Changing for the better, with four lessons
in leasing
Conway Daily Sun, July 25, 2012
By Michael Kline
I’ve missed you! I hope you noticed my column has been missing since early April, when I took a break to focus on other business projects. It seems that having a good business idea isn’t enough. Getting a store it up and running and even profitable for years still isn’t enough to guarantee it will still be profitable next year. The world changes constantly and quickly, so a good idea last year may need some tweaking this year, or could even be a loser idea completely this year. We spent the spring inventing and reinventing ourselves.
After a half dozen successful small businesses of our own and helping dozens of franchisees build successful businesses, I occasionally slip into this zone where I feel like I know a few things. In my experience, there’s no point in getting comfortable with what you think you know because the world is going to insist you keep changing, growing and adapting, or die. It’s a humbling realization.
In April we moved Soyfire Candle, followed in May with the opening of The Funky Bubble Bath and Body and in June, I launched a busy new seminar schedule. Three major undertakings, each with its own share of lessons, I hope to share with you as my column gets back into full swing.
Let’s start with some lessons on commercial leases. The features that make a location appealing to you are subject to change. What will you do, if those features go away and you still have years on your lease? This needs to be asked, answered and included in your lease negotiations up front. When the landlord says “don’t worry, I would never screw you”, fine - define what that means and put it in the lease – no exceptions. In the event the landlord is sincere, they still may sell the property, die, or turn it over to other management and you will besubject to the lease exactly as it is written. Having had two mall locations, each sell three times on me, I’d rather have a good lease with a jerk, than a bad lease with a nice guy. The lease governs the relationship, not the person. At Soyfire Candle, three mall owners ago, we put a clause in our lease allowing us to leave if the anchor store left the mall. The store did leave, and we decided to stay, because there was no better location available at the time.
This spring, when the T-Shirt store downtown left, we jumped at the chance to get that super-prime space.
Yes, the rent would be double, but (highlight and underline this as lesson #2) high rent is the best investment a retailer can make. Assuming it’s fair market value and your retail product benefits from traffic, shut up and pay
the price and be thankful for the opportunity. In our case, we also had to negotiate
our way out of our old lease. Lease lesson 3 – if the cost of moving, including getting out of your
lease is less than starting a new business, and it makes your business new again, compared to dying, you probably would be wise to pay it. We paid it. Did I mention the lesson about saving for a rainy day?
Having cash to pay for these unexpected opportunities makes a huge difference. For our first three months, sales are up 100% over last year, and if we stayed where we were, we would have been hoping to break even this year
compared to past years when we made a decent living at that location.
Lease lesson #4 – there is no such thing as a “standard”lease. That’s a phrase landlords like to use to comfort you into signing it. It may be standard to them, but it may or may not be good for you. After being through this process
dozens of times, I still found new lease features I never heard of before. I also was reminded that legal and financial aspects of the lease are not all that need to be considered. There are “what-if” scenarios that lawyers and
accountants don’t ask. You might consider asking a business coach, mentor or entreprenologist for advice and opinions before taking the plunge.
In the process of developing new supplier relationships, hiring several new employees, and launching a new concept, I learned or was reminded of valuable lessons I can’t wait to tell you about. But that’s a conversation for another day.
For now, if you’re experiencing good times, congratulations. Ask yourself how you’re going to replace that good fortune when it changes. If you’re having hard times, ask how to reinvent your business to be new again, or even if it
still makes sense. Change is good for us and we have to do it anyway, so we may as well get good at it. Good luck. Let me know how I can help.
Michael Kline is a local retailer, success coach and trainer. He may be reached through his website, www.klineseminars.com, or e-mail, mike@klineseminars.com.
in leasing
Conway Daily Sun, July 25, 2012
By Michael Kline
I’ve missed you! I hope you noticed my column has been missing since early April, when I took a break to focus on other business projects. It seems that having a good business idea isn’t enough. Getting a store it up and running and even profitable for years still isn’t enough to guarantee it will still be profitable next year. The world changes constantly and quickly, so a good idea last year may need some tweaking this year, or could even be a loser idea completely this year. We spent the spring inventing and reinventing ourselves.
After a half dozen successful small businesses of our own and helping dozens of franchisees build successful businesses, I occasionally slip into this zone where I feel like I know a few things. In my experience, there’s no point in getting comfortable with what you think you know because the world is going to insist you keep changing, growing and adapting, or die. It’s a humbling realization.
In April we moved Soyfire Candle, followed in May with the opening of The Funky Bubble Bath and Body and in June, I launched a busy new seminar schedule. Three major undertakings, each with its own share of lessons, I hope to share with you as my column gets back into full swing.
Let’s start with some lessons on commercial leases. The features that make a location appealing to you are subject to change. What will you do, if those features go away and you still have years on your lease? This needs to be asked, answered and included in your lease negotiations up front. When the landlord says “don’t worry, I would never screw you”, fine - define what that means and put it in the lease – no exceptions. In the event the landlord is sincere, they still may sell the property, die, or turn it over to other management and you will besubject to the lease exactly as it is written. Having had two mall locations, each sell three times on me, I’d rather have a good lease with a jerk, than a bad lease with a nice guy. The lease governs the relationship, not the person. At Soyfire Candle, three mall owners ago, we put a clause in our lease allowing us to leave if the anchor store left the mall. The store did leave, and we decided to stay, because there was no better location available at the time.
This spring, when the T-Shirt store downtown left, we jumped at the chance to get that super-prime space.
Yes, the rent would be double, but (highlight and underline this as lesson #2) high rent is the best investment a retailer can make. Assuming it’s fair market value and your retail product benefits from traffic, shut up and pay
the price and be thankful for the opportunity. In our case, we also had to negotiate
our way out of our old lease. Lease lesson 3 – if the cost of moving, including getting out of your
lease is less than starting a new business, and it makes your business new again, compared to dying, you probably would be wise to pay it. We paid it. Did I mention the lesson about saving for a rainy day?
Having cash to pay for these unexpected opportunities makes a huge difference. For our first three months, sales are up 100% over last year, and if we stayed where we were, we would have been hoping to break even this year
compared to past years when we made a decent living at that location.
Lease lesson #4 – there is no such thing as a “standard”lease. That’s a phrase landlords like to use to comfort you into signing it. It may be standard to them, but it may or may not be good for you. After being through this process
dozens of times, I still found new lease features I never heard of before. I also was reminded that legal and financial aspects of the lease are not all that need to be considered. There are “what-if” scenarios that lawyers and
accountants don’t ask. You might consider asking a business coach, mentor or entreprenologist for advice and opinions before taking the plunge.
In the process of developing new supplier relationships, hiring several new employees, and launching a new concept, I learned or was reminded of valuable lessons I can’t wait to tell you about. But that’s a conversation for another day.
For now, if you’re experiencing good times, congratulations. Ask yourself how you’re going to replace that good fortune when it changes. If you’re having hard times, ask how to reinvent your business to be new again, or even if it
still makes sense. Change is good for us and we have to do it anyway, so we may as well get good at it. Good luck. Let me know how I can help.
Michael Kline is a local retailer, success coach and trainer. He may be reached through his website, www.klineseminars.com, or e-mail, mike@klineseminars.com.
RSS Feed