I hate to admit it, but I get frustrated looking at the poor quality of the offers to lease that come across my desk. I know that I am not the only landlord who feels this way.
With the banks absent from the small business lending market for several years where can you go to get the startup money?
Friends and relatives are one source and the landlords of the space you want to lease are another.
Actually, there has never been a better time to ask landlords for a major portion of your start up costs. They, the landlords, are sitting on a substantial amount of vacant retail space and are creatively looking for ways to bring new businesses into their shopping centers.
I have never seen a time in the last 35 years when landlords were more willing to invest most, if not all, of the cost of the tenant improvements for start up businesses. Landlords have been practically begging for credible start up entrepreneurs to lease their space to.
So what has been the hang up? Most of the proposals are just not credible. These proposals are often slip shod and tend to provide very little detailed information about their business or their owners.
Below are 5 things you can do which will make you stand head and shoulders above 90% of the competition. I guarantee that you will be taken seriously and the odds you will get the financial help you want from the landlord will go up dramatically.
First, let me take a moment to give you some insight into how landlords think. As a group, most of them started just like you, with an idea and not much money. Having started that way they understand your position and are sympathetic to other entrepreneurs.
Most of them have gone through tough financial times themselves at some point in their business life and are willing to give you the benefit of the doubt. They are looking for reasons to say “yes”. It is up to you to give them those reasons.
Here are the five things you can do:
- Write a bio of yourself. Tell who you are and what you have done. Don’t worry if you do not have experience, it definitely helps, but it is not a deal killer. Focus on all the reasons you and your store will succeed.
- Give them a copy of your business plan. This will show you are serious, that you have researched and studied your market, and have a plan for success. In your plan talk about the obstacles or problem areas you see and an give explanation about how you will address them.
- Prepare a three year income/expense operating proforma. Make one for worst case, best case and expected case scenarios.
- Write up a study on your competition. Talk about all your potential competitors, about what they are doing right and about how you will differentiate your business from them. Having competition is not bad. Competition means there is a market for the product you are going to be selling.
- Put together a start up budget. This is different than your operating proforma and it should cover just that period of time leading up to opening your doors for business. Things to include in the budget:
- Tenant improvement costs
- Equipment and fixture costs
- Sign costs
- Municipal permit, impact fees and license costs
- A source and use of funds section
Finally, put it all together in a sectioned and labeled binder.
It will look impressive and the recipients will believe you know what you are doing. The most important thing is that you will believe you know what your are doing too. That is what will get you the lease on the terms you want.