Today I had a first in my career. I met with a potential Seller whose total gross monthly income would not cover the monthly rent charge of business. A 100% rent factor!!!!! The only logical thing for this seller to do was close the business. It was easy with hindsight to see what this potential Seller had done wrong:
---leased twice as much space as was actually needed.
---failed to analysize how beneficial this location really was for the type of business being opened and operated.
---failed to recognize the true size of the market for the services and product being offered and who the potential customers were and where were they in geographical proximity to the store.
---failed to negotiate the lease in manner that the owner's personal lease liability was limited to the first year or two of the lease or to negotiate a short primary term with a series options to extend the lease if the business is a success. Remember lease liability survives the closure of the business if closure occurs during the term of the lease.
Failing to pay a great deal of attention to lease terms and consequences is often one the major mistakes made by a new business owner.
Don't be the first tenant in a new strip center!!!!!!!!! If there are lots of vacancies in the strip center find out the reason and don't be afraid to look for another location.
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