stow community hub - stowhub.co.uk study and business plan for stow community council stow community...

Viability Study and Business Plan for Stow Community Council

STOW COMMUNITY HUB

Submitted by DTA Scotland’s consultancy service, the Pool

Compiled by Phil BrownConsultantDecember 2009

DTA Scotland54 Manor PlaceEdinburghEH3 7EH

Stow Community CouncilCommunity HubViability Study and Business Plan

Contents

1.Executive Summary ...................................................................................................................... 3 2.Introduction & Background ......................................................................................................... 9

2.1 Stow Profile ..................................................................................................................... 9 2.2 Stow Community Council .............................................................................................. 9

3.Economic and Social Profile ...................................................................................................... 10 3.1 Demographic Profile ..................................................................................................... 10 3.2 Economic Activity, Inactivity & Employment ............................................................. 11 3.3 Earnings .......................................................................................................................... 12 3.4 Industry and Type of Employment ............................................................................... 12 3.5 Business Base ............................................................................................................... 13

4.Policy Context ............................................................................................................................. 15 4.1 Scottish Borders Council Structure Plan .................................................................... 15 4.2 Single Outcome Agreement - Scottish Government and Local Authority .............. 15

5.Development Proposal ............................................................................................................... 17 5.1 Existing Premises .......................................................................................................... 17 5.2 The Redevelopment Proposal ...................................................................................... 17 5.3 Best Practice Developments within Scotland ............................................................ 18

6. Evidence of Demand .................................................................................................................. 19 6.1 Supply and Availability of Business Premises – Scottish Borders ......................... 19 6.2 Community business Hub – Prospective Demand .................................................... 21 6.3 A Supply Led Approach to the Provision of Managed Office Accommodation ...... 21 6.3.1 Festival Business Centre – Govan, Glasgow .......................................................... 22 6.3.2 Victoria House – Greenock ........................................................................................ 23 6.3.3 Michael Lynch Enterprise and Training Centre - Ardrossan, North Ayrshire ...... 23 6.3.4 A Supply Led Approach - Key Lessons .................................................................. 24 6.6 Competitive Overview ................................................................................................... 24 7.1 Vision .............................................................................................................................. 26 7.2 Objectives ....................................................................................................................... 26 7.3 Operating Principles ...................................................................................................... 26 7.4 Equal Opportunities ...................................................................................................... 26 7.5 Sustainability ................................................................................................................. 27

8. Business Model .......................................................................................................................... 28 8.1 Legal Entity ..................................................................................................................... 28 8.2 Management Arrangements ......................................................................................... 28 8.3 Marketing & Promotion ................................................................................................. 28 8.3 Staffing ............................................................................................................................ 29 8.4 Pricing ............................................................................................................................. 29 8.5 Monitoring and Evaluation ............................................................................................ 30 8.6 Risk Assessment ........................................................................................................... 31

9. Finance & Funding ..................................................................................................................... 33 9.1 Capital Budget & Funding ............................................................................................. 33

10. Conclusions .............................................................................................................................. 33

Appendix A – Cash Flow ProjectionsAppendix B – Capital Cost Estimates and Proposed LayoutAppendix C – Notes on Structure and CICAppendix D – List of Potential Funders

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1. Executive Summary

Introduction

This Business Plan sets out a proposal for the conversion of the single storey 450 sq. m disused school in Stow into a modern, multi-functional community and business centre.

Stow Community Council is the representative body of the local community through the Scottish Borders Council and is active in generating the development of the community through local and national initiatives. It has created a company limited by guarantee, Stow Community Trust as a vehicle for delivering this type of project.

The old school building has remained unused since the development of the new school on the other side of the Gala Water. The old school building is deteriorating as time goes by and unless something is done it will reach the point where refurbishment is no longer economically viable. The Community Council want to acquire the building and create a sustainable community facility following a business use theme. The facility would also be available for some community social usage but with most of the facilities this social use would be of space designed for business use as well.

Development Proposal

The school building is to the north of the village centre and is just outside the conservation area. The site is immediately ajacent to the A7 trunk road and lies to the east of it. The site is accessed directly off the A7 through an area shared with the adjoining schoolmaster’s house.The development proposal centres on the conversion of the existing space by re-arranging the division of the existing space. There is no inclusion in the proposal for extending or altering the external walls or roofs except for refurbishment. Consideration is being given to altering the access from the A7 to improve visibility and safety.

The proposal allows for the creation of the following spaces:

Type Description

Office accommodation for SMEs & Business Start Ups

Three individual suites of offices with shared reception and toilet facilities. The suites will have areas of 36 sq m, 46 sq m and 50 sq m respectively.

Hot Desk Area An area of 38 sq m to include a reception desk and up to eight desks equiped with computers. The area could also function as a training/flrxible learning facility.

Meeting/Media Rooms Two meeting rooms of 30 sq m and 50 sq m. The larger to be equiped with a multi media projector and screen, video conferencing and lighting and audio systems to enable media presentations.

Kitchen and Eating Area

An equiped kitchen to enable catering and food preparation for functions and catering for business users.

Fitness Suite A fitness room (27 sq m) with aerobic fitness equipment for the use of business and community users on a subsription basis.

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Demographic Drivers

Stow and the surrounding rural settlements, along with much of rural southern Scotland is experiencing a shift in demographic profile. The major employers and traditional industries are disappearing and the only remaining expanding sector is retail. The job opportunities are now in the lower paid and part time jobs which are typical of this sector. Younger people from the area are increasingly looking elsewhere for employment and opportunity causing them to leave the area or not return after higher education. The net effect is that the resident population is increasing in age with retirees becoming an increasing percentage and a higher proportion of professional commuters representing the working population. The long term effect on communities of this migration is expected to be dilution and dispersion.

The profile of business activity is also changing. With the increase in the near retirement age population comes an increase in lifestyle businesses which combines with small independent businesses set up on redundancy money from industrial closures to significantly reduce the average size of businesses in the area. Businesses are becoming smaller many with less than five employees and are focused on the service industry. Those businesses which are manufacturing predominantly tend to be single man units producing in the craft or local market food areas. The accommodation requirements of such businesses are also shrinking in terms of the areas they occupy. There is also a change in the social dynamics of this business lifestyle. Small one man businesses can be isolationist and a higher dependence on interaction and support can be seen in the choice of business premises

The proposal by the Stow Community Development Trust will provide quality business accommodation consistent with this model within the area. This should create opportunity and help to retain people within the local area. It will provide a limited number of full-time employment opportunities, and support a greater diversity of employment as an alternative to processing and lower skilled elementary jobs.

Business Profile

Over the last 2 years the overall number of business start-ups in the Scottish Borders has increased by 13% mirroring the trend in and Scotland. Business failures, during the first three years, across the Scottish Borders are slightly lower than the average for Scotland as a whole.

