Finding a great location for your business is a critical step to set your business up for success. Do your research on the area and think about the needs of your customers and employees. You can also save time and money down the line by learning about zoning and building permits in addition to getting smart about how to negotiate a commercial lease.
If you've developed your business plan you should have a good sense of who your target customers are, who is the most likely to purchase your products or services, and who you want to market to. Use this information to your advantage and consider how you can locate your business to most effectively serve your target customer base.
Consider factors such as age, ethnicity, gender, income, buying habits, occupations, and household composition. For instance, if your target customers are mothers with small children, you may want to think about neighborhoods that are family-friendly or areas that are located close to other family amenities.
There are several online tools that you can use to conduct a demographic analysis. PolicyMap and Esri Atlas, and are examples of free websites that aggregate demographic information and can help you research potential locations for your business.
Before you start looking at potential locations you should identify a few parameters that will make it easier for you to set up your business. Zoning is an important element that specifies what types of business activities are allowed on a property. Research and understand the allowable zoning for your business and if there are any additional city requirements, such as the number of parking spaces you will need to provide, that could influence which building is right for you.
Generally, the easiest way to get set up is to find a location that was formerly the same type of business as yours. For instance, if you're opening a restaurant, you might try to find a space that used to be a restaurant. This usually means that the property already has the correct zoning and permits for your business, although you should always verify with the City to be sure.
The terms of commercial leases can vary greatly from the length of the lease to the number of tenant improvements. A little research can help you negotiate a deal that works best for your business, and it's always a good idea to consult with a professional or an experienced mentor who can help make sure you're considering all of the angles. A few things to keep in mind as you're doing your research:
- Tenant Improvements - Few spaces are "turnkey ready" for your business – most businesses will require some changes and customization to help them realize their vision. Depending on the space and the market, you may be able to negotiate Tenant Improvements (or "TIs") with your landlord. Tenant Improvements can take the form of an allowance to help make improvements to the space, free rent, or the landlord may agree to make the changes themselves.
- ADA Compliance - Commercial spaces are required to be accessible to people with disabilities ("ADA compliant"). Depending on the specific site and your renovation plans, you may need to make accessibility upgrades from widening aisles to changing bathroom fixtures. Ask your landlord if the space is ADA compliant and discuss who will be responsible for any costs that are associated with accessibility upgrades and/or litigation should a lawsuit be filed. You may also consider having a Certified Access Specialist (CAS) to inspect the property and identify what changes are necessary to make the property ADA compliant.
- Consider the time it will take to get your business up and running - If you're planning to make renovations, serve alcohol, or conduct other activities that require a license or permit, keep in mind that there may be delays that are out of your control. Try to build flexibility into your lease in case it takes longer than you thought it would to start bringing in paying customers.
- Length of the lease and other term - There are no standard rules for the length of a commercial lease – they can range anywhere from month-to-month to ten years and beyond. What's right for your business will depend on many factors, but you should consider factors such as how much rent can increase each year, what happens if your landlord decides to sell the property, or a neighboring anchor tenant leaves. If you need to close or move your business consider your options to sublet the space, transfer the lease to a new business owner, or terminate the lease.