Using Rental Space to Start your Startup

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Using Rental Space to Start your Startup

By Mike Longsdon

Rolling out a new business is an exciting time, but it’s still a daunting task. If you add the challenge of searching for a location that sets you up for success, things can be downright overwhelming. 207 Prime Properties explains how to find a perfect space for your startup so you’re ready to hit the ground running.

Start With the Right Non-Physical Structure

One decision that every entrepreneur faces when starting a new business is choosing which business structure to use. When you make this decision for your startup, be sure to consider potential tax obligations as well as legal liability. Whether you choose a sole proprietorship, a partnership, an LLC, or something else, each structure has its own merits.

Begin With Budgeting Basics

When you create your business plan, you’ll need some projections for how much your space is going to cost. The Cauble Group shows that calculating commercial rent boils down to a simple formula. Begin with your price per square foot, and multiply that by your total square footage. That gives you the cost for annual rent, which you can divide by twelve for your monthly rent. With that amount, you can get a feel for what’s available that fits your budget. Then talk to a business loan specialist to secure your startup capital through SBA loans, term loans, or custom financing.

A good deal of your time will be spent on your business's finances to ensure you're staying afloat. Trying to keep track of available funds and constantly changing account balances can be complex, as this information is usually updated only once a day, which means it’s not available in real time when you need to make timely decisions. Fortunately, using a tech tool like an account balance API allows you to gain visibility on your business's account information by verifying your balance whenever you need to, while also protecting you from overdraft fees.

Learn the Industry Lingo

When you start looking at listings, you’ll need a handle on the lingo you’ll come across. For example, a triple net lease, or NNN, means you’ll pay the base price of the lease and everything else is extra, like maintenance, taxes and insurance. You also might be quoted rental based on Usable Square Footage (USF) or Rentable Square Footage (RSF). The USF is space you alone can access, and RSF refers to space that you share with other tenants. Shared space might come into play if you’re renting in a shopping mall or office park, for example.

Work with an experienced real estate agency like 207 Prime Properties who knows the “industry speak” (and the ins and outs of commercial real estate) to help you find the ideal space for your business.

To Estimate Square Footage, Examine Competitors

When you’re starting a new business, you’ll find most of your numbers can be projected based on what your competitors are doing. Square footage is no different. Research what your direct competition requires, and use that information as a starting point for your business. Don’t forget the hidden spaces as you make computations. You might need room for inventory, a break room, bathrooms, equipment rooms, and so forth, and since you’re new, you might leave room for growth.

For office spaces, Alterra recommends 125 to 350 square feet per worker. If you’re planning a retail sales area, divide the planned sales volume by sales per square foot in your chosen industry; you can get this number by researching trade-related publications or by reviewing data from the annual reports of publicly traded companies.

Location, Location, Location: Making Your Selection

The old real estate maxim that puts location at the center of success has hung on for decades for good reason: it can make or break your future. If your new venture will depend on foot traffic, being close to related businesses might be an important advantage. Boutiques and cafes often make a good combination, for example. It can also be a boon to be close to your competitors; fast food chains group together by highway exits so that they are convenient for people on the go.

Determine what your target audience looks like and which habits you need to capitalize on. That will help you decide on the specific location that will behoove your business most. Then shop for spaces that suit your customers as well as your budget.

Personal Considerations

As your business gets off the ground, you may find more and more of your time at home filled with work tasks. Use an online calendar to organize your time so you can easily schedule and stay on top of business and personal items without feeling like you're always forgetting something.

Be sure to create a designated workspace in your home to keep the energy balanced. Use this space as an opportunity to express your personal style. For instance, find a cool old chair at a thrift store then take it to a local upholstery service to have it reupholstered for a unique look.

Approach the challenge of finding a rental space for your venture with the right plan. Begin by protecting your personal assets and by budgeting logically. Determine how much room you need, and then look for a location that fits your budget and makes sense for your customers. Thanks to your smart strategies, you’ll be set up for success from day one.

207 Prime Properties represents the region's finest properties with exceptional skill using the most innovative technologies currently available. Reach out today to find out more! 207-646-2223.

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