Calculations for Lessees

 

It’s Time for Cost/Benefit Analysis

Note:  These numbers are for discussion purposes only.  Real numbers will be offered when contracts are because they will more accurately reflect all the demands of lessors.  Also, land location prices will be different for each site which will raise or lower costs. 

Let’s first look at some calculations, and then I’ll give you your own table below to fill in for your comparisons.  More exhaustive information follows, some duplicated to conveniently show you the value, but after doing your own Net Benefit calculations shortly, you’ll be able to make your own mind up quickly, but so will your competition.  

Lessees are signed up nationally in part on a first-come, first-serve basis in their NAICS (North American Industry Classification System) category.  Preferences, in order, will be given to: 

• Those who are willing to front a portion of their leasing funds to cover the operating expenses of our start-up company (equally split between all lessees willing to do so, and through a third party bank or legal trustee of your choosing), and to
• Those willing to be long-term partners with us (technological demand is insatiable), and to 
• Those willing to be multi-mall site partners with us (the proven dominating competitive power of the mall in a regional area of your choosing), and to
• The first to sign up (without risk, and you can drop out at any time before the leases are signed).

All potential lessees will be kept secret until they sign their lease.

Lessees get an unconditional, no questions asked, money-back guarantee which covers their first 3 months of leasing their space (but not their build-out costs).  

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Why is a $42,000 / 1,400 sq. feet / year lease worth it to manufacturers?  

Reasons why $42,000 / year lease for 1,400 (or about $30 per square foot, net of CAM) square feet is reasonable to manufacturers:

1.  The cost of outside sales calls.   With the mall, instead, pre-qualified customers come to you. (Here’s the math) 

@ $137 per outside sales call (for B2B the average cost is over $500 per call, google it)

(4 customers inside the mall / per day x 5 days / week x 4 weeks / month =) 80 x $137 per sales call = $10,960 in value per month for a tax-deductible lease payment of $3,500!  Your Net Benefit is $7,460 per month, or $89,520 per year.  But this number is unrealistically conservative from cost of outside sales call ($137 is way too low) and number of customers (we expect on certain days to have hundreds in the mall).  

@ $200 per sales call  

$12,500 Net Benefit / month, or $150,000 per year.

@ $1,000 per sales call 

$76,500 Net Benefit / month, or $918,000 per year.  

2.  Your customers can come to you at their convenience, instead of you going to them, and in the process they can look at the latest patents for sale, new discoveries, and talk with their other vendors.  And we’re not even including the fact that under one roof is now a vast technological training facility available for hundreds of people per day, PER corporate customer, to train their staff, for free, on products from the lessees, AND new patents for sale, etc., etc.  

3.  But we’re not just talking about corporate accounts coming to see you.  We’re introducing two other vast new markets:  Entrepreneurs, and mega-projects.  The market for entrepreneurs alone is huge.  I’m estimating it to be greater than 2x the largest 21 (!) international oil companies put together when the price of oil was $3.80 / gallon.

And one huge, mega-project can pay for your lease for years and years to come.  

4.  The cost of R&D to develop a product.  (the math)  Entrepreneurs are a new target market. 

Assumptions:

If we assume the average cost of an employee working in R&D is $50,000 / year, and that Entrepreneurs represent zero cost to your company while they invent on their own, and that your company’s R&D department introduces 1 new product a year worth $1,000,000, and that what the Entrepreneurs’ Mall^® does is bring in thousands of pre-qualified people every year to look at your products, who are willing to patent their product (cost estimated from $3,500 to $10,000) and that this is a globally unique facility which will be a world-wide destination for companies:

Then we calculate:

1,000 entrepreneurs x $50,000 / yr. = $50,000,000 in potential R&D occurring on your products for which you’re paying nothing for.  Note that these entrepreneurs aren’t just people starting up and running businesses.  They are also the intra-company employees like engineers, scientists, and R&D people who can also be called intrapreneurs because of their creativity.  In short, 1,000 serious entrepreneurs isn’t too hard to arrive at if you consider that we’re also a unique global facility, who’s also going to bring in people who need our unique services from around the world. 

(As far as how many new OEM products will be developed using your product, we don’t know; however, we do know that the Entrepreneurs’ Mall^® shotgun ‘mall’ technique will bring in the maximum regional audience exposure to people who can invent with your product.  We do know that it costs you nothing to have an entrepreneur developing a product using your product as an OEM.  And we also know that the commitment and drive of entrepreneurs can’t be beat in part because they’re not working for a paycheck, but a dream.) 

