Choosing a property for your new business
This week I sat down with Christine Sable, CCIM and broker of Sable Commercial Realty in Lancaster County, to talk about how a prospective business owner gets started, now that everyone is looking forward to some positive movement in the local economy in the coming years.
When it comes to choosing a location for a new business, there are several options with different pros and cons. The first option is merely to open a “home” business and work out of your home. I happen to know a number of folks doing just this, and it can work very well. Make sure you know if your property is zoned for such a use; if not, you’ll need to approach your municipality for a variance. Other than some remodeling, the expense is minimal and you know your landlord REALLY well!
If your business is retail, the next option is to look for a kiosk-type location in a busy co-op, farm market or a mall. These locations can provide a lot of foot traffic, but there are costs associated with them and you won’t be building as much visibility.
“Kiosks are a good way to ‘test drive’ a retail product idea,” noted Christine.
If your new business requires an office outside your home, but you don't need a large space, there are local options in most areas for shared desk or cubicle space in an office co-op or a single office in an executive suites type of space. Sometimes businesses will rent out a single unused office or excess space on a full-service basis.
When you need more space and want to build location visibility, it’s time to look for a lease. Leasing your property helps you keep the startup costs lower and the only financing you’ll likely need is the business/fixtures loan and some build-out costs.
“Leases also allow you the flexibility to ‘trade up’ when growth necessitates it,” added Christine.
The last option is to purchase a property/building to house your business.
“The upfront costs can be much higher than leasing and not attractive to a newer, cash-strapped owner,” Christine said. It's often very hard for a new business without a track record to come up with the equity needed to obtain financing for a property.
“If buying a building, one way to make it work is to look for a location with existing rental units and tenants already in place that will help pay the mortgage,” she said. Of course, that makes you a landlord, but it will help the lender make the numbers work.
Choosing the best location for your business startup depends on your budget, the traffic you are looking for, the upfront money you have to work with and the amount of hassle you want to deal with.
If you’ve been through this before, what did you choose for your business?