Finding the Best Location for your Small Business – Small Business Show 147

The Small business show episode 147 for Wednesday, November 29, 2017. Greetings, folks and welcome to the small business show here at BusinessShow Co the show by, for and about small business owners. This episode is sponsored by storyblocks, where it's story storyblocks.com SBS that's SBS for small business show. You can get their triple bundle for just the price of one of them, which is $149. We'll talk more about that in a little bit. Here in Durham, New Hampshire, I'm Dave Hamilton.

And in Lafayette, California, I'm Shannon Jean. How are you, man? Have a good Thanksgiving there?

Thanksgiving was stellar. Yeah, thanks. It was easy. We were home and all that good stuff. But you were out gallivanting the sights of the big city.

We were. We were at. Out in New York visiting my daughter and seen the parade, which we usually go to. And I think this is our 10th, 9th or 10th year out there. So it was great. It was awesome. I mean, it was warmer out there than some days. Anyway, that was in California, so we had a great time.

That's cool. Wow, that's.

Yeah, that's great. Took the boats out in Central park, which is cool, and had a really nice time out there.

Nice. Yeah.

I'm glad to be back.

You were doing all the fun stuff. Hey, so you were able to get into the. The VIP party. Nobody made copies of your of badges.

Nope.

Because I saw you posted those with the. With the barcodes on them and I.

Thought, yeah, well, you know, my friends, I just posted to my.

Yeah, and it's such a small.

There's only about. I don't know, maybe. Well, I guess there's. It's a sponsor party and this may be. Well, I guess there's a couple hundred people there, but it's. They probably only have a couple hundred. So they kind of have a sense of who's coming and who's not.

Got it. Okay.

But yeah, that would be good. That would be a good way to do it.

I thought about it. I'm like, yeah, I have to drive all the way down.

Yeah, that's right. I can remember the knowing guys that used to do that in the old Mac World days. Photocopy and getting the full pass. Right when color printers and color copiers were dating myself now. But those were coming out. You could go plop it on the old glass and make a copy and get yourself into all the sessions. Mac World.

Yeah, they've changed that now Trade shows have like RFID and. Or conference of Course, RFID and stuff.

That's okay. They don't, they deserve to be hacked once in a while. After I paid thousand dollars for a drop WI fi into my, my booth for years. They can, they can afford it.

Yeah, they can, they can eat that. That's right. Of course that show doesn't exist anymore, so maybe they could.

It doesn't. Yeah. But even, but all these, you know, shows they really want to control. It's all about, you know, the location. Right. Keeping you, you're a captive audience and they want to keep, keep everybody paying those bills and stuff. And so I think what a great segue. I thought we would talk today about location for your small business. And where you are can be such a huge factor. You know, even, you know, if all your sales are online, where you locate your business is still critically important on so many fronts. So I thought we would at least skim the surface a little bit today and talk a little bit about that.

Yeah, let's do it. Yeah, for sure. Because you're right, you know, when you presented me with this topic and you were like, we should talk about location. And of course I've, I mean I've run businesses with brick and mortar and all that stuff, but most of what I've done has been online. But even that matters big time.

It does, it does matter. And you know, from my, I have some experience in all these different types or the three types of locations that I think we could, you know, hit on today. And I'll talk about my experience, pros and cons. But like I said, even if you're just shipping everything out or even if you're using a logistics center and you have no inventory and you need to put, you know, people in seats answering phones or managing your website, or even if you're working out of your house, you know, location is critically important in. For so many different reasons, so many different. So, so let's, let's. So what I thought we'd do since, you know, we, we could talk for hours on this topic. We'll, let's chat about what I would consider three of the main different types of locations and then we'll talk about what could be the most important thing when you're getting into a space is the lease.

Yes.

And all these things that are encompassed in that lease and how to watch out for those kinds of things.

Yes.

Sound good?

Yes. Let's go.

