Entrepreneurs always underestimate the role that real estate plays in the success or failure of their small business. I've learned a lot over the years as a real estate entrepreneur that applies to any business owner. Here are my tips for entrepreneurs looking to rent an office, retail space, or even a restaurant.
1. Rent on the right side of the street. There's always a right and a wrong side of every street, and before you rent your retail space, stand out front and count how many people walk by the door. Every main street in America has double the foot traffic on one side over the other, which translates to more customers walking in your door and making a purchase. Always rent the space on the right side of the street.
2. Opt for a longer lease. For a young business, renting space for two whole years sounds like a heck of a long time but it goes by too quickly. If instead you're brave enough to sign a longer lease for four to six years, your largest overhead cost is locked in, and that puts your business on a secure foundation. It even pays to give your landlord pre-set incremental rent increases within the terms of the lease because it costs you less in the long run. If you think you might want to unload the space later, ask the landlord for the right to sublet. Most landlords readily give that option if you're willing to sign a longer lease.
3. Rent twice as much space as you really need. I find offices are just like empty closets andthey never stay empty for long. When you have extra office space to fill, it forces you to grow your business more quickly. Many businesses are held back because they simply don't have the space to grow. When my business was very young, I opted to move 50 sales people to a new space that held 100. With the pressure of desks to fill, my little business grew up at rocket speed!
4. Always count the windows. Fresh air and good light make people far more productive. The sun-filled corporate office I moved my company to in midtown Manhattan cost 20 percent more than every other space on theblock, but in that happy space my staff became 40 percent more productive. Before you decide which commercial space to rent, always count the windows.
5. If you're starting a store or restaurant, try to buy the building as quickly as you can. Shrewd landlords always up your rent in line with how well your business grows. If he owns your place of business, he'll soon become like an unwanted partner taking the lion's share of the profits. The number one reason most small restaurants and retail shops close is because the landlord doubled the rent. But if you're smart enough to buy your building early, when it comes time to sell you'll have a successful business plus a valuable piece of real estate. And the real estate is typically worth much more than the business.
Barbara Corcoran is a successful entrepreneur, having started her own real estate company with a small $1,000 loan, which after 25 years became a multi-million dollar firm, gaining her much credibility and popularity. Author of an unlikely business book and national best-seller, If You Don't Have Big Breasts, Put Ribbons on Your Pigtails, Barbara also is a real estate contributor to the Today Show and CNBC, and is currently on her fourth season as a panel member in ABC's Shark Tank.