This post is based off of a blog I wrote on another business website of mine, but I wanted to include it here because it’s so relevant to this community.
We are in the midst of once again searching for new and expanded space to house Vintage Body Spa, our upcoming men’s brand (shh…haven’t shared much about that yet, but I will!) and Bath and Body Academy. It is a fun time, full of possibilities and excitement, but also overwhelming with so much to consider in finding the right space. Many beauty entrepreneurs dream of moving out of their kitchens into ‘official’ space. Here are six things to consider before making that leap:
1. Consider your reasons for moving. Do you really need to move or do you simply want a change of scenery? If your business has expanded and taken over all of the available space in your home and/or if your business growth is being stunted because you’re not able to increase production with the space and machinery that that is currently available, then it is time to explore leaving your home workshop.
On the other hand, if it’s simply frustrating you to have to clean up your soap making equipment and ingredients in order to clean up and make dinner, then this might be a minor annoyance that you can figure out a workaround and keep your business at home for the time being. However, there is much to be said about having a work environment that fosters creativity and productivity instead of hindering these things. You’re the best judge of what you and your business need – just think critically about WHY you want to move your business out of the house and how that will help you succeed before making a hasty (and potentially expensive) jump.
2. Determine the type of space you’re looking for. Do you want a boutique in a busy part of town where customers can shop for your goods? Then you’ll need retail storefront space. Do you need an expanded workshop to increase the production of your spa products but aren’t interested in having customers shop directly at your store? Then you can look for industrial space. Each of these types of spaces are best suited for specific types of business, and each are priced differently, so this is a critical question to answer before you start the process of looking for space.
3. Determine how much space you REALLY need. When looking at available properties, it is very easy to get caught up in the excitement and imagining all of the possibilities a space can provide. Of course, the broker or landlord would be happy to convince you to move into a larger space (with a larger price tag!) so it’s important to make a list of the following so you can be sure you’re not getting in over your head to begin with:
* What you’re going to use the space for
* How many employees you envision working at that location (this will affect the number of required bathrooms, break room space, offices for desks, parking spaces, etc)
* How many offices you need/want and if you desire a larger meeting room
* If you’re searching for manufacturing space, then map out a draft of how your production area might be laid out with estimated dimensions. This won’t need to be exact until you’ve narrowed down some properties to consider further.
* Think about building up, not out. Can you add shelving or even a loft type area to add additional storage and/or workspace?
* Make a list of your non-negotiables – things that would automatically cause you to walk away from a deal. Having this thought out and written down in advance can help ensure you don’t overlook drawbacks of the space simply because you’re excited about another aspect of it.
4. Don’t start off too big, but allow enough room to grow. Once you have a range of how big of a space you’d like, consider how your company might grow in the next few years. You don’t want to have to move again in another year because you’ve already outgrown your space.
5. Crunch the numbers. When you lease commercial space, there are many more expenses than just the monthly rent. Work into your budget the following:
* insurance – in addition to any product liability insurance you carry, you’ll likely have to purchase General Commercial Liability coverage, which many landlords require to protect them from being sued in certain instances (the amount required and what it covers will be listed in the lease agreement)
* security system
* cable/internet/phone services
* additional fees charged by the landlord, such as maintenance fees, upkeep on common areas (parking lots, etc), signage
* repairs/renovations/ to your space
Be sure that your profit margins are sufficient enough to cover these additional expenses. Determine how much more you need to sell each and every month to cover these expenses, so that moving into a new location is a profitable move, and not one on which you lose money.
6. Carefully review the lease. I suggest having an attorney familiar with commercial real estate review any lease that you are considering and discuss at length with you what the lease stipulates. Be sure to read the fine print and be aware of the following clauses (among others):
* Length of the lease
* Rent amount and how often this can be increased and how increases will be calculated
* How and if the lease can be terminated
* Whom is responsible for upkeep and repairs on both the interior and exterior space
* How utilities are calculated
* What the lease covers (shared community space, a certain number of parking spaces, etc)
* If subleasing is permitted
Some people don’t realize that portions of the lease agreement are negotiable, which is another reason why it is helpful to have an experienced professional walk you through the process. This can help protect you and let you work to design a lease that works for both you and the landlord.
Searching for and securing space for your business can be overwhelming and exhilarating all at the same time. Remember to take your time, go into the process with your eyes wide open and don’t jump on the first space you see. Compare a number of spaces to determine which is going to work best for you and your business.
Your turn: Have you moved from making products in your home into a commercial space? What other tips/advice can you share?