October 2014 | Thinking Out Loud | Dream Big, Plan Bigger

ClassroomConnT
By Jennifer Smith

I made one of the biggest leaps I’d ever taken when I decided to stop renting space for my studio. It took two and a half years, six bank applications, two builders, three funding increase requests, four bank closings, five expensive changes required by the city, several court hearings, and countless sleepless nights—but now I own instead of rent, and I can look back at lessons learned.

First, always budget for much more than you think you’ll need. When I couldn’t find a building I could remodel with the $600,000 loan I’d secured, I decided to build a facility. I had to increase my funding to $725,000, and in the end it cost $1.2 million, double what I’d anticipated.

Of course you don’t want to borrow more than you need, but it is almost worse to try to get more money once you are already into the project. I learned that a Small Business Administration 504 loan was better than a 7(a) since it had lower qualifying requirements and better interest rates. Because I changed the type and size of the loan, I had to switch banks before we started. The first (large) bank made every change difficult, with multiple people making decisions. The small bank that eventually funded me required only two people to sign off on changes.

I learned to have contingency and equipment funding the contractor didn’t know about, which came in handy when I had to make expensive changes.

Having a detailed business plan set me in motion. The bank didn’t require one since I had been in business for 15 years, but it is what got me the funding. A financial consultant and children’s activity business expert helped me write a 171-page plan that included local demographics, my breakeven number, a three-year financial plan, resumes, and program descriptions. The new bank said this plan made my loan a slam-dunk with the approval committee.

The second hurdle was the general contractor. I had to fire the first person I hired, and the second one still gave me problems. I learned to have contingency and equipment funding the contractor didn’t know about, which came in handy when I had to make expensive changes. I saved money by handling the equipment and furniture and installing the dance floors myself.

I learned to read the drawings over and over in detail before taking bids. Builders are responsible only for what is on the drawings; you are responsible for any changes. For example, I had listed dance mirrors to run the height and length of the walls, but I didn’t say how wide each mirror could be. The subcontractor installed 13 three-foot-wide mirrors. My builder made him replace them, but I was almost stuck with them because I didn’t specify 8- to 10-foot-wide pieces.

I had to learn the codes and costs and get involved with the subcontractors to make sure I was getting the best of everything. Knowing the requirements of every agency that would inspect my building prevented change-order costs from the builder.

I’m most proud of the details and design. I tried so hard to think of every detail. The new facility is 8,300 square feet on 1.3 acres of land. It features a small cafe, four dance studios, a multipurpose room, a locker room, two offices, a retail space, a staff room, and five bathrooms. It has a Dumpster pad, a drop-off lane that can fit a bus, intercoms in the dance studios, viewing monitors, and LED lights, security cameras, and a panic button. Family-friendly items include benches that double as cubbies, a baby-changing table, and carpet tiles that can be replaced easily. I searched for coupons and specials, did fundraisers and trades, and looked for grants everywhere. An interior decorator helped me choose the fixtures and furniture and pulled everything together when I was overwhelmed.

I’d thought I would visit the construction site once in a while and ask a few questions and it would all come together. Instead, I worked day and night to run my studio, be a mom, and supervise the construction site. It was hard on my family, the staff, and my sanity.

But when we moved in, the smiles on the parents’ and children’s faces made the struggle worthwhile. And now I’ll have something to sell when I retire.


 

Jennifer Smith, studio owner of Dance Expressions in Texas, has a master’s degree in education, extensive studio management experience, and has done years of research in facility development.