Costing New Employees Sharing Premises

Discussion in 'Growing and Managing a Business' started by poulsen, Sep 1, 2010.

  1. poulsen

    poulsen
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    My company is going to start sharing it's premises with another company and I am trying to work out a fair way of splitting the fixed cost overhead for this e.g. Rent and variable costs such as Utilities and Stationery , photocopier etc. Any Ideas?
     
  2. ArcSine

    ArcSine
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    Can't really give specifics from a distance, as every situation has its own particulars and personalities. I think in general, though, common sense will guide you pretty well, once you begin to examine each cost and think 'em through.

    Certainly, you don't want to come up with a single %age or ratio, for the sake of simplicity. One of the two parties will end up regretting that one down the road, no question, and interoffice bad blood becomes very expensive. Take the time to examine each of the costs to be allocated, and develop a reasonable allocation methodology for each. That time investment will pay nice dividends in the form of workplace harmony, if both parties feel the allocations are equitable.

    I'd consider taking a two-tier approach to rent. Some of the square footage will be directly allocable to one party or another--desk / cubicle area; executive offices; e.g. Other portions of your facility will be "common area": breakroom, hallways, restrooms, parking lot, reception area, and so on. You might want to allocate the total common-area square footage based on headcount. If Company A has twice as many people as Co B, e.g., then it's reasonable to expect that A's people will get twice as much usage of the breakroom, parking spaces, etc.

    With respect to the copy machine, you might take a tip from multi-divisional organizations that allocate costs to specific divisions: They'll frequently put a key-code device on the copier, such that each employee has to enter his or her personal code to activate the machine. At the end of the month, say, you could easily tally up the number of copies made by each of the two companies (in your case).

    Stationery and office supplies might be subject to direct charging if, say, on "order day" each company submits its own "request list". The total order that day is the sum of both lists, and the invoice is split according to the lists. This is assuming, of course, that there's some benefit to ordering in larger quantities (discounts, say). Otherwise, just have each company buy its own supplies separately, as needed, and partition the supplies-storage area so that each company has its own "closet".

    Just a couple of thoughts or three...you'll come up with plenty more. Cheers!
     
  3. Fergal

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    I think proportioning rental costs by the amount of square feet each of you use, would work quite well and would be fair to both parties. Do you think that could work for you?

    ArcSine has given you some excellent advice on proportioning the variable costs. Would it be possible or practical for each business to have their own electricity metre, so that you can see how many units each of you are using?
     

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