Settling Into Your New Retail Space

The big day has finally arrived. You have moved into your retail space. It’s everything you ever dreamed of… or is it? Suddenly the glitz and fun of opening your own retail store can become very overwhelming due to the seemingly endless list of “to do’s”. Just when you think you have checked everything off comes another “something” that must be done. To help smooth the often challenging task of deciding what to do next, there are 5 D’s to consider:

1. Distinguish immediate deadlines that must be met to ensure a functioning retail space. This includes getting electricity, internet, cable, gas and so forth all set up as well as tracking when product shipments are schedule to arrive (assuming orders have been placed). If you can, set up online paying so that fixed bills are paid on time and without hassle so that can spend your time focusing on more important retail issues.
2. Define a designated inventory area. Whether this is behind the scenes in a backroom or within storage space of floor displays, make sure you have an organized inventory plan so that you can put things away as you go. Think about how your customers may shop when doing this so that if you need to pull extra sizes or extra inventory you can easily do this while still monitoring your retail space.
3. Decide on where the largest fixtures and displays will be. Your cash wrap is a focal point, so this may be the first thing you should decide on. Consider where you will be when customers aren’t in the store, such as at your computer, and make sure you can see the front door if possible at all times. This is both safe and allows for you to greet your customers with a friendly, prompt hello.
4. Determine what your merchandising strategy will be. Make sure to focus on product and price points when planning this, allowing for featured items to be easily seen by customers while also considering what products will be first viewed by potential consumers. Depending on your store, price points will matter (particularly in this economy) so balancing the front of your store with a variety of price points may attract more customers.
5. Decorate as you go with both style and purpose. Need a dressing room? Make it roomy yet cozy while adding some extra touches to help bring style to this necessary space. Want to offer a lounge area for guests of customers to relax? Great idea, just make sure it’s not out of place with your overall store layout. Need some mirrors? Must retail stores do, so think about where they will make sense for your customers to use them.

This is an exciting time and what you do now will help shape the overall foundation of your retail success. Remember to be flexible with your plans and accept changes as you go. Your customers will help make your store what it will become, so embrace this! And of course, enjoy!

Written by Nicole Leinbach Reyhle, this article was first published on www.Nolcha.com.

 

Ways To Cut Monthly Retail Business Costs

If you ask a small retailer what’s one of the most difficult operational tasks needed to be dealt with, staying on budget with monthly expenses will likely be a top contender, especially in these challenging economic times. And chances are your retail business faces the same obstacle every month. 

[tweetmeme]It seems every time you turn around, there is another expense, a delay in payment, or some other circumstance that has a negative effect on your cash flow. So instead of putting a little something away for an even rainier day, you find yourself sweating it out until it’s time to flip to the next page of the monthly calendar for a fresh influx of cash.

 If you want to make the money and the month line up better, you may need to rethink some of your business assumptions – including what constitutes a must-have expense. Following are a few ideas that can help improve your overall cash flow.

Get Rid of Your Landline - According to CTIA -The Wireless Association, 23 percent of US households are wireless, meaning they no longer have a traditional landline phone. One of the driving forces behind this epidemic is the desire to cut costs, especially in today’s down economy. Now you might think what works for households won’t work for your retail business. But believe it or not, there are simple technologies available today like virtual phone services for small business that will help your shop run more efficiently than it would through the use of a landline. With a virtual phone service, you receive your choice of a toll-free or local phone number that goes to a phone you already have. It allows you to assign extensions to all your employees, whether they are full or part-time. And if you have more than one store, you can have all of your locations linked to the same phone number and callers can easily dial an extension to reach the location they frequent. This makes getting a hold of the stores easy for your customers. They don’t have to memorize several different phone numbers if they wish to call another location to check on an item that might be out of stock at the shop they frequent. In addition to the one-number convenience, virtual phone services come equipped with robust features such as smart call forwarding, enhanced voicemail, call screening and more. Virtual phone services for small business provide all those big-retail business capabilities while costing as little as $10 per month. Compare that to just the base cost of a landline for your retail business and the savings are worth noting. But add in the cost to maintain the lines, taxes and the cost to purchase and maintain telephone equipment and the savings add up quickly.

Take your shop virtual – Leasing retail space is usually one of the highest fixed costs a small retailer has. While it’s nice to have a store front where everyone can gather and work more collegially, if most of your business comes through via online shoppers and phone orders from catalogs as opposed to foot traffic, taking your landlord off the payroll is a good way to cut monthly operating costs. Of course, sometimes you do need a formal office setting – particularly if you need a place to meet with vendors and business partners. Fortunately, you can look into renting a common conference room area from a local business. Even then, a virtual office strategy helps you keep that expense to a minimum, freeing up more cash for other aspects of the business that have more impact on your success. A virtual phone service can help also help your small retail business if you decide to reduce costs by going virtual because it is not location-dependent. In other words, phone extensions can be assigned to anyone anywhere on any phone, so a customer calling the single business phone number can reach their customer service rep or the department they want whether that employee or department no matter the location.

