It’s easy to make the wrong decision when searching for new property for your small business. You’re supposed to be paying attention to all the little details, but the very nature of the situation makes this surprisingly hard to do. With all the designing, marketing, and hiring you’re going to have to deal with in the near future, there’s a good chance you won’t be able to devote 100% of your concentration to the task at hand. Stressing about the future could cause you to simply pick the first property that looks remotely decent solely to get this process over with as soon as possible.
And much like new cars or new houses, a certain characteristic about one of your early options could be so appealing that you forget about all the other boxes you promised to check off before finding the right choice for your business. Relax: There aren’t too many boxes to worry about.
Here are three things small business owners should do before leasing or purchasing new property:
1. Make Sure It Matches Your Vision
Entrepreneurs are visionaries. In order for a small business to succeed, the leader must have a clear vision of the business’s goals as well as how to reach them. So, when a business is looking for a new space, it’s vital to know exactly what kind of space will help you achieve those goals. After all, you’ve probably ran a brick-and-mortar location for some time now and are therefore well aware of the advantages and disadvantages of the layout you’ve had to work with. You know which features to keep and which to avoid, likely based on their impact on customer experience.
You must consider whether or not every space you look at has the potential to attract customers and employees in the way you imagined. Does it have some particularly interesting features that will make it more memorable? Does it communicate the overarching message your business strives to send? If something about your space stands apart from your competitors, customers might bring it up when talking to friends and family members shortly after their visit.
2. Develop Accurate Financial Projections
Price is often the most stressful part of buying or leasing real estate, but not just because it’s so unnerving to see the price of the kind of space you have in mind. Most of the stress comes from having to figure out how much money you’ll be able to spend without putting your business in jeopardy. You need to have accurate financial projections based on your current financial health, capital improvements, and the growth you expect to see following the upcoming move or acquisition. If you plan on financing the property, your business’s debt-to-equity ratio and/or debt-service coverage ratio should be factored into your projects as well.
Accurate projections will also tell you how long it will take for you to make back all the money you invest in your new space, which shouldn’t be more than a few years. Businesses that are leasing new property should make sure the lease has a tenant improvement allowance, which is the amount the landlord is willing to spend on renovations. Remember, if you decide not to renew your lease, the space goes back to the landlord, who can raise the price thanks to your renovations.
3. Talk To The Experts
Let’s say you’ve finally found a space that checks all of your boxes. But there’s a problem: It’s significantly more expensive than your budget will allow. You could look into a small business loan but you can’t bare the thought of adding any more stress into your life right now. Besides, you don’t have the time or money to make monthly payments while you are occupied with the many tasks associated with opening your new space. Alternative business financing companies like United Capital Source, however, are one step ahead of you. Our application process is quick and easy, and your terms can be customized so that you receive funding and make your largest payments when your new space is in full-swing. We offer working capital loans, merchant cash advance loans, and various other unsecured small business loans that give you plenty of freedom to grow your new space and then make payments as sales volume increases.
Don’t Dive In Without A Life Jacket
Traditional small business loans have a reputation for complicating your finances, but the primary purpose of our small business loans is to literally do the complete opposite. With so much on your plate already (marketing, designing, hiring, etc), why add financing to that list? Trust us when we say that you will be amazed to see how much easier these tasks are when you aren’t concerned about maintaining a steady budget and/or paying your bills at the same time.
You don’t have to be a real estate expert to run a successful business. You just have to know where to find good help. In this case, good help consists of your accountant, your realtor, your attorney, and the business financing experts at United Capital Source. The process of securing a new space can be very long and grueling but the right small business loan can take a major weight off your shoulders and let you focus on what’s in front of you, rather than whether or not your business will have enough money to survive in the coming months. If you aren’t sure you can afford the new space you have rightfully earned on your own, it’s better to ask for help rather than diving in with no solution in sight.