As at March 2006 there were a total of 6,865 enterprises registered within the Scottish Borders local authority area. Of these enterprises approximately 94% employed less than 50 employees. In addition to this six out of every ten employee jobs are in businesses employing less than 50 staff. These two data points emphasise the fact that the Scottish Borders economy is built upon, and reliant on, small businesses, much more so than the Scottish average. This reliance will have increased rather than diminished over the three year period since figures were last published.

The development of the proposed Community Business Hub is consistent with the development profile for business activity in the area. Beyond this the business profile is developed to offer new and innovative dimensions to the business offering consistent with the latest business models in this sector. The serviced accommodation concept offers advantages to new and developing businesses as well as added value to the core business. The hot desk membership scheme is a flexible method of engagement with business customers allowing embryonic businesses to access services with extremely low levels of committed expenditure. Usage can develop flexibly but with some stability of income created by the membership packages offered.

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The community use of the meeting, media and fitness rooms will be competitive with the space available in the town hall to some degree. There is then the question of competitive charging if this is desired and how that would impact on both venues. In the financial analysis the income generated from community use is low relative to the total turnover and is not significant in terms of the overall success of the business.

Evidence of Demand

According to the Scottish Enterprise Business Property Review of February 2007, available supply of floor space in the Scottish Borders increased but with fewer units. This is surprising considering the down turn in industry and the increase in property development for industrial use. The average availablity of property over the whole of Scotland is only 12%. In both Dumfries & Galloway and the Borders the supply of industrial floor space was comparatively low, relative to average take-up. With regards to office space the Business Property Review indicated that the Scottish Borders and Dumfries & Galloway had the second lowest supply of office units across Scotland. However the proximity of local business property developments will influence the market.

The demand for commercial office space in the area would appear to be strong when considering the demographics, business profile and supply particularly in the sector supporting small businesses and business development. This is a small scale development which does not impact on the size of the overall market in this sector. There are positive lifestyle factors created by the rural location which add benefit and could draw users from larger conurbations within commuting distance. The development of the railway link to Edinburgh in the future could make the offering attractive to “out of city” commuters.

There is anecdotal evidence of demand and interest locally and this should be considered against the space available for lease which is small in the context of the market place.

Community Economic Benefit

In context the turnover of the proposed business is small and direct employment will only be of the order of one or two part time.

The benefits to the local economy will extend beyond the direct turnover of the company, although this will be absorbed by the local economy in employment and service contracts. The indirect benefits which are difficult to quantify will come from the growth of new and existing businesses supported by the new venture.

Strategic Fit

The project aligns with the following Local Government and National Government Plans and Priorities:

Scottish Borders Council Structure Plan, Chapter 3, Policy E16 - Rural Economic Development

The project will contribute to six of the fourteen Single Outcome Agreement objectives.

Development Sustainability

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The cash flow projections in Appendix A show sustainability at a realistic level of activity within a three year period.

Without this level of activity, the business can still exist on a lesser take up of demand. The cost of employment which is the major indirect cost can be manipulated in the short term by the use of voluntary labour, or by trading usage of the facility against a supervisory or management input.

The primary cost which must be matched for sustainability is that of services and maintenance, and these can be met easily from income generated if a flexible approach to the cost of management is adopted short term.

Development Objectives

The Stow Community Council wishes to achieve community benefits through the realisation of the following objectives:

• To refurbish and refit a derelict building for effective use in the community.• To provide multi-functional space that will be available for organisations engaging in

enterprise and business as well as for some social use by the community.• To financially manage the premises so as to secure its long-term sustainability.• To develop the local employability infrastructure in order to build the business base

of Stow.• To utilise the success of the old school development as a springboard for further

economic and community regeneration within Stow.

It is proposed to use this Business Plan as a basis for raising public sector capital grant support during 2010 to allow the building to be purchased and developed.

Operating Framework

Stow Community Council have set up a company limited by guarantee registered as Stow Community Trust, and is currently in the process of registering the company as a charity. This company will become the vehicle for the development of the project. This will in future be the organisation to seek funding for and manage the project.

To protect the asset created the property will be owned by the Stow Community Trust and be managed by a newly created wholly owned trading subsidiary which will act as Facility Manager. The subsidiary will be a share based Community Interest Company (See Appendix C).

A monitoring and evaluation system will be established to create and measure the targets and outcomes over time and report these to the key funders, stakeholders and Board of the Stow Community Trust.

Finance and Funding

An assessment of the development costs based on the proposed layout indicates a cost of £600,000 plus the cost of acquiring the building which is purely nominal.

A development cash flow forecast has been prepared which shows the cash movements during the first three years of operation. An indicative revenue budget has been prepared for the completed facility and based on the prospective rentals and hire charges for the

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building; the facility is projected to generate a small annual surplus. The forecast has been prepared as a parameter driven financial model and so can be used to simulate a range of activity scenarios.

A funding strategy for the development needs to be prepared based on the capital and development costs identified.

Potential funders would include; SRDP, Big Lottery GCA 2, Scottish Enterprise Borders, Scottish Borders Council, Community Enterprise Scotland, Third Sector Investment or Enterprise Funds, as well as private trust funds such as Lankelly Chase. An amalgam of funding partners will be required depending on the final level of funding necessary. All of the funders above are likely to provide both capital funding as well as the revenue funding identified in the cash flow forecast.

Overall Conclusion

It is from this basis that the Stow Community Council believes that this Business Plan presents a compelling case for the establishment of a new Community Business Hub as a viable vehicle for community and regeneration activity within Stow and its surrounding area.

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2. Introduction & Background

2.1 Stow Profile

The community of Stow includes the villages of Stow and Fountainhall, with respective populations of 596 and 101 in the last census. The Community Council represents both villages and has representatives from each. Stow’s place in history is strongly linked to its religious significance. It appears that Christianity arrived in the area in the 7th or 8th century, and there are written records of St Mary’s Well dating back to 826 AD.

The church in Stow had a special place in medieval times as with the support of the Bishop of St Andrews, the parish of Stow became one of only three sanctuaries in Scotland in which there was safety from persecution. There is an unbroken link through various secessions and buildings to today’s parish church. Until the eighteenth century, Stow would have been a farming community, but with the coming of the turnpike road to the west of the Gala Water in 1754, and the impact of the industrial revolution, the village became a small centre of industry, with an emphasis on spinning and weaving. The presence of the railway from 1862 to 1968 helped this trend, but in more recent times, local authority employment and commuting (particularly to Edinburgh and the Lothians) has become the norm for the working population. In the1972 local authority reorganization, Stow changed from being a part of Midlothian and became part of Selkirkshire and the Scottish Borders.

