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Making the Most of 'Lemons' and High Leases

Written by: Michelle Moore

Article Overview: Sometimes there's no getting around the high cost of doing business; but with a little creativity entrepreneurs may still manage their own "shops," wherever they are. Testing the marketplace and learning to negotiate rent terms can lead to future opportunities and "win-wins" for all!

Making the Most of 'Lemons' and High Leases

Bankruptcy, high rents and other factors are forcing business owners to find alternative ways of setting up shop. Everyone feels the cost of doing business these days - from the bootstrapping weekend entrepreneur to the "mom and pop" shop retailers. How exactly DO regular, hardworking, adventuresome folk afford the high cost of commercial real estate these days? Who can possibly find enough items to sell in order to generate the kind of traffic and RENT necessary to make a profitable venture?

Actually, now may be the time to take advantage of the sour economy to help build a business. With the unhappy changes in the marketplace, many landlords may be more willing to negotiate leasing terms today than a few years ago. Holding out for the "big boys" or for market rent can hardly benefit commerical centers where one retailer after another closes up shop, leaving a trail of vacancies and neighborhood "ghost-towns."

Of course, an affordable alternative to high retail costs is the home space; and tax deductions may make business home use a sensible idea - zone permitting. One of the nice things about a homebased business is that the operator can hold more control over its operations, while growing the business at a time and pace comfortable to the owner.  There are no long-term leases AND you can communicate with clients in your lounging attire.

Retail storefronts may realistically be out of reach for many business owners; so some have begun to think OUTSIDE of the retail shop. They're leasing WINDOWS and using them for billboard advertising.*  Vacant storefronts and professional offices with window space to display billboards are potential breeding grounds for traffic and profit-spreading (window shopping may not be ALL bad!).  These billboards can be laminated or plastic two-foot by three-foot color poster advertisements and attached in commercial window spaces using small, transparent suction cups.  A May 2009 article on Nadaadvertising.com by Nathan Nerland, says "companies are becoming quite creative with their [window] ads. [One] ad is composed of several panels that fit over the building's panes of glass, while an ad for Nestea is plastered over both the windows and the doors of a former shop in Midtown Manhattan, making it look more like a street-level billboard than abandoned retail space." Empty store fronts are unsightly, as well as unproductive.  One unoccupied shop I walked by the other day had newspapers (yes, newspapers) tacked up in the windows. Poor retail neighbors (Ok, there weren't THAT many surrounding tenants)!

Some retailers have even found bliss in Shacking Up. Sharing spaces, that is with other business retailers - and no long-term commitment. Anyway, it's a great way to test the market. And if the existing shop owners already have a retail following - even better! You'll get the benefit of all the traffic

(assuming there is plenty). One such shop in my neighborhood barters vendor space for retail help. It's a co-op arrangement where anyone wanting a reduced rent rate on their "shop" can work on days the shop is open. It's like a retail family where everyone supports one another to make the store successful; it's a great way for individual shop "owners" (vendors) to get more exposure.

Ultimately, Internet retailers (E-commerce) have the lowest overhead and are not generally subjected to the high costs associated with commercial property, like insurance, remodeling, retail rent, sales employees, etc. Of course, E-sellers may still have to Advertise to find customers; and many still prefer the face-to-face connection of non-virtual selling and customer service (explaining the use, benefit and/or background of the products they're so passionate about).  It may take awhile to find the perfect storefront (or investor), so in the meantime continue looking for CHEAP and creative ways to get noticed. Don't overlook the value of adding a calendar or some useful information to the back of your business card.  Give away something free. Hold a contest. Partner with other business owners if feasible. Cold-call. Surviving in a weak business environment takes hard work and "more effort into thinking outside the box," says Bo Fishback, VP of entrepreneurship at the Kauffman Foundation. After all, we can't all be Wal-Mart, Target (or even Trump for that matter). We may just have to put economic necessity to work for us - squeezing one "lemon" at a time until thirsty buyers are standing in line for a taste of what we have to offer.

*Commercial real estate owners (or tenants) can show community support and create goodwill by making their windows available to local nonprofit organizations that are promoting a good cause.

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Article Tags: affordable alternative, big boys, billboard advertising, breeding grounds, ghost towns, home space, homebased business, leasing terms, long term leases, pop shop, professional offices, profitable venture, retail costs, retail shop, retail storefronts, shop retailers, suction cups, vacant storefronts, window shopping, window space



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