Dave Cain: Welcome to unsuitable on Rea Radio, the award-winning financial services and business advisory podcast that challenges your old school business practices and their traditional business suit culture. Our guests are industry professionals and experts who will challenge you to think beyond the suit and tie while offering you meaningful modern solutions to help enhance your company’s growth. I’m your host, Dave Cane.
Have you ever thought about moving your business from one location to another, or simply doing a remodel? Have you ever considered what making this kind of change will have on your company’s office space and how to do it? Businesses grow, mergers and acquisitions take place, and changes to the company’s structure must be accommodated. Therefore, it’s only a matter of time before some business owners find themselves facing major relocation changes or contemplating the logistics of a major change to their facility.
Today’s guest has help Rea & Associates manage two separate office relocation projects and is beginning the stages of a new office remodel project. Mark McKinley, a principal and president of Rea’s Central Ohio region joins us today on unsuitable to talk about some of the steps he’s had to take to make these projects happen. He will also share how others can find success in their own projects. Welcome to unsuitable, Mark.
Mark McKinley: Thanks for having me, Dave.
Dave: You’re a first time podcaster.
Mark: I was wondering what took you so long to invite me to one of these podcasts. I’ve been hitting up the marketing department a number of times to join you.
Dave: It just takes a while to get through all the resumes.
Mark: We’ve got some great people.
Dave: We’ve got a couple rules for first time podcasters we need to review with you. One is you’ve already loosened up your tie, taken off your coat. That’s great. We have a full service bar for your accommodation. A waiter or waitress will be around to get your order. You need to speak into the mike and just pretend you’re making out with the mike. That would be probably the best thing. Then we are using some new technology today. Unsuitable is on the cutting edge of technology. We’ve developed a BS meter. When we sense there’s BS happening, there’ll be a sound that goes up like this. When you hear that, the listening audience has indicated that you’re BSing. Be on alert for the BS meter.
Mark: Sounds good.
Dave: As we were putting together today’s topics, we had several we were looking at. One was wild turkeys in Ohio and telling the differences between toms, jakes, and hens. Second one was grilling the perfect steak. Third one was how to improve wedge play from 130 yards. Then the last one was office relocation and remodeling, and that’s the one they picked, so that’s what we’re going to talk about.
Mark: Sounds great, looking forward to it.
Dave: You ready to go?
Mark: Sure.
Dave: Walk down a little bit of memory lane. One is you were involved early in your career, or partially involved with the actual building of a new facility. Then you moved an office from one location to the other side of town, and then you did a current remodel of that facility, and currently you’re looking at another remodel project. Now, it’s interesting to note, you’re not an architect, you’re not a designer by any means. You’re just a CPA with a lot of knowledge that’s done this before. We want to pick your brain about some of the keys, tips, pitfalls maybe that you’ve run into.
Mark: Absolutely.
Dave: One of the notes that we talked about was planning is essential. I think you’d mentioned maybe 30% of your project is spent or more in the planning stage. Can you share some ideas with us in that area?
Mark: Sure. When you start one of these projects, I find it a lot like a really, really large audit. If you think about the entire engagement all at once, you’re going to get overwhelmed. You have to really break this down into small pieces and say, “Hey, we’re going to attack this piece this time, next piece, and next piece.” For instance, right now we’re in the information gathering piece. We do not want to exclude any thoughts, exclude anybody’s idea. We want to get total buy in from the team. We are exiting that phase now where we know what we need, we know what our future needs are going to be, and now we’re going to skinny that team down into a few key people that can keep the project going.
Dave: The interesting about that comment, I thought for sure you were going to say, “I’m starting with the budget, and then we’ll go from there.” We’ll talk about budgeting later, but apparently that’s not the first thing out of the gate.
Mark: I think if you focus on the budget, you’re going to limit what you can do in a facility. I will tell you outside of that initial meeting, I’ve had several conversations with the key people that will be in charge of budgeting to get them up to speed with what’s going to happen. But if we start telling everybody, “Hey, that may not fit in the budget,” we’re going to squelch the creative freedom they have in deciding what we want this to look like. We can always go back and pull out, but once you’ve told somebody, “Hey, you can’t have,” it’s tough for them to speak up.
Dave: You’d mentioned 30% had been getting the team together. How many would be on that team because it seems like maybe you have too many cooks in the kitchen.
Mark: Let’s go back to where we get the 30% because I remember an audit back in the old days where I had an audit partner that we were working on an engagement, and they were working on their billing, and we had 30% of the total engagement in planning. The audit partner came to me and my manager and just wrote us hard about, “Hey, how can you plan for so long?” The reality was by the end of that engagement, we came in at 100% realization on that engagement. That taught me if you spend enough time at the front end, the back end’s going to work out nice and clean. That’s how we decided about 30% of the time is going to be there.