Awesome. That's great. So let's talk about the most obvious small business people think about. Oh, I'm a small business owner. I need a retail. If you're in a retail business or you have some business online, which is kind of. I think most small businesses have morphed, at least I hope they have, into. Well, we have a location, but we also have our website, and we do all this stuff and we ship stuff or we promote things or whatever, and that's a retail location. And in a retail location, I think what you're really paying for is traffic. Your space is really part of your marketing budget, and you're paying for either foot traffic if you're in a strip mall or a regular kind of mall or any kind of place that gets lots of traffic or car traffic that drives by and sees your signage and that kind of thing. And I think there's some important things to. It's one of my least favorite types of locations. I'll tell you why.

Yeah, well. Yeah, so tell me why.

Well, it's extremely restrictive on. And I understand the. I think the reason why. It's because they're trying to present, you know, a certain message to the people that are there all day and that kind of stuff. But it's restrictive in the sense of what kind of signage you can use, what you can really do there, getting creative with your marketing. It's very restricted, and it's very expensive, and those things kind of all, you know, tracking the negative column for me. But they have, obviously needs. I mean, people that need. Like, if you're in the iPhone repair business, you need to be in a retail spot if you're doing local service, because people. People want to drop their phones off and they want to go do that kind of stuff. And it's absolutely the way I go.

So I've done. I've done retail twice with the same business, multiple locations, actually, more than twice. But I was involved in the. In the negotiation of the retail lease twice. And it really. The. The hardest part is, is picking the right place to be. Yeah. If you want, like, if you want foot traffic or if you don't want foot traffic.

Yeah, if you're paying for it, you, you know, like, if you're. If you want that traffic, which this is, you know, obviously the reason you'd be there. Yeah. You need to. I mean, who's the anchor? You know, what is the draw? Because you, as a small business owner, and, you know, people may not be beating your door, beating down, you know, your door to find you. So you're paying for the. To be associated with whoever else is in that complex. And. And, you know, if. If you're I can remember my real estate agent taking us around. Well, this place is pretty inexpensive, but it's only made up of little small businesses, right? And so you have to have a specific reason to be going there. But if you're like in a retail location that has like a grocery store or some massive draw, like a, you know, Walmart or some kind of big like that, where people are coming over and over and over and over, you're going to pay more for those places. And it is really important to, to pay attention and see, you know, who's there, what's around you that's going to get people in the door.

Well, and also how that fits with your business, right? When we first rente space for computer nerds, that was the business down in Austin that we rented. Wound up renting retail space. The first time we rented it was space with signage, but it was mostly offices. So it, you know, every office that was there, you could put your sign out on the, you know, both on the front and then. Or they would do it for you. Actually, you didn't even have to do it because they, they wanted your sign, your, your name to match in with their. So like we gave them our, our font and our lettering, but they had the sign carved in their colors and their shape and size and all that stuff to fit the little, you know, strip mall or whatever you want to call it there. But it was really an office park. Even though we had this stuff and really it was. If somebody came in the door and it wasn't one of our employees, that was a shock to us. We weren't really expecting, you know, but, but that was the right thing for us at that point. We had built up a business based on, you know, TV ads. Actually it started with radio ads and then TV ads and print ads and you know, those types of things. And, and we were getting all of our business that way. None of our business was done with drop offs or, or in person. It was, I mean, it was done in person, but we were going to people's.

You were there, right? So you had your tech, a place for your text to start the day, if you will, or to congregate.

Congregate to do. If somebody needed to bring work back to the bench. We had a bench and of course we had. That's where the phones rang and, and that stuff there. But the nice part was it was real cheap. I mean, we were paying, you know, a few hundred dollars a month for a relatively sizable space. But there was no one was drawing foot traffic. And we Weren't paying for that.

And that's okay.

Yeah, yeah.

And I'm glad you brought that up because. And I'm mentioning like three different kinds of spaces, I actually completely neglected to think about office space because it's. And that that's a great opportunity for, especially when you're just starting out or if you don't have to have that foot traffic, need that kind of thing, and you can find it and you can get into some obscure little places that it doesn't matter.