2.2 Stow Community Council

The Community Council is one of 67 operating in the Scottish Borders. In general, the Parish of Stow Community Council is composed of twelve elected members, ten representing Stow and two representing Fountainhall. The Community Council is non-party political and carries out a number of important functions within the Parish. The main functions are:

1. To express the views of the community to the local authority and other public authorities.

2. To inform the community of information received from the local authority and other public bodies

Over the years, the Community Council have been involved in many important issues which have had a direct influence on the community. None more so than the proposed reintroduction of the Waverley Railway Line. In the original proposals there was to be no station at Stow. However, the Scottish Parliament was persuaded by the Community Council along with the action group that a station at Stow was essential. The Community Council is consulted on most planning applications within the Parish giving a good opportunity for members to express the thoughts of the community on what can sometimes be a very emotive subject. Scottish Borders Council now operates a service within their own website which gives public access to all planning applications. On a monthly basis, the Community Council registers many issues of concern with the local authority. They are assisted in their tasks by the local regional councillors whose ex officio membership of the Community Council allows them to advise often on important issues.

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3. Economic and Social Profile

3.1 Demographic Profile

The Galashiels area population was just under 13,000 in 2004 and has increased by less than 1% since 2001. Although the population in the Galashiels area has hardly changed over recent years the age profile is changing as illustrated in Figure 2 below.

Figure 2 – Galashiels Population Change by Age Group 2001-2005 (Source: South of Scotland Labour Market Profile www.southlmi.org)

From Figure 2 we can see that there have been net increases in all age groups over 55, apart from those between 70 and 74. The largest drops have been in the number of people aged between 20 and 34 (- 92) and under- 10s (- 61). This suggests that young people and young families are leaving the area for work.

Less than 20% of Higher Education graduates from the area was working or studying in the Scottish Borders, compared to 31% of graduates from the Highland and Islands. The young are leaving the region to find work elsewhere. This has been for reasons of education and to obtain better paid jobs.

Looking to the future it is projected that the Scottish Borders will see an overall reduction in its population by 2% by the year 2024 and within this the population of those of a working age will reduce by 17%, more than double the overall reduction across Scotland, with those above working age increasing by 45%. This will have an increasing impact on workforce availability and an increasing importance of migrant labour.The major expected demographic changes in the South of Scotland are:

• A reduction in the youth population: 28% fewer 0-14 year olds by 2016, with a consequent impact on future labour supply.

• A reduction in the population of those in prime working age: 38% fewer 30-44 year olds by 2016.

• An increase of 22%in the number of people above retirement age in the region.

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http://www.southlmi.org/


3.2 Economic Activity, Inactivity & Employment

The most recent figures for Gross Value Added (GVA) are from 2006. The Office for National Statistics estimates the GVA for the Scottish Borders is £1,486 million. The GVA for Scotland is £93,361 million. The GVA in the Scottish Borders can be split into the following:

agriculture, forestry and fishing are worth £108 million production and construction are worth £376 million service activities are worth £1,002 million

The number of people in the Scottish Borders was estimated to be 112,430 on 30 June 2008. This has risen by 0.9% since 2007. The General Register Office for Scotland suggests this increase is due to people moving into the area. The General Register Office for Scotland also calculates population projections. The Scottish Borders is predicted to have a population of 112,726 by 2010, growing to 127,390 in 2031. The workforce in the Scottish Borders was just over 43,500 in 2007. There are some key differences between the Scottish and the Borders economies. For example, the Borders has a relatively large proportion of its employment concentrated in the manufacturing sector (14.3% in the Borders compared to 9.2% in Scotland). In the last five years employment in manufacturing has generally declined, both here and in the rest of Scotland. In contrast, the region is under-represented in the growing services sector generally, and most notably in the banking and financial services industries.

Scottish Borders

Agriculture, fishing, energy and water: 6.9%

Manufacturing: 14.3%

Construction: 7.1%

Distribution, hotels and restaurants: 21.8%

Transport and communications: 3.1%

Banking, finance and insurance: 9.7%

Public administration, education and health: 32.1%

Other services: 5.0%

Scotland


Manufacturing: 9.2%

Construction: 5.7%




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The workforce profile has changed over the last five years. The biggest changes in the Scottish Borders are the increases in the service sector, notably in banking, finance and insurance (+21.1%), and other services have risen by almost one-quarter. Employment in construction has also increased by just over one-quarter. The sectors showing a fall in employment are manufacturing (-7.7%) and distribution, hotels and restaurants fell by one-fifth.

In Scotland, the biggest rise in employment has been in construction (+14.8%). The service sector also showed increases of almost 10% in banking, finance and insurance and public administration, education and health. The most notable decrease in Scotland was also the manufacturing sector (-9.2%). (Annual Business Inquiry (ABI) 2003-2007, National Statistics)

3.3 Earnings

The gross median weekly wage for full-time workers in the Scottish Borders for 2008 is £370.20, only 80.5% of the Scottish figure.The Scottish Borders earnings are only 77.4% of the wages for Great Britain, according to the Annual Survey of Hours and Earnings (produced by the Office for National Statistics).

3.4 Industry and Type of Employment

The Borders has a relatively large proportion of its employment concentrated in the manufacturing sector (14.3% in the Borders compared to 9.2% in Scotland). In the last five years employment in manufacturing has generally declined, both here and in the rest of Scotland. In contrast, the region is under-represented in the growing services sector generally, and most notably in the banking and financial services industries.

Scottish Borders


Manufacturing: 14.3%

Construction: 7.1%






Scotland


Manufacturing: 9.2%

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Construction: 5.7%






3.5 Business Base

The overall number of businesses registered in the Scottish Borders grew by almost 3.3% in the last three years. However there has been very little change in the last year in the overall number of businesses registered at 5,730. This is a similar pattern to the rural south and Scotland as a whole.

The main sectors showing increases in business registrations are education, health and social work and transport and communications, which both grew at a faster rate than nationally. The stock of businesses declined within the agriculture and fishing, manufacturing and wholesale and retail sectors.

The rate of new business start-ups is a key indicator of the competitiveness and economic health of the local economy. A high business start-up rate will tend to indicate a growing economy. Data from the Committee of Scottish Clearing banks shows that the Scottish Borders accounted for 2.9% of all business start-ups in Scotland over the year to the third quarter of 2007.

Over the last 2 years the overall number of business start-ups in the Scottish Borders increased by 13% which was the same as Scotland as a whole. The number of business start-ups was at a low of 118 in the fourth quarter of 2005, the lowest figure over the last 4 years. Since then the number of business start-ups have increased and average 169 over the last three quarters. Evidence from the most successful regions suggests that a high start-up rate is what is most likely to generate the strongest economic and employment growth.

Business survival rates over the three years to 2007, show that businesses in the Scottish Borders had higher survival rates over all years compared to Scotland as a whole. In 2007, 82.2% of Scottish Borders businesses registered in 2004 were still trading compared to 68.5% across Scotland.