Next add the value it's worth to get this kind of personal, face-to-face, exposure with the corporate walk-in accounts in your geographic target market.  Plus, large corporate manufacturing accounts who come in, may bring in hundreds of staff for product training, and you’ll get true depth of market penetration.  And don't forget, mall retail market penetration grew from 0% of retail sales in the 1940 to over 50% by 1990.  Personally, I suspect our market penetration for technical products will be higher, faster, and longer lasting than for retail products.      

Next, add the value to your company to participate in huge super-technological projects which are a natural result of putting all the vendors together that a large project requires.  

Also, consider that you’re centrally located in THE local regional TECHNOLOGICAL hub of business.  A place where professional organizational meetings occur.  Announcements of new products are made.  Speakers discuss issues, etc., and the public comes to see newsworthy events (which you can guarantee because of the leading technological edge we’ll have).

Add to this the fact that we will be the local, cutting-edge, technological showcase for all next generation employees to get educated.

Add the benefit you'll get for added exposure when walk-in corporate accounts come in to get a ‘technological tune-up’ from a fellow lessee, and your company's new product(s) are also on display in your front window.  

Plus you get the fastest, hands-on, technical product market penetration into your new geographic market possible today.  This is because your potential customers are coming to you by the thousands, instead of you going to see them one at a time. 

Additionally, just like in retail malls, you'll enhance your company's image.  And because this is the regional technological showcase, your company will be identified as a cutting-edge company, and people will know why.  

Like the malls did for the retail market by growing retail mall market share from 0% in 1940, to over 50% retail market share by 1990, let your company benefit from the convenience your customers get from one-stop shopping.

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Net Benefit Table 

Where You Can Calculate the Value to Your Company of the Entrepreneurs’ Mall^® (patent pending) 

	Your Current Cost (you fill in the blanks)	As a Lessee, your Entrepreneurs’ Mall® Cost	+/- Benefit Estimated
(Bad news first) Square footage cost	$0	Note:  Square footage costs vary by area, etc.. If $36/square foot, (incl. common area maintenance), for a low to mid priced real estate location like Buffalo, NY. 36 x 1,400 sq. ft’ = $50,400 / year
Build-out Cost from gray box condition.  (Inside the mall you’re projecting a very powerful corporate image to your customers.)	$0	Office desk(s), chairs, drywall, lighting, HVAC, etc.   Depends on what you want.  Let’s just use a figure here and you can adjust:  $60,000.
Cost of an interpersonal sales call or reaching new industrial / governmental / institutional customers  $ _________ (I used $137 above for making outside sales calls)		(Lowest cost for interpersonal sales and building relationships.  Because you may meet them by the hundreds on any given day.)
Cost of R&D for creating new products	(Low paid R&D personnel average about $50,000/year each.  How many do you have now?  It’s hard to estimate how many you’ll have in the Entrepreneurs’ Mall® because it depends upon entrepreneurial interest.  You will know once you start up, because they’ll approach you.  Entrepreneurs will also work at their own pace.)	(Lowest creation cost because you see entrepreneurs who work on projects funded by themselves, and you get entrepreneurs by the hundreds, if not thousands.  Estimate how many engineers, scientists, entrepreneurs would be interested in your product, and multiply this value by $50,000)
Value to your company of opening NEW high quality product markets.  (Broaden product line with quality products in the pipeline and Future income from many new products)		PRICELESS
Value to your company of supercharging your company’s new pipeline with blockbuster products (cherry picking from entrepreneurs willing to sell)		PRICELESS
Sales depth.  Opportunities to reach massive swaths (100s?) of an organization’s staff for training and development.		(The Entrepreneurs’ Mall® was built for this, and for perpetual innovation.)   HUGE!
Cost of being the first to purchase important patent for your marketplace.		PRICELESS
Value of regional market penetration via mall, versus stand-alone office.		VAST
Value to your company of being alone in your marketplace addressing the vast, multi-Trillion dollar market of mega-projects.		Priceless (One massive project can pay your lease for years to come.)
Value to your company of gaining access to customers you wouldn’t ordinarily see because they’re coming to see other mall lessees.		BIG
As a corporate, governmental, or institutional shopper, what’s the value of interfacing with your top vendors in one space, at the same time?		HUGE
Net Benefit Calculation Subtract the lease and build out costs from all the positive net benefits to your company below them to determine the value of the Entrepreneurs’ Mall® to your company.

