Finding the right space to open your new brick-and-mortar venture is critical to its success. Location, size, price and parking are all pivotal decision points that can make or break you, but there are other nuances to the decision.
When you're looking into commercial real estate, you have a few different options, all dependent on your budget and business type. Smaller businesses with limited inventory could open up in kiosks. Others might prefer larger spots in shopping or strip malls, or even stand-alone buildings if they can afford it.
If you're looking for your first retail location, these tips from retail entrepreneurs and business owners will help you make the right decision.
Know what you want and need
Serial entrepreneur Nicole Pomije, who operates two retail businesses, advised business owners to think about their size and budget requirements when considering the type of space they'll need.
"Figure out your realistic budget and stick to it," Pomije told Business News Daily. "You also need to know the size of the space you need before you start looking, as this will have a big impact on the price."
Similarly, Mallory Thorburn, owner of multi-location bridal boutique The White Magnolia, said to think about your business's future expansion needs.
"One of the most important factors to consider is square footage," Thorburn said. "You want to make sure that not only is the space big enough to accommodate your current needs, but additionally there is room to grow in the space as your business expands."
David Wolfe, CEO of Leesa, an online mattress company with a retail location, said you should also think about how you can design your potential space to tell your brand's story.
"For Leesa, opening our retail concept in NYC allowed us to highlight the positive impact of our mattress-donation program [and] create a lot of buzz around our brand, and [it] allowed customers to try the Leesa mattress for themselves in a pressure-free environment," added Matt Hayes, Leesa's director of marketing.
Choose the right location
Once you know the type of space you need, you'll have to find it in the perfect location for your business. Wolfe reminded business owners that foot traffic and demographic makeup of the area are among the most important considerations when choosing where to set up shop. But there is more too that just those.
When choosing a location for your business, you should ask yourself two questions, said John Wechsler, founder of the Launch Indiana network, a community of local co-working spaces. The first has to do with the climate of the business community.
"The value of collaboration with other founders is not to be underestimated," he said. "A community with a critical mass of supportive entrepreneurs will help you thrive, while an uber-competitive landscape is typically unhealthy for growing companies."
Secondly, consider what quality-of-life resources are available to employees.
"While you may only have a handful of employees today – or maybe it's just you – if your startup is poised for growth, you'll need to consider the amenities that make a neighborhood attractive to prospective employees," Wechsler said. "The live-work-play balance is a major driver of quality of place and can make a big difference in the type of talent you will attract to your growing enterprise."
Fully understand your lease or contract
Think you've found your dream location? Carefully review your lease or contract before you agree to it. Most commercial spaces want at least a five-year lease, which can be a huge commitment when you're just starting out, said Thorburn.
"You can typically find more lease term flexibility in a privately owned building, rather than a corporate-owned space," she said. "If you're stuck with a longer lease term, make sure there is a clause within your lease that you can sublet, should you need to."
If you're looking for space in a mall, Pomije said to take note of any time requirements your contract may entail. These locations may require you to be open during certain hours and dates, which would affect your staffing needs, she said.
Hidden costs that are not clearly stated upfront (insurance, property-management fees, common-area maintenance, etc.) can also be an issue.
"These can add up to a pretty significant additional monthly expense," said Thorburn. "It's important to get a clear understanding of these costs before you engage in a lease."
To avoid any issues, Thorburn advised hiring an attorney who specializes in retail leases to represent you during the process. "It may seem like an unnecessary expense, but you really want to make sure that you are protected. If you decide to go about it without an attorney, remember that everything is negotiable, and don't be afraid to ask for what you want."
For more advice on reviewing and negotiating your first commercial lease, visit this Business News Daily guide.
Additional reporting by Nicole Fallon. Some source interviews were conducted for a previous version of this article.