As at March 2006 there were a total of 6,865 enterprises registered within the Scottish Borders local authority area. Of these enterprises approximately 94% employed less than 50 employees. In addition to this six out of every ten employee jobs are in businesses employing less than 50 staff. These two data points emphasise the fact that the Scottish Borders economy is built upon and reliant on small businesses, much more so than the Scottish average. A summary profile of registered enterprises within the Scottish Borders is provided in Figure 7 below.

Number of Enterprises

Scottish Employment

Turnover (£millions)

Total 6,865 45,440 3,9830-49 Employees 6,450 25,150 1,781

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50-249 Employees 130 5,430 449250+ Employees 285 14,860 1,752

Figure 7 - Number of Registered Enterprises and Their Employment and Turnover by Scottish Borders Local Authority Area, March 2006 (Source: Scottish Corporate Sector Statistics).

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4. Policy Context

The proposal to develop a new Community Business Hub needs to be seen against the wider economic and social policy landscape for the area. The main policy statements and documents which underpin the proposal are set out below.

4.1 Scottish Borders Council Structure Plan

The Structure Plan Chapter 3 sets out the council’s policies on economic development for the Scottish Borders area. It covers the areas of Rural Resources, Business and Industry, Retailing and Tourism. The relevant section to this project is Business and Industry. Within this section Policy E16 – Rural Economic Development states that:Business and industrial development will be encouraged which will support the rural economy provided it can be achieved in accordance with the Plan’s other policies, particularly those on the environment. Particular encouragement will be given to those which:

1. Provide employment in villages or the countryside2. Contribute to the wider rural economy3. Are part of farm diversification schemes4. Re-use vacant and derelict buildings

The proposal aligns itself with this policy under 1,2 and 4 above and so should be supported by the Scottish Borders Council and Scottish Enterprise Borders within their other constraints.

4.2 Single Outcome Agreement - Scottish Government and Local Authority

The Single Outcome Agreement is based on the Scottish Government Priorities and so underpins the development plans of the national and regional government in Scotland. It also provides a framework for the delivery objectives of funds and funders. Alignment with the objectives of the Single Outcome Agreement strengthens the ability to gain support and funding across the board.

There are fourteen outcome objectives identified and the proposal aligns with the following:

01 We live in a Scotland that is the most attractive place for doing business in Europe

This objective is about technical infrastructure as well as physical surroundings and transport. The proposal creates improvements in technical and communications available to small businesses as well as offering the surroundings and transport infrastructure to support business activity.

02 We realise our full economic potential with more and better employment opportunities for our people.

The proposal creates employment opportunity directly and indirectly through the stimulation of local businesses and the local economy.

10 We live in well-designed, sustainable places where we are able to access amenities and services we need.

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The proposal brings with it enhanced business and community facilities with improvements to an existing building making it sustainable.11 We have strong, resilient and supportive communities where people take responsibility for their own actions and how they affect others.

The proposal is a community initiative and as such will progress with the support of the community. The process will build community engagement and cohesion with common ownership and involvement.

12 We value and enjoy our built and natural environment and protect and enhance it for future generations.

The proposal will bring an existing old community building to a modern environmental specification, put it to use and preserve it for the future.

14 We reduce the local and global environmental impact of our consumption and production.

Not only will the proposal reduce the carbon footprint of the buildings under use, it will provide local delivery of services which would otherwise involve travel.

The project will contribute to six of the fourteen Single Outcome Agreement objectives.

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5. Development Proposal

5.1 Existing Premises

The proposal centres on the community ownership and development of the disused old school buildings in Stow. The old school building has remained unused since the development of the new school on the other side of the Gala Water. The building is deteriorating as time goes by and unless something is done it will reach the point where refurbishment is no longer economically viable. The Community Council want to acquire the building and create a sustainable community facility following a business use theme. The facility would also be available for some community social usage but with most of the facilities this social use would be of space designed for business use as well. The school building appears to be structurally sound but with a lot of work required internally. The total available space is around 450 sq m. The original stone building comprises basically a large hall with classrooms off each end. There are two front entrances at each end of the building. The building has subsequently been extended to the rear to include toilets, a kitchen, dining area, cloakrooms and offices.

5.2 The Redevelopment Proposal

The school building is to the north of the village centre and is just outside the conservation area. The site is immediately ajacent to the A7 trunk road and lies to the east of it. The site is accessed directly off the A7 through an area shared with the adjoining schoolmaster’s house.The development proposal centres on the conversion of the existing space by re-arranging the division of the existing space. There is no inclusion in the proposal for extending or altering the external walls or roofs except for refurbishment. Consideration is being given to altering the access from the A7 to improve visibility and safety.

The proposal allows for the creation of the following spaces:

Type Description

Office accommodation for SMEs & Business Start Ups

Three individual suites of offices with shared reception and toilet facilities. The suites will have areas of 36 sq m, 46 sq m and 50 sq m respectively.

Hot Desk Area An area of 38 sq m to include a reception desk and up to eight desks equiped with computers. The area could also function as a training/flexible learning facility.

Meeting/Media Rooms Two meeting rooms of 30 sq m and 50 sq m. The larger to be equiped with a multi media projector and screen, video conferencing and light ing and audio systems to enable media presentations.

Kitchen and Eating Area

An equiped kitchen to enable catering and food preparation for functions and catering for business users.

Fitness Suite A fitness room (27 sq m) with aerobic fitness equipment for the use of business and community users on a subsription basis.

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• Community Archive – housing records and documents currently stored at the town hall.

• Meeting or conference space – dual function as the space could be used for community groups and be rented out to potential business users

• Exercise room – not a full gymnasium for staffing and insurance reasons; again potentially dual function as could be fee charging for business users.

• Practice or rehearsal space – use for bands or groups requiring more space than for just a meeting.

• Media room – equipped with media presentation and IT equipment to facilitate presentations and events; potentially dual function as could be fee charging for business users.

• Flexible learning facility – provision of a space with the necessary internet connectivity and equipment to let community members access web-based courses.

• Video conferencing facilities for hire to business users

Functions venue – with a working kitchen the hall could become an effective functions space which could be hired out for weddings, dinners, private parties and private organisation functions. Registration as a wedding site could also be considered.

There is already interest in office space type business accommodation and from a craft business.

There is a limited amount of space available for lease so to make a sustainable model there needs to be an emphasis on maximising the income per square metre for the space dedicated to business use and income generation.

