Location based on emotions or Location based on reality?

(08 /05 /2014)

I have just found the perfect location!  Perfect!  I mean it is right in the heart of everything; it will go with my vision of what my restaurant should look like!  I really want this place and I will pay anything for it!

Emotions!  Unfortunately in this case, it got the better of me and the $3,300 a month for rent really had me struggling!  I became a statistic of the industry all because I let me emotions rule when choosing a location!

Did you know that the accepted industry standard for rent is a maximum of 10% of your turnover per month?  So in my case I needed to generate a minimum of $30,000 per month just to pay the rent before anything else!  That’s a lot of lasagne!

So because I didn’t do my homework I put myself on the path of failure before I had even opened the doors!  Just another thing to think about when you are starting a business, or taking over an existing business.  Look at the rent!  How could the rental terms change over time? How rent increases have historically been determined or if it is a new arrangement ask the landlord what factors they will consider when looking at increases to the rent.  What is the relationship like with the landlord?  Creating a working relationship with your landlord, one based on open and honest communication will help you down the track.  If your landlord sees you are busy all the time then they may assume that an increase in rent is warranted and you can afford it!  If you keep them in the loop then you may just form a mutually beneficial relationship where the rent may not increase a lot but you become a long term tenant!

I have a friend who had a difficult relationship with his landlord and over the years he invested a lot of his own money into the property, even adding an entire dining room to the upstairs level.  Unfortunately, the relationship went sour and as a result he had to move out!  All the effort and years of building up the business crumbled due to a poor relationship with the landlord! In this case, everyone loses!

Receive our newsletters

Signup to receive the latest posts directly to your email - It's free!!