Eliminate specialty or limited-use business tools- Look around your shop, or through the applications on your computer. How many things do you own that have only one function? Can that function be performed by something else? A fax machine is a good example of a piece of equipment that is only capable of performing one task. All it does is send and receive faxes. Yet there it sits, costing you money for a dedicated phone line, paper, toner, even the power to keep it running and ready to receive an incoming fax. You can eliminate almost all of those additional costs that are making your small retail business go over budget by moving to an Internet fax service that allows you to send and receive faxes on your PC or mobile phone. When it comes down to the software you are using to run your retail business, consider a pay-as-you or Web-based service model. With this model you pay a small monthly fee rather than buying the software up-front at a cost that is certain to make you go over your monthly budget. You then gain access to feature-laden applications that have the sophisticated capabilities normally found only in expensive software packages.

Let’s face it. While operating a small retail business is challenging even in good times, it can be particularly difficult when the economy is taking a beating. But with a little creativity and some unconventional thinking, you can help ensure the month runs out before the money does.

Kevin Baker is the Product Marketing Manager for my1voice (www.my1voice.com) the cost-effective, feature-rich virtual phone service for small business. my1voice is a part of a suite of services from Protus, provider of the highest quality Software-as-a-Service (SaaS) communication tools for small-to-medium businesses (SMB) and enterprise organizations, including the award-winning MyFax, the fastest growing Internet fax service and Campaigner, an email marketing solution with advanced automation features. Kevin can be reached at kbaker@protus.com.

 

What You Need To Know About Leasing A Store

So you own your own retail business, excellent!  Aside from the “4 P’s” of marketing, there is another acronym that is ultra important to the success of any retailer, “The 3 L’s”…..Location, Location, Location!  Let’s take a look at some critical pieces of information you will need to know in order to be successful at taking your retail business from your garage to Main Street, USA. 

Important First Steps

[tweetmeme]An important step in being able to strategically locate your business in any retail environment, is knowing who your clientele is.  Once you have identified that, then you are ready to begin your search for leasing retail space. 

So now that you know what demographic you intend to market towards, what are some of the keys to successfully leasing your first retail space?  Use of a professional Broker could be very helpful since more than likely, that Broker knows the Landlord and/or the Broker who is representing the Landlord on a piece of property that you may be interested in.  Your Broker also acts as the “buffer” between you and the Landlord during the negotiating period, which he or she can implement “tricks of the trade” to ultimately get you the best possible deal.

The “In’s and Out’s” of Leasing Your Store

Let’s look at the “in’s and out’s” of how to successfully lease your first retail store:

The first thing that you should do is get in your car and drive an area looking for vacant spaces in shopping centers.  When you drive your target area, look for the following:

 -          “For Lease” signs in windows or board signs in the grass area.  That’s your starting point for getting all the necessary information that is available.

-          Look at the co-tenants in the shopping center.  Are they complimentary uses to yours? 

 Once you have identified a site, or multiple sites of interest, you should then call the Landlord or Listing Broker to obtain all information like asking price per square foot, size of the available store, and set up a showing so that you can view the interior of the space.  Keep in mind a few things:

 -          Does the frontage (the number of feet of window space you have open to the street) provide enough visibility to the road?  Is there enough depth to the space?

-          Is the bathroom strategically located in a spot that will not take up valuable floor or storage space?

-          Is the ceiling in good shape?

-          What is the age of the heating and air conditioning unit?

-          What are the 1-3-5 mile radius demographics?

-          What are the traffic counts at the intersection of the roads at the property?

-          What is the access in and out of the property from the streets?

-          Is there pylon signage available to you?

-          Is there plenty of parking available to you?

Let The Negotiating Begin

So you have now viewed each space and selected the one location you want, what’s next on the agenda?  Traditionally speaking, you will begin negotiations via a Letter of Intent (“LOI”).  An LOI is a non-binding, which means that you are not legally obligated to rent the space even if you sign the LOI, agreement that depicts the terms of the deal.  It essentially lists who the Tenant is, who the Landlord is, the premises you will be renting, the term of the lease in years, any options to renew your lease, the base rent you will be paying, the expenses of the shopping center, any free rent you will get in order to build out your store, the security deposit, and Lease Guarantors.  This is your opportunity to negotiate!  Keep in mind that most of these points are negotiable, such as the asking base rent, the security deposit, and base rent abatement rent period.

Once you have had all the back and forth’s with the Landlord or the Landlord’s representative, a Lease will be drafted based on the terms and conditions you negotiated in this LOI.  Landlords will require you as the Tenant, to provide them with a Personal Financial Statement so that they can assess the viability of you as a Guarantor of the lease as well as the viability of you being able to pay the rent.  Additionally, the Landlord or its Agent will run a credit check on you.  If you are married, your spouse may be required to sign the Guarantee as well since assets are typically joint when married.

