When it comes to finding a home for your new (or even expanding) business, there is a great deal of truth in the adage of “location, location, location”. The commercial space chosen by a tenant can, in fact, be a deciding factor in the success or failure of the business.
Considering the importance of this issue, we have devoted an entire chapter to finding a space that is right for your business in our new book, Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Consider the following additional factors before signing a lease.
Will the physical space work for your business?
Location within the Location: Where is the commercial unit situated within the property? Would you be leasing inside a plaza/mall or on the pad outside? Would you be located at the end of an abandoned corridor or beside the busy food court?
Accessibility: How easily can your customers access your new business? Are there stairs leading to your front door? If so, elderly customers may have difficulty. Can drivers easily turn into your business’ parking lot or do they have to cross in front of oncoming traffic? Which side of the street will you be located on (e.g. customers may be more likely to pick up groceries/dry cleaning/pet food on their way home from work rather than when they are going to the office)? If there is an elevator in the property, when was it last inspected and/or serviced? Will that elevator be available for use or locked down during your own business hours?
Parking: We have seen parking to be a highly contentious issue and one of the hardest things to correct after the lease has been signed. Typically, there are only so many parking spaces assigned and, once they are taken, they are gone. Negotiate for plenty of parking spots – for your customers, your staff, and you. Parking spaces closer to your business door would be preferable.
Will customers be able to find you?
Visibility: Can your business be seen from the street by both drive-by and walk-by traffic? Or, are there trees or other buildings blocking the view?
Signage: What signage is available to you? What type of signage is it? Where is it located? Can you place signage on the side or the rear of the building? Would your business name be placed on a common pylon sign shared by other tenants, and where is it located? Would you be charged for any additional signage requested? Negotiate now for “grand opening” signage (e.g. banners and/or pull-away signs).
Will surrounding tenants help or hinder your business?
Neighbouring Tenants: Ascertain who is doing business directly next door to you. Will this tenant be conducive or detrimental to your business? Personally meet and quiz these tenants. Be friendly and polite and introduce yourself as a prospective new tenant. When representing new tenants, we frequently ask pointed questions – what you learn may very well surprise you!
Anchor Tenants: These are the major businesses/retailers which pull customer traffic to a property. Typically, they are major grocery or department stores; however, this is not always the case. Consider the stability of those anchors. How long have they remained in the property? Are they planning to remain or move?
Competition: Before you commit to leasing a location, scout the neighbourhood to see if you have any nearby competitors. Become acutely aware of your competitor’s services, products, and pricing – one easy and effective way to do this is by means of a secret shopper. Ask your secret shopper to visit your competitor(s) and report back on their experience. As a bonus, ask your secret shopper to quiz your competitors about your business (if you are already open) or find out if they are making disparaging remarks about your business to their customers. Do not just evaluate your current competition, but also consider future competitors who may move in to the area. Franchisors, for example, may be exploring opportunities and may have a competing franchisee move in just down the street from you. You can contact franchisors directly to see if they are planning to come to your city or town.
Of course, this is not an exhaustive list of all the factors you should consider when signing a lease, but it will help you during your search for the perfect space. Visit our website at The Lease Coach for more information.
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If you are looking for one-on-one support for your startup, give the Business Link Business Advisors a call at 1-800-272-9675 or email email@example.com.