Category: Product Updates

The Partnership Overview

Product Updates14 April 2022

The Partnership Overview

We based BuildPartner on the simple principle that we could use recent technological advances to increase information exchange in the industry, in particular with regard to pricing. Therefore we are building a collaborative product which enables users to quickly and accurately create budgets, compare prices, and track the progress of their projects.

The initial version of the product is live. However, there’s a lot more to do, in particular prioritising and testing new releases, managing the data and planning the roadmap. We think that the same technological advances in information exchange which have made this business possible can be used to improve the process of building the business itself.

It is now possible for a wide range of people to collaborate on projects at a low cost. So we are asking users if they would like to join as partners on the project. This group will become owners of the product in principle and practice. They will provide feedback as a user, direction for the business as a team member and resources as an investor.

Information on the process is below. The hope is that this will enable us to build a better product, more efficiently, together.

In Principle

The current corporate structure:

Currently, businesses are owned by team members and investors. As a result, capital and control then tend to consolidate in those groups. This is associated with certain problems. Growth in capital tends to be accompanied by growth in inequality and volatility, a slowdown in innovation and collaboration and blindness to wider social externalities.

However, now is perhaps the right time for a different approach. Recent technological advances enable information to be distributed almost instantly at a dramatically lower cost. The result is an opportunity for more decentralised yet efficient and equitable companies.

The Partnership Model:

The partnership model makes it possible, even the default, for a wide range of customers, team members and suppliers to become shareholders in the business. This is done by making it easy, even the norm, to invest their spare time, resources and connections at any point in the business.

Benefits:

To the partners:

Passive capital creation resulting in equity growth and long term reward
A more efficient business which will increase revenue streams and lower costs
Governance rights on the key strategic decisions enabling greater control

To the business:

More efficient practices resulting in lower costs and higher revenues
Lower capital requirements resulting in a more stable, efficient company
An increasingly innovative and socially-minded business

To society at large:

More efficient, less volatile, more socially conscious businesses

How it works

The partnership approach involves customers in the development of the business. To that end, we are enabling users to invest their spare time, resources and imagination and repaying them with share capital. Examples of which include:

Product design and feedback (hourly or daily rates)
Sales and marketing introductions (commission)
Governance and management (retainer)

Payment:

Any time spent advising, marketing or governing the business will be valued at a quarterly valuation. These payments, for feedback, commission and advisory time can be invested in the company according to the Partner Scheme terms.

Governance:

As a shareholder you will have rights to business information. However, on top of your codified rights we emphasise the spirit of total transparency and equality. As a shareholder, you will be able to take up the right to information and vote at any point.

Reporting and tracking:

Business reporting will be consistent and transparent. Every quarter, metrics will be sent out, results analysed and valuation tracked.

An example

Monthly advisory payments paid at a per hour rate - £100
Commission on an introduction of 10% first year revenue - £2,600

Over 12 months: Net equity - £3,800

Company valuations

The last investment round closed at a valuation of £3.2m in April. Partners can invest at any time at the previous valuation or quarterly benchmark.

Tax relief

Tax relief is available to personal investors. Therefore we recommend that investments are made personally rather than by companies or partnerships due to the tax relief available:

EIS relief offsets 30% of your investment against tax. So £5,000 of invested time would result in a rebate of £1,500. And up to 45% again if there is no return on your investment. So a maximum of £1,925 is at risk.

There is also no capital gains tax on any profit if the shares have been held for three years.

Possible scenarios

With early-stage investments the range of possible outcomes is wide. So investments should only be made out of free time, margin or cash, ideally subject to tax.

Here are some examples, ranging across, zero, poor, medium, good, and excellent outcomes based on a £5,000 equity stake at a £1.4m valuation:

The level of uncertainty is high but you can help bring it down. That is the point of the scheme. If they work, early-stage tech investments tend to return large multiples. If they don’t, don't expect much back. But tax relief ensures you only lose 25%.

FAQs

In the case that I take the shares, would they be in my name specifically? Do you issue some monthly statements to this effect?

Yes, ideally shares are in your name as that has tax advantages, however companies can own shares as well, the amounts are totalled and valued quarterly.

How do the shares that accrue from advice work with tax? Do I need to 'invoice' you for my time and then you 'pay' via shares such that I can demonstrate to HMRC that I have income which went towards an EIS investment?

Yes, for example we would pay you £100 which you reinvest in the company.

When would be the starting point for my advice accrual? Would we go all the way back to the beginning?

Yes, all time to date is included.

Would you see the time spent on introducing architects as captured by commission or amalgamated into this new advice-for-equity arrangement

Sales time doesn't count as it's commission-based but you can invest the commission at the market value. If the intensity of the sales work increases we can do what's called a 'drawdown' which is paid upfront in advance of the commission.

How do I track how much time has been done

We track the time for you and provide a portal for you to check the progress.

How is the company valued?

Either by external investors or in the interim periods by a valuation committee.

How can I sell my shares?

The natural point is a buyout, but to avoid reliance on that we will cultivate secondary markets to match buyers and sellers.

Do I have any ongoing responsibilities as a shareholder?

Other than filing your tax return when the investment is made, no, there are no other responsibilities. You will have opportunities to vote, and buy or sell shares, which you can take up as you please.

Any questions are more than welcome, we're extremely grateful for your support and very excited about the coming years.

