too much for any particular element of your renovation.
Remember to check out their reviews online, potentially talk to any other business that have used their services in the past, and check if they are fully accredited and licenced to take on building work.
Funding your renovation
Since a renovation can be considered an investment in your long-term asset (property) it makes sense getting a long-term loan to fund it. If you can’t redraw on a mortgage or don’t have one, you should find a small business loan to cover the renovation.
A small business loan has two significant benefits – it increases your property’s value and also has the potential to improve your business turnover by having a more attractive and modern storefront – and workers are more productive if they are in premises that are clean and functional.
If you’re doing renovations yourself, you should also be aware of the various tax implications.
Selling your business after the reno
If you are renovating to increase the value in a potential sale, you need to be aware that it could be considered a profit-making activity and it may need to be classified as such on your tax return.
If you property is being used for business, you may be eligible for a 50% Capital Gains Tax reduction – or waiver if you have held the property for more than 15 years.
Remember to speak to your accountant for solid advice – the information here is general in nature.
