Negotiating a lease in an optimal location at a fair rate can be a big factor in the success of your new store.
As a new store owner, it’s easy to overlook some of the key factors in negotiating your lease. Leasing agents will do everything possible to get you to sign, but won’t necessarily be forthcoming with the many possibilities and perks that can be negotiated. It’s up to you to get the best deal you can, and not sign until you do. Here are three factors that will help you negotiate a better lease for your new store:
1. Make sure cost per square foot is consistent with projected sales
It’s tempting to focus solely on the monthly rent and shoot for the cheapest price you can find for a space big enough to suit your new store’s needs. But if the rent seems too good to be true, investigate the reasons for the low price.
It’s most likely that the location is not optimal, the foot traffic is low and it may be hard for potentially poor sales to ultimately justify the lower rent. Alternately, if the rent seems extraordinarily high, it may be worth it to find out why. It may possibly be that the location is good enough to bring in sales numbers that justify the price per square foot. Is the location good, but not quite good enough to warrant the price?
If that’s the case, you have room to negotiate a lower price, so you can still secure a better location for your new store.
2. Set up your rent payments by sales cycle
No matter your product, your new store’s sales will fluctuate based on the time of year. If you’re selling sunglasses, you will see your highest sales numbers during the summer months. If you’re opening a gift-oriented store, fourth quarter will be when you have your best numbers. When negotiating your lease, look at what your total payments will be for one calendar year and alter the payments to fit your potential sales cycle.
For cash flow reasons, it’s advantageous for you to make larger payments during high sales months and lower payments when sales are more likely to be down. You can get these terms incorporated into your lease so you don’t struggle to make larger payments when you’re not in your optimal sales period.
3. Take advantage of all the potential perks available to you
Talk to your leasing agent about all possible perks that can be thrown in at no additional cost. Who doesn’t need some extra storage space? Ask for a small, unused space where you can store your excess inventory. Does the venue have any upcoming promotions? Ask that they can add in a blurb about your exciting new store opening in their center.
Is there a digital sign at the main entrance that advertises stores and specials? Supply them with copy about your new store and any relevant sales or special discounts that you offer. These types of things can frequently be negotiated at no additional charge, but you have to ask for them. Any free marketing you can get, take it. Take any available avenue to make sure people know that your new store is coming, what you offer, and when you’re opening.
Lease negotiations can be very complicated and frustrating. In order to get the best possible deal, you’ll obviously need to be prepared to ask the right questions. If you can’t get what you need or feel is fair, be prepared to walk away. You’ll find plenty of location options that will be more open to negotiation and get your new store into a space on terms that work best for your business.