All the very best,

Hugo and The BuildPartner Team

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Product Updates Blog

Case Study, Collective Works – “We became better architects” and “increased revenue 5%” by using BuildPartner

Post author By codecrew02
Post date March 25, 2022
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Product Updates25 March 2022

Case Study, Collective Works – “We became better architects” and “increased revenue 5%” by using BuildPartner

Location: London, England

Project: Commercial Architecture and Design

Collective Works is an architectural firm based in London. They received a brief to renovate Summit House, a commercial office space, with the aim of increasing its desirability and rental income. The Collective Works team used BuildPartner as their ‘digital quantity surveyor’ to generate benchmark costs, create a detailed schedule, and collect comparable quotes. Here is an overview of how BuildPartner impacted the Summit House project, and their overall business, the headlines are:

● Created an additional revenue stream and increased practice income by about 5%
● Saved up to 8 hours per schedule created
● Enabled more freedom to pursue architectural creativity and deepen client relationships

When Khuzema Hussain, partner at Collective Works, and his team began using BuildPartner in2018, he expected it would save his firm a lot of time when it came to putting schedules together. But he was surprised to find that using the platform came with a host of unanticipated benefits as well. “The best way to illustrate BuildPartner’s impact on our business is by looking at our Summit
House project. It neatly reflects the various ways in which Collective Works has benefitted from BuildPartner: having cost information upfront, creating schedules faster, more creative freedom, and the ability to deepen relationships with clients,” Khuzema says.

1) Quick, Accurate Cost Planning

“With BuildPartner we can tell clients exactly how much ‘the best idea’ will cost, and it works. BuildPartner helps us sell these ideas to our clients.”

During the initial design phase, the discussion focused, in particular, on how to address the ceiling space. So the Collective Works team generated three ideas at three different price points:

● Option A, the high price: remove a suspended ceiling over the floorplan and take advantage of the vaulted structure of the roof
● Option B, the medium price: retain a flat ceiling
● Option C, the cost-saving option: leave the existing ceiling as is

It was obvious that Option A would be the most beautiful option. But, without concrete numbers, the client would have struggled to decide if a more expensive ceiling was worth the investment. So, using BuildPartner, the Collective Works team quickly generated precise estimates for each option so the client could compare them.

After that, the decision was simple. The client felt that it made sense to invest in the ceiling since their overall goal was to make the space more appealing to their prospective occupants. With the exact prices in hand, the client enthusiastically chose Option A.
Khuzema believes that being able to provide his clients with this kind of confidence, especially so early on in the project, enables him to be a better architect. “I can give them exactly what every client wants,” he says, “and that’s an understanding of how much their project will cost before it even begins.”

2) Quick, Accurate Scheduling

“The benefit isn’t just in how much time is saved, the quality of the schedules has also improved greatly.”

Putting a schedule together has always been a heavy lift for architects and designers. It’s a labour-intensive task that takes days to put together and, even with the best efforts, the accuracy of these documents is still variable.

This is exactly how Creative Works described their experience prior to working with BuildPartner’s scheduling platform. “It was just onerous,” says Khuzema. “It was this big, long list that took days to put together and then did nothing for us once the project was completed.”

BuildPartner provides users with a database of templates and tasks which users can select from. So Collective Works estimated that they saved at least 4-8 hours in creating the schedule for the Summit House project. This amount of time-saving has become standard for their team when they use BuildPartner. But the benefit is not just in how much time is saved, Khuzema says the quality of their schedules has also improved greatly.

Collective Works quickly realized that their ability to provide these precise estimates, and thus provide this deep confidence, was, in fact, a new line of service that they could also charge clients for. “Architects don’t usually have the confidence to produce an itemized cost plan but it's now possible with BuildPartner,” says Khuzema. “So you can now charge clients for part of the time spent on building that schedule.”

3) Increasing Client Confidence and Revenue

“If you credit BuildPartner for its ability to help us land work, it has a pretty substantial impact.”

Zooming out from the Summit House project and looking at Collective Works’ business more broadly, Khuzema says BuildPartner allowed his firm to increase its revenue by about 5%. This revenue increase happened in two ways. First, they were able to create an additional service, cost management, which now generates an additional stream of revenue. Second, they were able to dream big and design more creatively because they could put exact numbers to their unique ideas. In turn, bigger clients were more willing to choose Collective Works as their architecture firm.

With BuildPartner as part of their toolkit, Collective Works now has the accurate data they need to help sell their most creative ideas. “No one is after best quality at no cost,” Khuzema says,

4) Deepening Client Relationships

“When you look at it from the big picture, BuildPartner is not just saving us time, it’s also allowing us to do our core job better and more easily, while generating income. Now that’s a powerful tool.”

When it comes to spending money, nobody likes surprises. And yet, many homeowners are forced to start build projects knowing they have little control over how much it will ultimately cost. When architects use BuildPartner to generate precise project estimates, their clients feel confident and in control of their projects. This, in turn, allows for deeper, and better, client relationships.

Collective Works now uses BuildPartner on all of its projects. “This was a logical and important transition.” The firm’s mission is to design for the future in a beautiful and responsible way. This means working more sustainably, supporting diversity in the industry, and working collaboratively with new partners to positively impact their communities. BuildPartner has provided a stepping stone for the Collective Works team, which now has more time and more revenue, to continue to work towards their mission.

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The Partnership Overview