To maximise the income the best option in terms of a business model is to offer serviced office accommodation in the smallest practical units. Office equipment, furniture, telephones, IT equipment and the use of meeting rooms and communal space should be offered as part of the deal. Services such as reception, telephone answering, cleaning and catering should be available as part of a package or for occasional use. The proposed layout is shown in Appendix B

To maximise income part of the space devoted to income generation could be developed along the “Melting Pot” model. Here desk space and office access are offered on a membership package with no dedicated space for each member but a “hot desk” approach being adopted. Membership packages include different levels of standard usage with extra time bought as and when necessary.

If 60% of the available space (270 sq m) is devoted to this type of income generation a lease return of £200 per sq m per annum would yield £54,000 of income. Normal “four walls and carpet” office accommodation would yield between £70 and £100 per sq m per annum, so there is obviously a need to follow an added value business model. It is unfortunately the case that the craft or retail sector will not return these levels of lease value. The highest income would be generated from the hot desk model if all the area could be successfully filled. However this is not likely to be the case and a model with part hot desk and part serviced offices is most likely to return the highest income.

5.3 Best Practice Developments within Scotland

The business proposal has been drawn from examples of other community organisations which have acquired and developed buildings for community and business use. The proposal

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builds on this established practice and develops the model to encapsulate the best ideas for the circumstances of the project.

6. Evidence of Demand

6.1 Supply and Availability of Business Premises – Scottish Borders

According to the Scottish Enterprise Business Property Review of February 2007 the Scottish Property Network recorded over 18.7 million sq m of ‘standard’1 industrial space in Scotland, with 18.4 million sq m in the Scottish Enterprise area. The distribution of stock across Local Enterprise (LEC) areas is shown in Figure 13 below.

Figure 13: Industrial Stock Recorded by Scottish Property Network at September 2006 (Source: Scottish Enterprise Business Property Review, February 2007)

At December 2006, SPN recorded 2,226,720 sq m of available industrial floor space in 1,883 units in the SE area. This represents 98% of all available industrial floor space in Scotland.

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Figure 14: Industrial Stock Recorded by Scottish Property Network at September 2006 (Source: Scottish Enterprise Business Property Review, February 2007)Available supply of floor space in the Scottish Borders increased by nearly 30% in the year to December 2006, but the number of units fell by approximately 18% as illustrated in Figure 14. The implication being that development was in larger units.

The rate of availability can be seen to be arround average for the areas shown, neither especially high nor low.

Figure 15: Industrial Availability at December 2006 (Source: Scottish Enterprise Business Property Review, February 2007) When we look at the supply of available industrial floor space with respect to the annual average take-up of floor space and convert this into the number of years supply that this represents we can see quite clearly from Figure 16 that the supply of industrial floor space remains comparatively low, relative to average take-up, in both Dumfries & Galloway and the Borders at less than 2 years’ supply. Ayrshire and Tayside, by comparison, both have over 6 years’ supply of industrial floor space.

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Figure 16: Estimated Number of Years Supply of Indistrial Floor Space at December 2006 (Source: Scottish Enterprise Business Property Review, February 2007)

With regards to office space, Figure 17 below illustrates that the Scottish Borders has the lowest supply of office units across Scotland. This evidence is further supported via an enquiry made to the Scottish Borders Council Property Services office which stated that they are desperately short of office space in some locations and therefore do not lease any out. As detailed in section 3.5 herein, 94% of Scottish Borders businesses employ less than 50 employees and six out of every ten employee jobs are in businesses employing less than 50 staff. These two data points emphasise the fact that the Scottish Borders economy is built upon and reliant on small businesses, much more so than the Scottish average, and as such it is important that the supply of future offices meets the needs of small businesses. This is the type of office space being proposed by the Community council for the Community business Hub.

Figure 17: Estimated Number of Years Supply of Office Space at December 2006 (Source: Scottish Enterprise Business Property Review, February 2007)

6.2 Community business Hub – Prospective Demand

There is anecdotal evidence of demand and interest locally and this should be considered against the space available for lease which is small in the context of the market place. The strength of the offering for business accommodation is that it is directed at the type of accommodation where there is a shortage, namely office accommodation. It is also offered in a unit size consistent with the requirements of small businesses where again there is a shortage of supply.

Locally available office space in this category is commanding prices of £100 to £120 per annum per square meter for a bare shell let without services or rates.

6.3 A Supply Led Approach to the Provision of Managed Office Accommodation

The Community Council’s proposals for the community Business Hub are underpinned by a number of factors including the evidence of market failure to provide suitable office and

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business space within the Scottish Borders, as illustrated in section 6.1 herein. Further evidence of prospective demand from local businesses further supports the proposal to redevelop the premises for business use.

Further to this, additional evidence to the potential for the premises to attain a full occupancy rate is provided by a number of successful examples across Scotland where experience has been gained over the last fifteen years in relation to the development of a supply led approach to the provision of managed workspace and office accommodation. The basis of this approach includes:

The development of a local response in situations where there is clear evidence of “market failure”. Public sector funding has been provided to support the development of the local business infrastructure and stimulate the local economy.

The approach has also been developed as a response to situations where there is limited evidence of market demand for business accommodation. Public sector intervention has been used to support this approach recognising the risk that is involved for the project sponsor.

This approach has been used successfully in a number of areas within Scotland and tends to form part of a wider regeneration strategy. Examples of some of the developments undertaken include:

6.3.1 Festival Business Centre – Govan, Glasgow

The approach was used by Govan Initiative during the early 90’s, as part their work to develop the local business infrastructure. Despite having a strong industrial heritage, the area had suffered from economic and social decline during the 70’s and 80’s. Govan Initiative was established in 1986 with responsibility for leading the local economic regeneration of the area.

As part of this work, Govan Initiative recognised the importance of developing a strong indigenous business base and established an extensive programme of business start up support. However, they also recognised that the infrastructure within the area had to be updated, and that limited facilities existed to support SMEs. The market at the time was not investing in Govan and did not see this area as an area of opportunity. There was also limited evidence available in relation to potential demand.

However, as part of the economic regeneration strategy for the area, Govan Initiative put together a package of funding to build Festival Business Centre in Brand Street, Govan. This building was constructed in 1994, and provides over 23,000 sq ft of business accommodation. A total of 35 offices are available ranging from 128 sq ft to 2000 sq ft.

This project has been extremely successful with occupancy rates of around 95% to 100%. It is also interesting to note that the project has acted as a catalyst to the private sector and has stimulated economic growth within the area. Brand Street is now a thriving business area with a range of new developments having been undertaken through private sector investment.

Since the early 90’s, the Govan economy has experienced significant growth, with the area now seen as an attractive business location. This will be further enhanced by the forthcoming re-location of the BBC and Channel 4 to Pacific Quay.

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Govan Initiative has continued their work in relation to the development of the local infrastructure but the rationale and focus of their approach has now changed. At present they are developing 30,000 sq ft of new business accommodation within the area as part of their strategy to provide local facilities, but also to build their own asset business and provide a sustainable income to support their work. They are also investing in specific growth sectors such as the Creative Industries and are seeking to build on the opportunities that flow from Pacific Quay. This includes the development of a new Digital Media Centre that will provide accommodation for small scale media companies and training facilities for local people interested in this field.

