Can’t Be That Easy?

In certain American States it is very easy to open a business. We know: as three of our lot had a really enjoyable Scotslion adventure helping to reopen a gas station and restaurant in Missouri, USA. The American planning laws are, in many, many cases, a lot simpler than here in Britain. Yes, there are good aspects and bad between the two nations, but our American business reopening efforts contrasted starkly to the ones in the U.K. Majorly because of archaic planning permission laws in Britain.

The primary thing in this next example, is that the shop pictured above in the U.K., used to be an RS McColl newsagents. Staggeringly, it took 203 pieces of paper to obtain a Change of Use planning permission consent from “General Retail” to “Office” (plus Building Warrants etc). The council were reluctantly helpful. But there was a huge burden of obstructive, and time consuming paperwork here in Britain that simply did not exist in our American counterpart experience. This is a malaise that afflicts some UK local authorities. It acts as an obstruction on jobs, and keeps U.K., shops, especially the small ones, closed down. That asides, this particular building was another “empty” as the architect and television presenter George Clarke describes them.

We are asking George to start another campaign – this time for small empty shops in addition to his excellent empty homes initiative. Seriously. But that is another section of the website for another day.

Back to this particular empty newsagents we had bought. The owner of the adjacent video rental business was – by self admission – inexorably going bankrupt when he approached us for help. He had been turned down by the bank when he asked if he could have some financial support to change his VHS video rental stock over to DVDs (it was a while ago, and DVD’s were just emerging as a new format to watch films at home). The bank said: “DVD’s would never catch on”. Aye, right. We know that there are very good bank managers out there. It is just sometimes hard to locate them!

Our video shop owning neighbour, aware we had just bought the “empty” shop next to his video store, and having renovated our acquisition, and illuminated a temporary window display as described in the Good Neighbours example on the preceding page, asked if we could turn our latest shop into an estate agency? His request was based, as he put it, on the fact that we owned several properties, and could put photos of these into the window and call it an estate agency. We could then knock a hole in the wall between his shop and ours and he could run both businesses. We thought “It couldn’t be that easy?”

The strange thing was that this idea, implausible though it sounded, actually did work. Not as easy as it could have been because of the aforementioned 203 pieces of paper the council needed for a “Change of Use” permission. Many, many local authorities are VERY helpful and constructive in getting closed businesses reopened. But for this sorry closed down shop, we had a bureaucratic nightmare with the planning permission process.

Though to our shock when we researched the new estate agency initiative and after all due diligence helped our neighbour get it started, the business took off.

The estate agency boomed, and the adjacent video shop avoided imminent bankruptcy. In fact it was given a new lease of life. Along with a modest injection of cash from ourselves to buy a new DVD stock, as these were catching on, contrary to the prehistoric views held by the local feckless bank manager. Both Argyll and Arran were very poorly served by this banker.　

The fact the new estate agency business in this previously empty and closed shop was booming dawned on the photographer of the picture above when he couldn’t get the shot he wanted: there were too many people crowding around the window for a clear picture of this building to be taken. The penny eventually dropped that this was a good thing – lots of interested potential customers.

It actually took 20 minutes for a brief crowd-free moment to capture the photograph of the refreshed and open building without so many people blocking the shot.

But the point was, and is valid. Sometimes, adversity can bring about good fortune. An empty shop, plus a neighbouring business struggling to survive combined and both turned into something positive. It was certainly good news for a local lady, newly married, who was hired to work in the new estate agency – in addition to our neighbour who had salved himself from job-loss and losing his video rental business. This old shop – now renovated and reopened, brought one full time and two part time jobs. Three new jobs in total.

After a couple of years, this new business was gifted for a nominal amount to the video shop owner as it became too busy for ourselves to help maintain an involvement in, whilst trying to concentrate upon core business elsewhere.

The chap who was gifted the estate agency was later offered the building to buy, but declined. We ended up selling the property to a very nice person who subsequently became a firm friend. He just wanted enough investment buildings in order to utilise the rental income to cover the costs of his sailing around the world. He did this, and in some style. This brought us to our next thing to take away from this continuing adventure:

LESSON: One of the finest things about reopening closed shops is it brings you into contact with all manner of interesting people. Many of whom become good and enduring friends. Like our world travelling amigo who bought a number of refurbished shops from our portfolio as investments. An asset backed property portfolio producing between 5% and 10% each years (averaging 7.5%). Plus capital appreciation too.

Again, for the sake of good form, it needs to be emphasised that there is risk involved in buying, refurbishing and reopening small shops. However, even when things occasionally go wrong, the property, once renovated, usually continues to host a viable business.

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