When you taking on a new lease, there should be single-minded obsessive voice in the back of your head going, “Can I be doing business on day one?… No?….Well then what about day two?… Well then what about day three? …”.
Your business won’t survive unless you make more money than you spend. As soon as you sign the lease, that spending start. The clock is ticking.
You should have one big thing in your favour – a rent-free period. Let’s say you’ve successfully negotiated a three-month or six-month rent-free period. The usual justification for a rent-free period is that the tenants need time to fit out the premises, and shouldn’t have to pay rent during the period when they really can’t use the premises. So it’s a concession by the landlords.
But to you it should be more than just about fitting out. You should be trying to maximise your early profit potential by doing business from your premises while rent is not yet eating into it.
Far too many businesses, in my experience, fritter this opportunity away. This is particularly the case with bars and restaurants. New tenants always seem to want to rip out the perfectly good fittings of the previous tenant, in order to put in new stuff. Sometimes, this adds to the allure of the new business, if it has a wow factor. But most people going to a bar or restaurant don’t take in too much about how the walls are covered or how well the lighting is recessed in the new drop ceiling.
There is one restaurant/bar in my area which seems to go through a never-ending cycle of fit-out … go bust … rip out and replace the previous fit-out … go bust … rip out and replace … and on and on. None of the fit-outs are any better than the replaced ones. My theory is each goes bust eventually because they knobble themselves from the start by not maximising income when they had no rent to pay. Lift-off it the most risk-fraught time.
What the professionals do is they get in and start trading immediately, and do any changes bit by bit. They may get the major stuff, which can’t be done with the business trading, done first in a blitz of action. But then they do the smaller stuff, or less intrusive stuff, at weekends.
One crucial factor is to plan everything in advance and have builders lined up and ready to go. And don’t change your mind too often while they are doing the work.
Bear in mind that it takes any business some while before it gets up to speed, before people notice it’s there and start using it regularly. If that period is all part of the rent-free period, that’s fine, you are trading profitably by the time rent kicks in. But if you waste your rent-free period tarting up the place, and then suffer the experience of slowly getting the business off the ground while you having to pay your first quarter’s full rent, you’ll be sweating.
There is often a narrow margin between success and failure of a start-up business, so anything you can do to increase your odds at the start by trading as early as possible is something you should squeeze for all its value.