6.3.2 Victoria House – Greenock

The approach has also been pursued out-with Glasgow in areas such as Greenock. In 1997, Inverclyde Council undertook an assessment of business facilities that were available within the area. At that time, the area was designated as an Enterprise Zone with a range of major sites identified for development. However, the business facilities review highlighted that a very limited range of modern business accommodation was available that would be suitable for new business start-ups and SMEs. The Enterprise Zone sites were earmarked for major inward investment opportunities with the private sector not providing facilities to support smaller scale companies.

The premises review also indicated that the area had a poor level of business start up and that there was limited demand for small office accommodation. Despite this assessment, the Council agreed to pursue a supply led approach based on the assumption that they could stimulate demand by providing a range of quality facilities.

Funding was secured through Inverclyde Council, Scottish Enterprise Renfrewshire and ERDF to undertake the refurbishment of an existing building located at Victoria Harbour. The project was undertaken over two phases as follows:

Phase 1 – providing 8,500 sq ft of industrial space + 3,500 sq ft quality office space (15 offices)

Phase 2 – providing 3,200 sq ft office space

The office accommodation ranges from 1 person units of under 100 sq ft to units over 1,000 sq ft. The office accommodation was fitted out to a high specification and included a range of common facilities such a reception support; meeting space; etc. Phase 1 of the project was extremely successful and was fully let within 3 months. The second phase was then completed providing a further 3,200 sq ft of offices.

6.3.3 Michael Lynch Enterprise and Training Centre - Ardrossan, North Ayrshire

Pursuing a supply led approach to the provision of business accommodation has also been undertaken within Ayrshire and led by Cunninghame Housing Association in their development of the Michael Lynch enterprise and training centre in Ardrossan,

Cunninghame Housing Association Ltd (CHA) was founded in 1984, has over 2,000 properties in management and operates in the local authority areas of North and East Ayrshire. Over the last 8 years CHA has diversified from traditional housing development and management activities, creating an innovative regeneration programme that has levered in excess of £6m and significant training and employment opportunities into disadvantaged local communities.

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Since the 1970s, Ardrossan has suffered a decline in its economic base through the loss of tourism, the closure of relocation of major employers in the decline of port activities. The town and the adjoining areas were therefore in need of economic and social regeneration and this was underscored by a number of employment, poverty and income indices.

The property at 71 Princes Street comprised a late 19th Century sandstone office and workshop building. The proposal called for a £1.25 million extensive refurbishment and new build works to create a multi-functional facility comprising offices and training space.

An assessment of demand indicated that in the past there had been a relatively low demand for business office accommodation within the area however CHA took a supply-led approach to the redevelopment of a 100-year old building to provide multi-functional space that was made available for organisations engaging in enterprise and learning.

The redeveloped building comprised 8,500 sq ft of both office units for lease and training space for hire. The office units were made available for lease to existing SMEs, start-up businesses and social economy organisations. Support services are provided for these SMEs within the facility. A variety of training rooms was also provided on both floors and these were designed to meet the training delivery requirements for a variety of training providers. The property is owned and managed by the housing association which also acts as Facility Managers.

Since its opening the facility has increased its occupancy rate to above 90%, allowing it to realise its aims of developing accessible multi-functional space providing opportunities for enterprise and learning for the people and organisations of Ardrossan as part of the ongoing economic and social regeneration of the area.

6.3.4 A Supply Led Approach - Key Lessons

The key lessons from these examples include:

A supply led approach has been successful in a number of areas and has acted as a catalyst for future economic growth.

All of the projects indicated that an emphasis should be placed on providing quality facilities with additional support services available.

Lease arrangements should be based on licence arrangements or short leases with short notice period. New business start up’s and SMEs do not wish to enter into long lease arrangements.

All of the projects have been linked to a wider programme of regeneration being undertaken within the area.

All of the projects have been developed in situations where there is clear “market failure”.

6.6 Competitive Overview

The location in the village of Stow is remote compared with the larger centres in Galashiels and Selkirk, but this could be advantageous within a limited market segment where a rural location is considered an advantage. Were this a development with more space to fill the capacity of the segment in total could be a problem but with only three relatively small office suites to let there should be no disadvantage created by location.

In considering the proposal for the Community Business Hub development it is important to do so in the wider context of competing business accommodation premises. The prognosis

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from the above information is that although there is business accommodation available in the area, it is not sized or geared to the growth sector of demand. It can therefore be assumed that the business accommodation offered will be taken up.

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7. Aims & Objectives

7.1 Vision

In bringing this proposal forward, the Community Council’s vision for the development is:

“The Community Business Hub will provide accessible, multi-functional space providing opportunities for enterprise and business for the people and organisations of Stow and

Fountainhall as part of the ongoing economic and social regeneration of the area”.

7.2 Objectives

The Community Council wishes to achieve this vision through the following objectives:

7.3 Operating Principles

In seeking to implement the above objectives, the Community Council will pursue the following operating principles:

The promotion of accessible services with flexible opening hours which are designed around the needs of clients and tenants.

A commitment to honesty, openness and accountability in all aspects of the management and operation of the facility.

A commitment to the continuous review of the performance of the management of the facility.

Adherence to the highest standards of best practice in the stewardship of grant funds. A positive commitment to partnership working. A commitment to the ongoing training and development of staff employed within the

facility.

7.4 Equal Opportunities

The Community Council is committed to the promotion of equal opportunities in all aspects of its work and will seek to reduce disparities in terms of gender, ethnicity, disability,

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1. To refurbish and refit a 19th century building for effective use in the 21st

century.

2. To provide multi-functional space that will be available for organisations engaging in enterprise and business.

3. To financially manage the premises so as to secure its long-term sustainability.

4. To develop the local employability infrastructure in order to build the business base of Stow and Fountainhall.

5. To utilise the success of the Community Business Hub as a springboard for


religion, or any other form of discrimination. Consideration has been given to the issue of promoting equal opportunities as part of the Community Business Hub through each of the phases of development as outlined below.

Design PhaseThe design specification for the refurbished premises will allow access to all sections of the community with potential barriers having been identified at this stage. Statutory access requirements will be met and surpassed and regard will be had to the Disability Discrimination Act, which introduces new measures aimed at ending discrimination. Mobility, safety and security on the property will be included within the design process through the provision of well-lit car parks and CCTV facilities.

Development Phase (Construction Contract)Employment opportunities in respect of the construction site will be offered to all sections of the community. This may mean the promotion of opportunities and services using mediums specific to the needs of client groups and via associated support networks.

