Renting out a space especially for someone who is new in business can be daunting. At that point you do not know what it will be like to take the responsibility of monthly payments without financial certainties. How do you begin to develop a budget based on the profits you will be making? A business space is a lot more complicated than a residential space. In the case of residence you only have to appease yourself. In the case of commercial you have to think about employees and also clients. There are more factors to consider in this case. You must therefore tread lightly as a simple mistake in picking a commercial space could be detrimental to your business. Below are a few factors to consider.
1. Type of business
This will be a big determinant of how much space you need as well as location among other elements. A fashion designer will require a different kind of space from a clearing and forwarding agent. Their needs will be completely different and will therefore warrant different qualities in the commercial properties they rent.
If this is a new business then obviously you have yourself some capital to tide you over until you break even. However, this means that you have to create a very effective budget. The commercial space you rent must be within or below budget. Not budgeting or going over budget on things like the space could mean that you will run out of money before the business is able to support itself. However, you should be mindful of how strategic the location you pick is.
3. Strategic location
Is the location of the space suitable to the type of business you want to run? Will it be easy to reach your target market from there? Does the location fit into your vision for the business? For example, you would not put up an upscale restaurant in downtown Nairobi. You would not put up a ‘chapo dondo kibanda’ in that Intercon area. You must take care not to place your physical address in a place that leaves the image of the business in shambles.
4. Expansion possibilities
Some businesses tend to blow up after the first two years. After this, a physical expansion of the space may be warranted due to growth of the business. If it is a business like a restaurant or a supermarket then you need to know that you can expand in the same space by maybe taking up two units instead of just the one. If you can find a building nearby that offers more space then that could work too. In the mentioned examples it could be easier to simply open a new branch in a bigger space.
5. Types of establishments in the area
You know how a mechanic’s garage would boost business for a tyre shop next door and vice versa? It would be nice if you could find a location like this. The types of businesses that surround your own could make or break your own business. You would not put up a daycare centre in a shopping centre that is mostly bars? No, you would want an area that is mostly residential houses or maybe some offices. The environment in the location of your choice should help your business thrive.
6. Agent v Self
Using an agent instead of finding a space on your own has very little to do with your personal preference and more to do with the kind of space you are looking for. An agent could make things easier and would open some tightly shut doors for you. They could also help negotiate your terms of tenancy. If you do it on your own then there is a better chance of finding something that suits you perfectly without the pressure to settle. It would also save you some money. The great thing is that all these real estate management companies post their commercial listings online. It would be easier to find something through the internet.
7. Physical appeal
Believe it or not, physical appeal of your business remises matters a great deal. It is the first contact your business will have with potential clients It is therefore in the best interest of the business to ensure that the space is appealing to the clients as well as functional. This is more important for some businesses more than others. The physical appearance of the space must communicate efficiency and capability to provide service that is up to par.
a. Insist on a Tenancy Agreement
Commercial real estate has some very important distinctions from residential real estate. One of them is that a tenancy agreement is absolutely necessary in the case for commercial real estate. You must ask for an agreement and read thoroughly before signing then keep a copy after. This will keep you covered in case of anything. In commercial real estate, it is not uncommon that a bigger company desires to take over several units thus warranting some evictions. The agreement will cover you in this case so that your business is not inconvenienced.
b. Good Filing
Every receipt you get after paying rent must be properly and safely filed. This should actually apply to every single business related document no matter how small or seemingly insignificant. You will need these receipts when you have to file your taxes. You will need your copy of the agreement when the time comes for you to consult what the terms are after a perceived injustice has been done. You will need every document in case the time comes for you to either sell or pass over your business.
Finding a good space will be one of the most important decisions you will ever make for your business. The space has to be strategically located as well as within budget. All the best!