Last week we started the long process of finding a place to call home. No matter what business you are in, you must remember these three important things when looking for a suitable spot: location, location, location. If your business plan relies on a physical location to draw in customers, as ours will, where you put your business matters almost as much as what you intend to sell. I will walk you through our process and how we intend to proceed with making all of our wildest dreams come true.
Step 1: Assemble a Team
If you think you are going to superman everything and fly it solo, you are crazier than a giraffe screwing a monkey. I am not saying it cannot be done, but you will in all likely hood burn yourself out, or encounter a problem or issue that you will not have the answer to.
We started by first contacting our realtor, who in turn brought in a partner that specializes in commercial real estate. You do NOT want a realtor who specializes in residential real estate or who only sells a few houses a year to represent you in such matters. Commercial real estate contracts are much more advanced than residential. If you don’t believe me, ask your realtor about a letter of intent or triple net leases; they probably won’t know what you are talking about.
The next person you want on your team is a good lawyer who has experience drawing up and negotiating contracts. You may also want a lawyer who is knowledgeable in the zoning and building requirements of the town you intend to locate inn. You will not need a lawyer until you actually intend to make an offer on the property, but I would rather find a good lawyer early on who is savvy to the specific workings of my project. That way, when the time comes, you can pull the trigger.
Step 2: Zoning and Building Department
It doesn’t make much sense to try and fit a square peg into a round whole. You won’t be able to put a business in a town or specific location unless the zoning and building requirements are suitable to your classification of business. For us, as a brewery, we will need to find a building that is zoned for a restaurant or light manufacturing. Ultimately, each town has different ordinances and codes that pertain to your business. If they don’t, which may be our situation (many towns are not familiar with breweries and what they entail), you may need to actually go in front of a zoning board or committee to discuss your plans and what you intend to do.
It is best to be upfront and honest about your plans, as this will remove any animosity or headaches down the road. Make friends with everyone. Talk to the clerk or the secretary, get people excited about your business. You want as many friends in your corner as you can find!
Step 3: Hunt for a Location
If you have a general idea as to what space you will need, and/or you now know the correct zoning requirements, it is time to look at properties. Do not fall in love with the first place you look at. Look at every single place in town. Commercial properties tend to sit on the open market for much longer than residential, and they are not as cookie cutter. You will want to make sure the intended building is either suitable to your size and business type or it is economically feasible to convert the building.
Also, be a detective. See a vacant piece of commercial real estate that has no sign in front of it? Ask your realtor to look up the owner and give him/her a call. Ask the neighbors. Ask the town. You may be able to find a place that is not on the open market, which could be much more suitable to your business or time frame (if it is not listed, chances are you may be the only one looking at it!)
Step 4: Letter of Intent
I am not an expert on this topic, but a letter of intent is a general statement of what you intend to do with the property. This could include any alterations or concessions you will need from the landlord. This is not a legally binding contract, but rather a start at negotiations.
Step 5: Bring in the Reinforcements
Sometimes this step is actually reversed with step 4, but for us, now is the time to bring in contractors or other industry professionals to give you quotes and estimates on build-out costs. It is best to be conservative during this step. Add 20% on to every quote you get, and a good rule of thumb is to get 3 quotes or 3 professional’s advice before proceeding. I would rather be safe than sorry!
Step 6: Make An Offer
Once you have found the right spot, and the landlord seems to be willing to work with you, you can make a bonafide offer on the property. You will want to consult heavily with your lawyer during this step. You may want to build back doors into your contract that allow you to break the lease under certain circumstances. For us, if we fail to get the proper permits from the government, we will not be able to brew. That is pretty much a deal breaker for our business. We do not intend on paying for a lease if we cannot legally operate our business. Our lease will likely have a contingency based on whether or not we obtain our brewing licenses. Others may have contingencies based on financing. It really depends on your specific business.
Step 7: Acceptance, Build-out, and Permits
If they accept your terms, you will want to start moving as fast as possible. Sometimes your landlord will build everything out for you (lucky you), other times you will be responsible for the costs and construction yourself. Either way, do not do anything without a permit! I have seen businesses fined thousands for moving electrical boxes or walls without a permit. You may also need to get more permissions or variances from the town, which is why I recommended making friends with everyone. Any snag in this process could cost you time, and time is money.
Open Up Shop
There may be some technical details I am overlooking in between the build-out step and this one, but eventually you will be done building and ready to open your business. For us, we will need to obtain government licenses before we can actually open up shop, which may take longer than our actual building being suitable. Others may be ready sooner. The goal now is to start making customers/clients! For us, we can’t want for people to grab a cold one!