 

 

Calculations for Mega-project Shoppers

If the estimated size of your project is a relatively small $1,000,000,000, and you estimate your cost savings from shopping at the mall based upon the benefits we can provide to you, of only %5, then your estimated savings would be $50,000,000.  With this savings you might use the mall to provide better technological training to your employees, a one-stop shopping experience for your purchansing department making it easier for them to make sure shipments will arrive on time, and your engineers get the benefit of being up-to-date with the latest technologies while having access to as much technical consulting as they would like.  

But actually, it's generally recognized that mega-projects begin at $100,000,000,000, and it's probably much more reasonable to estimate cost savings based upon the length of time it takes to complete the necessary tasks given above, and the actual percentage savings might be much larger than the %5 I've given here; but, each mega-project will be different.  In any case, a five percent savings here would be worth five billion dollars.  

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Calculations Comparing the Potential Value of R&D via Entrepreneurs

Example of small manufacturer apart from the mall, versus a small manufacturer as a mall lessor:

Smaller companies are more prone to going out of business than larger ones.  

Let’s assume your company does $1,000,000 in sales a year, spending 3.5% on R&D, and you decide to spend your entire marketing / Applied Research and Development budget leasing a space in the Entrepreneurs’ Mall^®. 

At 3.5%, you’re spending $35,000 / year on R&D, which means, if you’re lucky, you’re able to employ one person ($50,000 is about an average wage).  Your leased space would be about 1,400 square feet at about $3,000/month, not including CAM (common area maintenance which average about another $300/month). 

If 1,000 entrepreneurs a year see your product and start working on ideas for how to incorporate it, your net benefit is 1,000 x $50,000/year.  In other words, the value of R&D work being done for you is $50,000,000/PER YEAR! 

Example of mid-sized manufacturer alone, versus as a mall lessor:

Calculation for an R&D budget at 3.5% of revenues if a company is worth…

$100,000,000  x   3.5% = $3,500,000 on R&D per year.

On the basis of a cost comparison of salaries versus entrepreneurs, let’s look at how many people are doing R&D for the company.   Assuming the average R&D employee is making $50,000/year, that’s 20 employees per $1,000,000, or 60 employees for $3,000,000, or 70 employees for $3,500,000; Entrepreneurs are FREE.  The value of having 1,000 entrepreneurs working on applied research and development for your product is a staggering 1,000 x $50,000 = $50,000,000 a year AND these are the highest motivated researchers you’ve ever seen.  In other words, the net benefit for leasing a space for $84,000/year is:  $50,000,000 – 84,000 = $49,916,000, until you decide to purchase a product from an entrepreneur.  But even then, you have your choice of any of the entrepreneurs products being offered to you.  Product innovation becomes an over-the-counter commodity instead of an overhead expense, and you get to choose what you want!  Therefore, even if you paid $5,000,000 for a new product's patent, you've still netted $44,916,000 in value AND assuming you did your market research right, you can now market the new product, and bring your company in another $15,000,000 in revenue!  Overhead drops, revenues and profits rise, and market share increases.    

So, going back to our discussion of having 1,000 entrepreneurs working for you, instead of 70 in-house, Voila!  We’ve multiplied your company’s R&D efforts by a factor of 14 (I'm conservative because 1,000 entrepreneurs/70 employees=14.28 times increase), and reduced your operating expenses by $3,500,000, or 3.5%/year.  But by no means am I saying to get rid of R&D, I'm just offering a cost-effective alternative.  In fact, this mall is built to make ALL R&D departments better at coming up with answers!  

Or, from a business opportunity standpoint, suppose your company leases a space from us costing $7,000/month (let’s say it’s approximately 2,500 square feet) x 12 months = $84,000/year.  If you only see 1,000 entrepreneurs a year and buy a patent for a new product that has $1,000,000 in revenues currently, and can further expand its sales through your own marketing network to $3,000,000, the you have enormously profited by being part of the Entrepreneurs’ Mall^®, without even considering the other 999 entrepreneurs or large new projects.  (More likely, there’ll be ten $100,000 products.) 

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Where’s My Company Relative to the Market Leaders on the Curve of The Law of Accelerating Returns?