Everybody that’s going to live in that building, work in that building needs to be included at some point. Some people are going to have a lot of input, some people are going to have a little bit of input. We wanted to bring it out to the entire team and say that, and then natural leaders rise to the top. We selected from the initial, we selected a group of leaders that really have the tone of the office to tie the next two meetings. Now we have a pretty good plan of what we want to do and where we want to go.
Dave: Let’s talk about building the team. Obviously an office of CPA firms have all different types and classifications of employees. Do you involve a smattering of everyone?
Mark: I think you need to include somebody from every level in the firm, from staff accountant, all the way up to equity owner, to some of the individuals that are on their way out the door because you want that history, you want to bring that, but you also want to say, “Hey, what is the new generation going to want out of their workplace?” You need to blend all of that because you don’t want to be a fad, but you don’t want to be stuck in the past. It’s really who leads. Then the other role is egos have to be left at the door. You can’t come in with an agenda. Come on, we learned that a while ago, Dave.
Dave: That was our technology going off. I had nothing to do with that. That was the BS meter.
Mark: I was waiting for it.
Dave: We’re building the team, all different levels within the firm or the office that can give input to their particular work area. I think that’s a critical part of success in the plan.
Mark: Yes.
Dave: I wanted to talk too a little bit about the technology side as you remodel because technology’s changing quickly. People want larger monitors, TVs here, screens, all types of different technologies available. Do you even attempt to tackle that, or do you hire that out to a third party?
Mark: We’ve devised what we think we want in the building. Now it’s time to involve our IT department and some of the specialists to come in and take a look at that and say, “Hey, here’s where we’re going. Here’s what we’re going to need.” Those individuals will have the ability to set that parameter of the building up. This is when we go back to the budget because now we’re starting to talk some real dollars here. We’ve done this pie in the sky, this is what we really want, but cold, hard reality’s going to come set in now into the phase. This is where in our project we have here at Rea & Associates going on, this is where some people are going to come away a little bit disappointed. Not everybody’s going to get what they wanted. The mani-pedi bar has been axed because of the cost. The coffee bar is going to be …
When we look at the IT needs, when we look at everything else that we’ve got going on, there are some things that we are going to stretch and put in the building, and there are some things that we’re going to just say, “You know what? We’re going to have to either rent those things or we’re going to have to work around them because they’re not going to be able to be in the budget.”
Dave: Really what you’re doing to simplify is you’re getting an order ready, and you’re going to place an order with the architect, the designers, “This is what we want to start. This is what we want to do.”
Mark: Correct.
Dave: Then the whole costing thing comes into play. You’re just one person with a lot of responsibilities, plus a large family. Do you try to delegate the responsibility?
Mark: I was blessed with a team in Lima in the last renovation where you had certain people that have real strengths. Jan Stiles really, really rode the contractors to make sure that we were done on time. Peg Minnig really helped with that and the general decorations of the office, the setup of the office. She has a feel for the way the office should flow. There are some individuals here in this Dublin office that you can tell just have a natural sense for that, and they’re going to be put in charge of those things. I will not be the day to day person that runs this project.
Dave: One of the things as you begin to accumulate data for this plan is employees’ needs have changed over the years. Now you have individuals who work from home, who work out at a client’s office. They may not be in the physical office all that often. How do you build office space around concepts like that? That would seem to run up some costs where you set aside space for a person or a group of people who are in the office only a small amount of time. You take that into consideration?
Mark: That is an excellent question.
Dave: That’s why I ask it.
Mark: We had a couple of people that went out and looked at other accounting firms and seeing what they’re doing because the reality is we’re going down this road. We just talked to an individual today that may not report to the office all the time. We’re looking at huddle rooms where audit teams can come in and there’s not assigned seats, but four or five people can sit around a table, share a monitor, and wrap up an audit. We’re going to have floating offices that are always going to be open so when somebody comes in to work in Dublin for the day, they have a nice clean space that’s got some privacy so they can have a phone call with the door shut. We’re going to have some of those abilities here for people to just come in, log in, and feel like they’re at home but also maintain a home presence so that they don’t have to be at the office all the time.
Dave: Yeah. This process, as we’re talking through this, we continue to refer to relocations and renovations that we’ve done at Rea & Associates as an accounting firm, but this concept could work with any industry. Could be a marketing firm, could be an architectural firm, could be a legal firm, could be a retail space. A lot of the concepts are the same.
Mark: Absolutely, absolutely. The clients that I’ve dealt with that have moved over the last couple of years, what I always tell them is it’s never too early to start thinking about it, planning for it, getting ready for it. Ask for the advice. Ask your team. Ask other people that have done it. Everybody wants to help each other out. The reality is if somebody has a good idea, they want to tell you about it, so you just have to ask people.