The Community Council will encourage the successful tendering construction company to use local labour where appropriate by introducing local labour clauses in the tender documentation. In this context, the practices developed at Glasgow Harbour and The Michael Lynch Centre in Ardrossan will be incorporated into this development as an example of best practice.

Operational Phase (Completed Development)Once the facility is completed, there will be opportunities for working with the incoming SMEs, social economy organisations and their staff. The Community Council will work closely with Job Centre Plus and other labour market agency partners to link local people with new job and training opportunities.

7.5 Sustainability

Consideration has been given to the issue of sustainable development with regard to the development of the school. In overarching terms, this project will transform a dilapidated old building at the end of its life into a modern multi-functional enterprise and business centre fit for the 21st century and bring an underutilised building into productive economic use. The building is centrally located within Stow maximising opportunities for users of the facility to walk, cycle or use public transport.

The environmental impact of this project and the way in which resources can be utilised efficiently have been carefully assessed by the Community Council and the design team who have sought to design out excessive resource use, waste and pollution and consideration has been given to long term sustainability over short term savings.

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8. Business Model

8.1 Legal Entity

In order to manage the Community Business Hub premises the Stow Community Trust will form a wholly owned, share based limited company as a trading subsidiary. This approach will provide a number of benefits, namely:

• The opportunity to manage without risking the asset of the Community Business Hub premises;

• The ability of the Community Trust to generate a financial revenue stream for the organisation through the charging of a lease fee to the trading subsidiary for the day-to-day occupancy of the enterprise and business centre;

• The ability to minimise the financial exposure and risk to the Community Trust as the parent organisation by legally distinguishing the Trust from its subsidiary;

• The ability for the Community Trust to legally differentiate the Community Business Hub development from any other project plans.

8.2 Management Arrangements

The responsibility for the implementation of the Business Plan rests with the Stow Community Trust’s trading subsidiary and its Board. The key tasks undertaken by the trading subsidiary will comprise:

• Perform front-office functions, reception area management, switchboard operations and induction of new tenants;

• Efficient running of the centre including management of the leased areas and booking and management of training facilities;

• Promotion and marketing of the centre and the letting of the industrial, office and small business unit space to start-ups, SME’s, social economy organisations and public sector agencies, including tenant verification and preparation and termination of lease agreements;

• Attending to the efficient and timely facilities management and maintenance of the building including arranging maintenance of common areas and repairs;

• Dealing with the lease and maintenance of equipment within the building;• Preparation of regular progress reports on the use of the facility centre for review by

the Community Council as well as key local stakeholders and funders;• Financial management of the Community Business Hub including management

accounting, rent collection, debt management and payment of invoices for day-to-day operations.

8.3 Marketing & Promotion

The marketing of the Community Business Hub will be carried out through a number of marketing mediums. The main routes planned to be used by the Community Council to market the Community Business Hub come from best practice developments as well as traditional cost-effective marketing techniques. The mix of promotional means planned to be used by the Community Council to market the Community Business Hub is detailed in Figure 24 below:

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Marketing Technique Partner / Agent Target MarketCreation of website for the Hub.

• Website Developer • New business start-ups.• Small and medium enterprises.

Use of business property agents.

• Local Commercial Property Agents

• Medium to larger sized businesses.

• Local and national organisations.

Use of internet property agents.

• Various • New business start-ups.• Small and medium enterprises.

Use of local business networks and agencies.

• Scottish Borders Business Gateway

• Scottish Borders Chambers of Commerce

• Scottish Borders businesses.

Use of promotional articles and features.

• Local print media. • Local population and business market.

Figure 24: Marketing Plan Summary

8.3 Staffing

The Community Council propose to hire a suitably qualified Centre Manager to manage the facility and eventually one part-time deputy/Admin support.

8.4 Pricing

The pricing model proposed by the Community Council for the developed Community Business Hub is as follows:

Lettable Space Price Per Sq M Comments

Office accommodation • £100 - £120 / sq m bare shell

• Services for added value available.

Hot desk rental • £2.50 per hour basic. • Membership packages available.

Conference, Training & Meeting Space

• £25.00 meeting room half-day and £50.00 meeting room full-day.

• £50.00 board room half-day and £100.00 board room full-day.

• £2-4.00 refreshment charge per person.

• £3-£6.00 catering charge per person.

• Cancellations with less than 2 working days notice incur a 50% charge.

• To be realised from December’10 onwards.

• Board room hired at flat, daily rate compared to competing local hotels which charge a c.£20 rate per each delegate. This will further positively differentiate the Community Business Hub.

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The terms and conditions proposed for the lease of the available premises are detailed below with respect to the tenant obligations:

• To pay rent, charged per square foot occupied, monthly in advance along with a deposit of one month's rent payable on entry;

• To pay insurance premiums in effecting and maintaining insurance against all normal commercial risks including public and property owners’ liability and loss of rent insurance;

• To pay all fees associated with the maintenance, repair, replacement, renewal and rebuild of the lettable premises to the same condition as when first occupied;

• To pay all local rates, business and water/sewage rates for their own unit and similar assessments in respect of the leased premises;

• From one year after commencement of the lease and every three years thereafter the tenants agree to a rent review in relation to ensuring that the annual rent is in line with market conditions;

• To pay all fees related to stamp duty on leases, metered electricity and telephone charges within their unit, cleaning of their own unit, photocopying, faxing, and postage, all of which will be metered;

• To pay, by way of a service charge, with VAT as appropriate, a proper and reasonable share of the costs and estimated costs of the repair, renewal, improvement, cleaning and securing, janitorial services, security, heating and lighting, refuse collection, building insurance, car park maintenance and fire alarm system in respect of the Common Parts and a fair equitable and reasonable proportion as the Landlords may reasonably determine of the costs and expenses of repairing, maintaining, renewing, rebuilding and cleansing all sewers, drains, pipes, watercourses, walls, fences, structures, cables, wires, toilet facilities, access roadways, yards and roofs, main gable and mutual walls and entrances and stairways which are or may be common to the Leased Premises. Service charges will be apportioned based on either floor space or actual metered costs.

The traditional approach in relation to pricing, and that proposed by the Community Council, tends to be based on a standard charge per sq m with an additional service charge added for the other support services as specified above.

The market rate within the surrounding areas is very varied ranging from £100 to £120 for a shell rental. The proposal by the Community Council has a pricing policy at the lower end of this scale in order to attract business to the area.

8.5 Monitoring and Evaluation

A robust monitoring and evaluation system will be formulated in order to report against the outcomes set out in Section 7.5 over time.

Quarterly Reporting

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The trading subsidiary will measure actual outcomes against the targets and report every three months to the Community Council, as well as to key funders and stakeholders. This will include a brief commentary on facility activities and outcomes during the quarter reported, together with information on the following additional indicators over and above those indicated in section 7.5.

