Location, Location, Location: Small Business Real Estate
Small Business Real Estate
It pays to be pretty picky when it comes to Small Business Real Estate. Take it from someone who knows. I’ve built websites for property management, promoted drone videos and even taught seminars on online presence for real estate agents. Now I hope to impart some of that expertise on you.
We’re going to be discussing 2 types of Small Business Real Estate: Virtual and Physical. Virtual refers to your website and web presence. Physical refers to the actual location of your business and store.
Virtual Real Estate
Is your website an asset or a liability?
The concept of Virtual Small Business Real Estate arises first since it applies to pretty much all businesses, even those without a physical address. A well designed website can be both informative and a source of new leads. It’s a great way for you to control the perception of your business. An outdated website or no website at all can turn off potential clients. For more information on picking out a theme, see our earlier blog post.
When it comes to setting up your first website, keep it simple. Make sure you are using a website builder that you can understand and update. Choose an understandable domain name. For example, we are www.L4SB.com . It’s easy to understand and it ties into our business. We are not L_4_S_B.com nor are we Law4SB.com. Why? Because those make no sense and would be quite difficult to convey to potential clients. Keep your domain short and to the point. Chances are all the obvious domain names for your business are already taken, so your best bet is to resort to something clever or an acronym. DO NOT use images you do not own! And remember, make sure you are using images you own! Failure to do so can result in copyright infringement lawsuits. The same goes for any YouTube videos you might produce.
Physical Real Estate
Let’s say you want to open a physical store for your Small Business. When it comes to picking out a physical location for your small business, there are three (3) aspects to consider:
- Location– This is the obvious factor, yet it is often overlooked. Does the facility have the right traffic for your potential customers? Is the location easy for your customers to find? Does it have the right compatible businesses in the area? Are there no competitors in the area? If there are competitors, how will you stack up? Is there enough parking? Is there room to grow? Did a qualified professional inspect the premises and give it a thumbs-up?
- Rent – Real Estate Comps are calculated by dividing the monthly rent by the square footage of the premise. When comparing comps, it helps to pull data from all the similar businesses in the area. Is the cost per square foot in line with the market and area? More importantly, can you afford it? Is there a revenue-share component and does it make sense given your business?
- Lease Terms – Is the lease fair? Does it clearly spell out the expectations of the parties? Are you in control of your own destiny or at the whims of the landlord? Speaking of which, does the lease specify repairs? Do you have reasonable recourse in cases of breach? (See our blog article entitled Negotiating a Good Lease, which details some of the lease terms to think about).
Are you paying fair market price on your lease?
Now all three of these components seem fairly obvious when it comes to Small Business Real Estate, but they are all to frequently overlooked. Great lease terms and low rent simply cannot fix a poor location. Likewise, a great location and favorable lease terms won’t make up for very high rent. You need all three (3) of these terms to succeed, no matter how tempting other deals may be.
We wish you and your business the greatest of success and I pray your landlord (and/or property managers) is one of the good ones.
Law 4 Small Business. A little law now can save a lot later.