Dave: I’m going to use an incorrect term, I’m sure, but you’ll correct me. I’ll use the old school term is the term cubicle, or workspace. That’s disappeared from the office vocabulary. It sounds condescending anymore, you use the word, “Where’s your cubicle?” Do you take into consideration? Is that still something you look at?
Mark: I think you’re talking about the open office.
Dave: Correct.
Mark: The reality is you need a place to work that’s convenient, comfortable, and gives you a level of privacy. But the reality is we’ve got to put enough people into the building, and so you’re not going to be able to just throw in office after office after office. Costs are cost prohibitive. You’re going to have a situation where you’re going to have some of those. They key is make sure that it meets the needs of the team, and go from there. I think you’re always going to have some open offices.
Dave: The planning is done, and that takes a number of weeks, months to accumulate that data and have everybody look, and change, and correct it. Now we go get cost, I guess. Is that the next step, you go get some cost, you put a budget together?
Mark: We are at the budget phase. Our architect has the drawings, they know what we want. He’s called it a four-phase drawing that he then takes out to the construction guys and gets quotes. The reality is you have to give them enough time because if you don’t give the construction individuals enough time, they’re going to put a quote on that just gives them a buffer so they know that they’re going to be okay. You have to give them enough time to give a good, solid quote. You’ve got to pick a couple of people that you feel comfortable with working with to give you that quote. You can’t give it to just one, and you can give it to one that’s a high quality and one that’s a bargain basement in the company. You’ve got to give it to some nice ones.
Dave: I’m going to be the master of the obviously here, but what happen when you come in over budget in your preliminary numbers? Here’s where the plan that you ordered or you accumulated with the help of your team, now they put a pen and pencil together, went and put some numbers on it, and it’s unrealistic. What do you do?
Mark: That’s where we’re at with this project. We went through and we had originally allocated probably 150,000 to renovate this building. We’re looking at 500,000 now, yet you’re saying up, might be up, might be not. What we talked about over the last couple of days is, “Hey, if we lock this in and say phase one we do this part of the project, phase two we do this part of the project, take a break on the project until we need that third phase in, and then do the third phase of the project, is that make the budget a little bit more palatable,” and then you’re spreading out over a couple of years because the reality is we have to make a profit. If we don’t make a profit, there’s not a reason to be here. We have to watch the profitability of the business versus where we are with the office.
Dave: As you look at this, and again, you’ve done a few of these, how many years should it take you to pay that off or pay that back, whether it be through rent or a loan? Do you have a rule of thumb there? Is it two years, three years, one year?
Mark: You want to get it paid back within a couple of years. You want it to be a pretty quick process. You have realize the reason the office is here is to make money. It doesn’t have to be a Taj Mahal, but it’s got to be that comfortable. You need to have a reasonable place to work, but it needs to be paid off in a couple of years.
Dave: In your experience, where do you stub your toe on this as far as cost estimation? Is it things like the technology that we talk about? Is it the HVAC that gives you headaches? Is it the office furniture, the chairs? Maybe it’s all of the above, I don’t know, but I’ve not been through this. I just like to walk in, and sit down, and start paying for it. I don’t want to go through all the headaches that you’ve gone through. Where do you run into that?
Mark: First of all, the only thing I would say is it’s not really a headache. It’s a great challenge. It’s fun, it’s exciting because people that you don’t think of are going to have great ideas or they just come up with stuff that you’re like, “I never saw that coming from that individual.” It’s not a headache. It’s just a challenge you get to work through.
Dave: I think the headache probably then starts when construction starts and you get people moving all over the place between here and there. It’s just an inconvenience.
Mark: Remember, I told you I delegate this to somebody else that’s got that skillset.
Dave: You go on vacation during that period.
Mark: You got it. If you don’t keep it simple, that’s where we get in trouble. One of the buildings had the most over engineered heating and cooling system you would ever imagine for the size of the building, and it was an absolute nightmare for us. When you look at the buildings, you’ve got to keep them simple. That’s why you spend so much time at the front end of this so that you can look at those issues, spread them out and say, “Hey, is that really what we want to do?” and then you go from there.
Dave: Our guest today has been Mark McKinley, principal and president of Rea’s Central Ohio region. Mark, thanks again for joining us on unsuitable. If you have any questions about relocation, email us at podcast@reacpa.com. You can also get some great resources on our website at www.reacpa.com/podcast. Don’t forget to subscribe to unsuitable on iTunes. Until next time, I’m Dave Cane encouraging you to loosen up your tie and think outside the box.