Activity Indicators• Occupancy rates within the Centre – measured monthly

Outcome Indicators• Tenant satisfaction with the support and services provided in the enterprise centre

(measured twice per annum)• Financial performance against budget – measured monthly

Financial ReportingAt the beginning of each year a financial budget will be prepared for the facility. This will be presented to the Community Council for formal approval as part of the existing financial reporting arrangements.

The annual accounts will be subject to a statutory audit by the housing associations’ Auditors.

Annual ReportingEvery year a detailed Annual Report will be prepared for the facility which will set out the principal activities, the achievement of the outcomes against targets, the financial results for the previous year and an Operating Plan for the ensuing year.

8.6 Risk Assessment

The key risks identified by the Community Council in the development and delivery of the business plan for the developed Community Hub premises, together with the actions taken/proposed to minimise and manage these, are summarised in the Table below.

Category Potential Risk Likelihood/ Potential Impact

Actions

Financial Adverse impact of project on the Community Council cash flow.

Low / Medium

Match funders payments will be sought early in fiscal years.

Cost of overdraft facility incorporated into cash flow forecast.

Development of facility under trading subsidiary.

Emergence of future VAT liabilities.

Low / High

Secure capital funding package to recover all VAT during refurbishment.

Consider VAT registration of trading subsidiary to enable claim back of VAT.

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Failure to generate revenue for lease/hire of space.

Low / Medium

Chance of occupancy negotiated locally.

Dedicated Facility Manager to be employed by trading subsidiary to promote Centre and negotiate leases/charges.

Pre Contract

Design variations. Low / Medium

Pre design discussions over 3 types of functional space helped formulate design and reduce risk post contract.

Maximisation of GFA within existing building constraints e.g. creation of mezzanine floor space.

Planning and Statutory consent failure.

Low / High

Plans to have pre detailed design dialogue with Planning, Building Control and Roads.

Underestimate probable cost.

Medium / High

Plan to produce a full Bill of Quantities with a low proportion of provisional sums based on actual quotes.

Pre-tender costs check exercise to be executed.

A pre-qualification list of approved contractors to be interviewed followed by a tendering exercise based on single stage selective tender.

Principal contractor financial checks to be carried out.

Post Contract Contractual delays Medium / High

Pre-tender interviews with principal contractors.

Weekly Technical and fortnightly Design team meetings will review procurement plan & identify remedial actions.

Cost overruns Medium/ High

Monthly valuations/cost reporting and variations checking – all linked to Technical, Progress and Design Team meetings. Resultant feedback into procurement contingency plans and cost control measures.

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Quality failures Medium / High

In house clerk of works daily inspections and feedback to Progress, Technical and Design Team meetings.

Monitoring Management of disparate funding sources and compliance with associated conditions of grant. Project outcomes require to be achieved to secure/demonstrate value for money

Low / Medium

Ensure necessary skill set in place to manage multi-agency initiative.

9. Finance & Funding

9.1 Capital Budget & Funding

An initial estimate of the capital costs of the project is given in Appendix B, along with a drawing of the layout of the building on which it is based. The identified capital cost of £600,000 will be met by a package of funding with one lead funder (70%) and match funding from a small number of other funders. Two funds that would be potential supporters as lead funders are SRDP or Big Lottery GCA 2. The latter programme is due to be announced in July 2010.

The additional costs could be met by match funders identified below, who will all supply funding for capital projects and will also cover necessary start up revenue funding. Potential funders would include; Scottish Enterprise borders, Scottish Borders Council, Community Enterprise Scotland, Third Sector Investment or Enterprise Funds, as well as private trust funds such as Lankelly Chase. An amalgam of funding partners will be required depending on the final level of funding necessary. All of the funders above are likely to provide both capital funding as well as the revenue funding identified in the cash flow forecast. The requirement for match funding can vary according to whether the costs are costs of land and buildings, capital development costs or revenue costs and different funders have different requirements in each category.

The funding required will determine the mix of applications to be made. Funders are listed in Appendix D.

9.2 Development Cash Flow Forecast

A development cash flow model has been prepared and a break-even scenario is shown as Appendix A. It is in the form of a parameter driven spreadsheet model so that the parameters can be changed as the proposal develops and various scenarios can be simulated if changes have to be made as the building project develops.

10. Conclusions

The consultants and the Community Council believe that this Business Plan presents a compelling case for the establishment of a new Community Business Hub as a viable vehicle for regeneration activity within Stow and Fountainhall: -

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Strategic Relevance

The facility is a locally based project initiated by the Stow Community Council as a way of engaging in the economic regeneration of the area.

The project demonstrates a strong fit with local and national policies supporting the development of the business base and community based asset development (e.g. Scottish Borders Structure Plan, Scottish Borders Single Outcome Agreement, Communities Scotland Wider Action).

Employment Generation and Economic Benefits

New jobs will be created between the construction phase and the SMEs and other organisations locating in the Centre.

Further indirect employment will be created via the multiplier effects of the capital investment and subsequent local supply chains developed from expenditure by SME’s and other organisations locating within the facility.

The construction of the Centre will result in 450 sq m of redeveloped and refurbished local infrastructure to retain and attract economic activity within the Stow area – amounting to significant increased investment.

A multi agency funding partnership will be created to provide funding for the project including contributions from national funding bodies creating leverage to local funding.

Demand and Risk

• The risk of lack of take up is low based on the demand profile.• Further evidence is provided by Scottish Enterprise Business Property Review statistics

which show that supply of floor space in the Scottish Borders is not geared to the target market segment. Economic statistics show that the target segment is growing and stable.

Revenue projections, based on a banded and competitive pricing strategy, prudent occupancy and letting assumptions and realistic expenditure estimates, indicate annual surpluses will be generated by the facility.

Four distinct but complementary space offerings have been identified – office space, media room and meeting space, small business hot desk space and community space – as part of the risk management strategy

Improving Image of Area

The project will bring about enhanced perception of the local area by local residents, the partners and potential investors in the area.

The refurbishment of a well-known old building will create a modern well equipped space fit for use in the 21st century.

The area is in need of infrastructural investment and this project will create a community asset that local people can be proud of.

The project can be used as a catalyst to create further momentum in increasing the attractiveness of the local area as a place to live, work and spend leisure time in.

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References & Bibliography

Scottish Borders Structure Plan

Annual Labour Market and Economic Intelligence Report 2007. South of Scotland LMEI. February 2007.

Scottish Borders Single Outcome Agreement 2008-11.

South of Scotland Labour Market Profile. www.southlmi.org .

Business Property Review. Scottish Property Network. February 2007.

A Smart, Successful Scotland: Strategic direction to the Enterprise Networks and an enterprise strategy for Scotland. Scottish Executive. 2004.

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http://www.southlmi.org/

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