• Calla Norman

How to Build-Out Your Business’s New Retail Space!

Updated: Jul 14, 2021

The interior of Scoot! Cold Brew in Cleveland, which features a blue wall and coffee machinery

Wouldn’t it be amazing if you found the absolute perfect location for the new brick-and-mortar location for your new business, and it was perfectly designed for your needs, fit your brand’s aesthetic, and didn’t require any kind of face-lift at all?

Yeah, it sure would. But, that kind of thing rarely ever happens. Most small businesses when they move into a new place need to do at least a small amount of renovation in order to customize the place for their needs. This could be as minimal as a fresh coat of paint or as extensive as ripping out flooring and putting new plumbing and wiring in.

We talked with Kari DeGraff, founder of Scoot! Cold Brew, a coffee company in Cleveland, Ohio, and Honeycomb alum about the buildout project she took on in opening her business. Scoot! raised $49,000 with Honeycomb, which helped scale the operation, purchase working capital, and supplement the buildout.

In this article, we'll cover:

How much does a buildout typically cost?

A retail buildout can cost anywhere from $50 to $200 per square foot. This, of course, depends on a variety of factors, including location, the scope of your project, your timeline, and what kind of business you’re running.

If you’re opening a business in a place that had a similar business in it before, chances are your buildout costs won’t be as expensive. If you’re a restaurant moving into a space that was a restaurant before, you won’t have to build a kitchen from scratch, yay! So, previous use of the space is definitely an important factor in picking a location if you want to keep your costs down.

The building Scoot! is in now was previously a staffing office, and had old carpeting and lighting that was not up to Kari’s standards. So, ripping out the carpet, replacing the flooring, changing the lighting, and running new plumbing all became part of the process of transforming the space from a dingy office to a warm and inviting cold brew taproom.

A hand hoists up a growler of Scoot! Cold Brew Coffee

What do I need to know before I start my buildout?

There are three major things you need to know before starting your buildout: what you’re allowed to do in the space, your design requirements, and finally that you’re going to spend more than you think.

Types of buildouts

Some landlords offer what are called turn-key buildouts, where they renovate and prepare the space for you so that it’ll be ready as soon as you’re ready to inhabit it. This might sound convenient, but sometimes landlords will use shoddy materials and workmanship in these cases, and often turnkey buildouts don’t always meet the needs of tenants.

Another form of buildout is the tenant-controlled build-out. That’s pretty much what it sounds like - you’ve got creative control in designing and implementing the build-out, but you also have all of the responsibility. It might be more expensive and more of a hassle than a turnkey (or not, if you budget well!), but it will ultimately be your call and you can make it what you want.

If you opt for a tenant-controlled buildout, be sure to talk to your landlord about tenant improvement allowances. This is often a dollar amount that the landlord pays for the buildout as the tenant is technically improving their property. A tenant improvement allowance can be used for virtually anything related to the buildout, including labor, but it can’t be used for things like furniture or moving/startup costs.

With this in mind, the second thing you need to have planned before starting your buildout is to have your design requirements ready in as much detail as possible. While there are some things you won’t know until you’ve got a space, there are also things you can plan for. Will you need a kitchen? A locker room? One thing that many businesses underestimate is the amount of storage they’ll need, so be sure you’re taking that into consideration.

Scoot!’s buildout is an example of a business having flexibility with the design and function of the space. They originally only planned to use the new building as a garage space for their delivery truck. But, they realized they could use the space for bottling. And since they were already bottling, why not design a taproom area to go with it?

Eventually, the design grew to include the bottling area, taproom, and a conference room for guests who might want to host meetings. While they weren’t originally planning for these to be part of the first buildout, all these additions were designed with the intention that fit with the company’s business model.

“We wanted to create a space that was inviting, like going over to a friend's house, but also functional, where you could operate there meaningfully,” says Kari.

The delivery truck that started it all for Scoot! Cold Brew's buildout

The truck that began Kari’s search for a space to build-out

Finally, the third thing you need to keep in mind before starting your buildout is that it is almost certainly going to cost more than you expect it to. This is why it’s important to overestimate rather than underestimate your budget.

“I had a budget, then it kind of got tossed out the window, or otherwise different expenses kind of seeped in,” says Kari. “You don’t think you’re spending as much as you are, but then you look back and notice an extra couple hundred bucks spent on a nicer-looking floor, the unknown cost of running an extra wire that wasn’t anticipated. It kind of stacked up.”

How can I keep costs down?

As we’ve established, a retail buildout can be pretty pricey. Also, buildout costs have risen 2% in the past year, most likely due to the pandemic. While this shouldn’t deter you from building, it is also something to consider and maybe cause for you to consider padding your budget for rising costs and implement some strategies to keep costs down.

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