The space that you choose for your retail business can have a substantial effect on how well you connect with your target buyers. To optimize your sales profits, you want to find a space that is accessible for consumers but doesn’t break the bank when it comes to rent, utilities, and maintenance costs. There are a lot of different options when it comes to retail space. Here are a few examples and some advice on how to find a space that’s well-suited to your business needs.
Leasing vs. Owning
Leasing a space is the most common way for a brick-and-mortar business to open its doors to customers. Commercial leases are quite different from private rental agreements, so you want to fully understand the terms and conditions before signing a commercial lease. If it’s your first time signing a lease, don’t be afraid to contact a reputable commercial real estate broker who can help you navigate lease negotiations and ensure you get the best possible space for the best possible price. Online listing services such as LoopNet allow you to search for commercial properties for lease and for sale in a given area. LoopNet is open to the general public, but there are number of similar listing websites that only certified brokers can access. For this reason, a commercial broker can be an indispensable ally for entrepreneurs, both new and experienced. Leasing a space for your business may be cheaper up front but can have hidden costs. Depending on the stipulations of your contract, your rent may be set to increase on a regular basis. You may also be required to pay property taxes, insurance costs, and a percentage of added rent based on your sales profits. Though you may have some say in what happens to it, the property is still controlled by the landlord. With owning, you may not have to pay base rent, but you are still responsible for utilities, maintenance costs, and taxes.
Size and Location
One of the most important factors in how you choose a retail space is square footage. Before you start your search, you should have a set of parameters for the size of the space you’ll need, and what you can realistically afford. Determine a minimum and maximum square footage, and stick to it. Don’t waste time looking at spaces that are significantly larger or smaller than what you require. The perfect retail space should be in a location that reflects your customer base. To find out what type of location will benefit your business the most, you’ll need to do a bit of research. Look for information or do your own analysis of the amount and type of traffic surrounding a space in which you’re interested. Determine the accessibility of the space, and talk to the building owners and nearby shop owners to find out about any events or upcoming construction projects that could affect that accessibility. Your location in relation to other local shops can also affect business. Though situating your business close to other shops can potentially open up business competition, being located in an area that already draws significant customer traffic is a plus for any business regardless of size or experience. Look for a balance between isolation and direct competition. Ideally, you want your business to offer something new to customers who already frequent a shopping mall or street location.
If your retail business is small or quite specialized, you may be able to sublease a space within an existing shop. Subleases can take place while the primary leaseholders are still conducting business in the space. This type of sublease can take the form of a kiosk inside of a shop, and it can be advantageous for retail businesses that are selling accessory-type items or products related to what the existing store already stocks. Subleases can also occur when the primary leaseholder wishes to expand to a larger space or move to a new location before the lease on the current space has expired. In this case, your business can take over the space, usually for a reduced fee, while the primary leaseholder is still on-contract. Keep in mind that a leaseholder cannot legally sublet a space without the landlord’s consent. Before you sign a sublease contract, make sure you’ve been in contact with the landlord of the space and confirm that the sublease opportunity is legitimate.
Thanks to the popularity of online commerce, operating a retail business out of your home is a viable option in 2017. A home-based business model can be advantageous as it is generally cheaper than leasing a commercial space. As a home businesses operator, you can also potentially deduct a portion of your home rent and utilities at tax time. Home-based businesses also have their disadvantages. Devoting a portion of your home to business purposes doesn’t leave very much room for expansion. If you outgrow the space, you may end up having to look for a commercial space, which could drastically alter the way you conduct business. In addition, operating a business out of your home presents challenges when it comes to balancing work and your personal life. To successfully balance a home business and healthy relationships with family and friends, you need a great deal of personal motivation and discipline. Small retail businesses that deal with handmade, custom products such as jewelry, clothing, and artwork are often a good fit for home-based business models because they don’t require specialized facilities and are often sole-proprietorships or partnerships. If your planned business model includes numerous employees or a larger production volume, a home-based business may not be for you.
Considering Your Capital
The type of space that you choose for your retail business will also vary depending on the stability and age of your business, not to mention your own level of experience. A recent retail startup may find that a shopping mall kiosk or sublet space provides the ideal balance of low cost and easy upkeep. If your business is larger or you’re looking to expand, it’s likely that you’ll be looking into a long-term lease or ownership.