What does a Personal Guarantee mean?  Essentially it is a promise from the Tenant to the Landlord that IF you default on the Lease, close the business, but still have term left on your lease, that you will continue the payment of rent to the Landlord until the space is either subleased or leased to a brand new Tenant.  In the event of a default on the Lease, such as non-payment of rent, the Landlord has the ability to gain a legal judgment against you for any outstanding rent owed.  This is a very critical topic, so discussion with an attorney on this matter once you get the lease to ensure awareness of what you are signing is important.

Moving forward, you now have a lease draft in your possession, what do you do with it?  Unlike the LOI, a lease is a binding agreement.  Once you sign this lease, you are bound to it for the terms and conditions you agree to.  Therefore, the use of an attorney to negotiate the legal aspect of the lease would be a wise investment, but don’t use bad form and have your attorney try to renegotiate business terms, Landlords don’t like nor appreciate that.  Typically speaking, commercial leases are more favored towards the Landlord and protect them, which is why the expertise of an attorney is needed in order to make the lease fair between the parties. 

Types Of Leases

So what types of leases are there?  There are gross leases, modified gross leases, and triple net leases.  Most commonly used are the triple net leases.  A triple net lease means that you, the Tenant, are responsible for basically everything.  You will have two rents that will make up into one.  You will have your base rent, which is more commonly known as fixed minimum rent, and then additional rent of the expenses of the shopping center: real estate taxes, common area maintenance, and shopping center insurances.  You will also be responsible for maintenance, repair, and replacement of your heating and air conditioning units.

Typically speaking, your base rent will increase by 3% annually, unless you negotiate an alternative with the Landlord.  However, the unknown is what the expenses will do each year.  It is rare that expenses decrease from one year to another, but not impossible to occur. 

As part of your LOI negotiations, a Landlord may offer you 30 days of free base rent.  As a start up business, a Landlord will more than likely have you take Possession of the Premises in an “As Is” condition.  You will have to do any demolition of the space as well as the build out.  Now, general building code issues that are not related to the type of business you will be opening, should be handled and corrected (if need be) by the Landlord.  You will still be required to pay the expenses of the shopping center during that base rent abatement period, however. 

So there you have it!  A general glance at what to look for and expect when you make that leap from your business out of your garage to Main Street! 

Copyright © Jason Lenhoff: Jason Lenhoff has been a commercial real estate broker for Horizon Realty Services, Inc. since 2000.  Horizon Realty Services is a full service commercial real estate company specializing in retail shopping center leasing/sales, tenant representation, construction, development, and shopping center management.  Specifically, Jason Lenhoff specializes in leasing shopping center space as well as tenant representation.  For more information on Horizon Realty Services, Inc. please visit our website at www.horizonrealtyservices.com or email Jason Lenhoff at jlenhoff@horizonrealtyservices.com.

Negotiating Leases for Commerical Space

Do you sign a lease or don’t you? Do you renew yours or shut your doors? With so many vacant commerical properties available and more and more business owners suffering from the recession, retailers are struggling with what to do regarding their rental business space.

As small business owners, it is imperative to have a retail space that will allow for customers to get to you easily and ideally allow for walk in traffic, as well. But paying for a premium retail location can be pricey. There are less customers but your rent is still the same. As a result, retailers are wondering – do they sign another contract when their current one expires or move out?

To Renew or Not To Renew – That Is The Question

Landlords get it. They may not like it, but they get. They know that business is tough, consumers are spending less and as a result, small business owners are making less, as well. If you are good tenant with a positive history of paying your rent on time, respecting your space and offer a great store within the space, chances are your landlord would be open to a discussion of renewing your lease on a less expensive scale. If you are comfortable sharing your numbers, let them know what business was and now is so that they can see the difference. Or at least give them percentages to review. Another thought? Consider a month to month contract with the option of three months till you need to be out if they should find a new tenant or you should need to shut your doors. While this scenario may not be ideal, it’s more ideal than an empty store front that has no tenants and no business for your local community. At the very least, have a conversation with your landlord if your lease is about to expire regarding what you can do to stay afloat.

Signing A Lease In A Recession

So you want to start a new business in the mist of struggling businesses everywhere? Good for you! I love that go-get-them attitude! Of course, I am sure you will be pinching pennies where you can, so make sure that getting a great rental space is among those places. Landlords know too well that empty store fronts don’t make money for anyone. A year of nothing in a space is a lot less money than a year of 20% less than what they are asking per month. Consider the location, the local market and your options. Talk with potential landlords about shorter leases (afterall, no one knows what the success will be of their businesses) and cheaper rent. It’s worth the conversation. Make that conversations – talk to a few landlords and consider a few options before closing the deal to ensure you are getting the best available space and rent out there.

Finally – you need to pay your rent, your business expeneses, and hopefully yourself, as well. Don’t let bully landlords get in the way of this. There are smart, willing to work with you landlords out there that “get it” and want to see you succeed. Like it or not, the recession has opened the door for conversations we may not be use to, but unfortunately the recession won’t be over tomorrow so it’s time to start getting use to these new conversations.