Operating costs (business plan response)
BUSINESS PLAN RESPONSE: Operating costs. (£75,825/yr annualised)
Operating costs are an important consideration when looking at a BID business plan, because before even £1 is spent of front-line project ideas like marketing and events, there is a private limited BID company to be set up, run and managed that will become responsible for delivering the Business Plan for BID members. The following are the operating costs that have been presented by Taunton BID:
% spend is as a proportion of the overall BID budget.
“Finally to those who are intent on supporting the BID scheme I urge you to check the administrative costs in relation to the proposed benefits and attractions being offered, before you commit.”
Company running & management (£255,000, 18% of total budget)
A limited company will need to be set up, and there will be normal administrative costs such as for accounting, Companies House & ICO fees, office lease and insurances etc, and then there’s the biggest single operating cost of the BID Manager in terms of remuneration (including costs for employers NI and benefits such as employer pension contributions etc), in addition to his/her job related expenses.
Minehead have a much smaller BID budget than Taunton and so have sensibly opted for a part time manager, but Taunton BID haven’t made it clear whether they are opting for a full time or part time BID Manager, and what their salary would be, so we suggest you ask this. Considering the budget allocated, we’re assuming the BID Manager will be full time, and on a salary in the region of upto £40-45,000 per annum. From what we’ve seen of other BID’s that would be reasonable to assume.
“the group are concerned that significant costs will be expended on the administration of BID, at the consequence of funding additional front-line services.”
SWT Council BID Levy collection fee (£40,500) & Levy collection / licence (£19,125). Total £59,625.
Given the BID tax is legislated as a business rate, it’s important to understand that you’ll be paying SWT Council to collect the levy from you, and if you’re NO voter there’s bound to be a bit of sourness around that eh? Just think, paying the council to take money from you for a scheme you didn’t vote for!
Lets break down and put the numbers into context;
Over the 5 years, the annualised the cost will be £11,925; that is more than two of the project initiatives budgeted at £10,000 each, and just less than the crime budget at £15,000. So in comparison collecting the levy is not an insignificant cost.
The cost per levy payer each year will be £27. So for a business with a Rateable Value at the £5,000 threshold, 1/3rd of their levy payment will go on it being collected each year.
Note that SWT are charging for the levy collection, so they’ll be making money from the BID for this. Just remember this when you’re being told that the Council will be contributing to the BID levy fund. Also remember that the BID is also likely to pay SWT for parking concessions, and maybe extra cleaning if BID decides on that, so their £15,000 annual contribution looks likely to quickly become net positive with money they’ll be taking from the BID!
A couple of facts from the 2019 British BID’s survey:
15.9% of BIDs have no collection charge made to them by their Local Authority. So that’s nearly 1 in 5, but we’re not that lucky with SWT Council!
The median figure for those that pay a collection charge is £15.95 per hereditament.
We wonder how hard Taunton BID have tried negotiating with SWT Council over the collection costs, if they have then clearly not that successfully, which is a potential omen for the future with all the other “working with” concessions they seem to want to achieve from SWT Council in the Business Plan.
We hope this analysis helps your decision one way or the other!
Here are more of our business plan response articles for you to read.
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