Do you remember that Peter Drucker said innovation and marketing are the two things every company must do?  

If you want to know how fast your company/market is innovating, pick a year in the past (the further back you pick the more accurate your curve will be), and compare it to this year, by subtracting the number of innovations which have occurred today with what occurred in the past, and plot the points.  

Assuming both of your companies are in the same market, and subtracting any products which aren’t, how does your company stand up to all your competitors on innovation for creating new products, and on the latest, most effective marketing techniques to sell and serve your customers?  

How many new, innovative products do you need, and how large must their market size be, for you to dominate the future product pipeline for your market?

Now, ask yourself how many new products you think entrepreneurs (including scientists, researchers, engineers, intrapreneurs and entrepreneurs) may be able to contribute to your product line.  

Next, let’s look at all your manufacturing processes.  How far away are you from being the most state-of-the-art manufacturer in your marketplace?  Again, count the number of new innovations state-of-the-art technology has, and subtract from the technological features you currently have.  

How much would new manufacturing technology help you?

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Case Studies

 

Please understand that the purpose of going through these case studies is to teach you how to assess your competitive technological situation.  Any input you can provide to make these calculations more accurate, is welcomed, and appreciated, and will be shared with all, with you getting credit.  

1.  Let’s quickly look at the case of Apple Computer who created a new software programming language in 2014.  

Apple decided to create a new programming language, but after they did so, they had the challenge of locating people who would be proficient at it.  At this time a school in New York took up the challenge.  In the end they not only graduated people schooled in technology who could write programs for Apple's new language, they also placed almost every member of their school's graduates.  

2.   Companies Are Searching Hard for Marketing Innovations

According to an article in the Wall Street Journal, 12-17-16 (page 1), Microsoft spent $26 billion dollars purchasing LinkedIn, an established business model serving a coveted market segment, but purchased it because it represented a better alternative than innovating from within the company.  

With the Entrepreneurs’ Mall^®, now there’s a third more cost effective alternative, which minimizes the impact on your R&D overhead and/or the acquisition price you pay, while your competitors keep doing business the old-fashioned way, and it allows you to choose between perhaps many more alternate innovative investments, which cumulatively might be a better strategy.

Imagine your company being able to suddenly, without your competition expecting it, flip the switch on and supercharge your company and its marketplace with innovation.  That’s right, not just innovation at your market segment’s current pace, but 100x or 1,000x more, WITHOUT SIGNIFICANTLY INCREASING OVERHEAD.  

In part, The Entrepreneurs’ Mall^®, Inc was created to do this for you.  Actually how much innovation you’ll get depends upon a number of factors, but the supercharging occurs from a massive customer interaction increase resulting from doing business in a new way — by leasing space in a new B2B mall dedicated to technology and manufacturing companies.  

Regardless of how much, or little, entrepreneurial interaction your company gets, you’ll certainly be accessing 3 new multi-trillion dollar markets, AND more than likely get the chance to pick new product/project market opportunities before your competition sees them.  And even if you only get a little interaction because of the slower innovative pace in your marketplace, just one idea alone can be enough for you to DOMINATE your marketplace.  

Why?  Because this mall was created to service and support entrepreneurs, who include researchers, scientists, and engineers.  We put as much hands-on technological products as possible, along with product experts, in one spot.  This enhances technological training and development, and new markets arise including mega-projects and perhaps smaller but more complex, supertechnologies.  

So, back to the $26 Billion spent by Microsoft: What was the alternative?  Before our business model was introduced, none.  Now, The Entrepreneurs’ Mall^®, offers an alternative. What if companies had hundreds of new ideas to choose from, instead of one, big priced objective to pursue?  

• First, innovative investment costs are lower the closer we are to inception when the entrepreneur walks in.  
• Second, with this shotgun approach, it may be wiser to simultaneously choose many lower cost projects, than one large one.  
• Third, a Niagara Falls of ideas constantly coming through the mall only allows more choices to explore in the future.  

The real question here is how does your company plan on perpetually innovating?  Current innovations only last for a limited time, but the type of perpetual innovation The Entrepreneurs’ Mall^® offers, never stops.  

As time goes by, I'll add other examples if I feel they'll help you understand what The Entrepreneurs' Mall^®, Inc. can and will do for your company.  This is a committment to excellence, but it starts with being excellent to other human beings.  We must always remember to be very responsible with our use of technology, and the care we take of our species, and our shared planet.