Right.

And maybe they can see your sign from a road or something like that, but no one's going to come in. I think that's a great idea.

Yeah, it's mild branding was really what we got out of the sign. And that. That was fine. I mean, it. Anybody that happened to drive by this place, which was kind of on a not very busy road, it was sort of half residential and half commercial, but it was fine. It was great. And you know, there was like a burger joint nearby and things that we could, you know, if you needed to run out and get food, you could do that without getting in your car. And. Yeah, it worked out. Yeah, it worked out really well. And it was like I said, I mean, it was dirt cheap. You'd be shocked what it. How little it costs to rent just office space.

Yeah. Because there's a lot of it, too.

Yep. Right.

And it's typically a lot of it. And I think retail is, you know, supply and demand. And you want to be at a certain spot and you're, you know, you want to be associated with other certain retailers that are there. So you often, you know, are going to pay for it. And when you're looking at where to go, the one thing, thing that to think about in a retail location is is there anyone else in your particular business or realm of business in that same area and what's the local competition? And often the lease that you'll wind up signing will have an exclusive use, you know, part of it that you will. Or the landlord will agree that, hey, if you're, you know, a nail salon or a pharmacy or a yogurt place, well, we're not going to rent to another one of those, you know, types of entities, you know, that kind of stuff. Or if you're a, you know, electronic repair place or, you know, that kind of thing, you. They don't want to have more than one.

Right, Right. Yeah. If you're, if you're counting on foot traffic to serve you, you. You don't want to have to have once the person is there, you don't want them trying to choose between you. And that's right, you know, the, the person right next door that does exactly the same thing.

Yeah, got it. And I think one of the things that I'm going to mention over and.

Over sometimes, you know, in those retail places, you have to agree to be open certain hours too.

Well, that's absolutely right. And so when you're, when you're looking at retail, you need to actually get those details. When you're way before you've decided this is the place, you need to know, you know, what are the signage requirements and what are the costs? Oftentimes they have signage programs that you're just like, oh, we have to order from this vendor and it has to have these specifications and going to cost, you know, eight, $10,000 or whatever for these things and you're going to pay for it. So you need to know that before you need to know that are what requirements for open hours, you know, are there? If there are.

If there are.

If there are. And then one of the things that, and I was a relatively newbie in the retail locations, but if you wanted your sign on the monument on the street, well, that was an additional monthly rent. And so you would have to pay an additional charge to have your sign up there. So you need to know that before. And then the, the scariest one, which is not. Not uncommon. But are you going to be required to have some kind of revenue share? Is it rent plus a percentage of your revenue?

And that's not, that's not rare.

Right?

Yeah.

So you need to look at that, those things before you fall in love with the space. You need to ask for like a, you know, hey, give me a sample lease. Give me or a one page, you know, details. So I know what I'm getting into. Because you, you want to cross out that space right away if it, if it's going to require something that you're just not happy with.

Yeah, no, it's true. Yeah. And you know, I might be jumping around here, but I do, I want to talk about some of the other terms of the lease, especially the whole triple net thing. But first, can we talk about our sponsors, Shannon?

Yeah, absolutely. We gotta pay the rent.

Well, that's right. You gotta be able to pay the lease. Yeah. So our first sponsor for this episode is storyblocks, where@storyblocks.com SBS you get access to a deal that really is unlike anything we've ever seen before.

It is.

Yep. They have, it's a stock Image service. It's a stock video service and stock audio. Now, what I mean by that is They've got over 400,000 images, over 150,000 videos in the video service, over 100,000 audio clips in the audio service that you can, once you have a subscription, you can download and use royalty free. And your use on those goes beyond your subscription. Their subscriptions are a year. It's 149 bucks for a subscription to any one of these services. Normally, with our deal, storyblocks.com SBS, you get the triple bundle, images, video, and audio for the price of 1, 149 bucks. That's it. You can download anything, and you can use it even past when your subscription expires. Of course, I'm sure they would like you to renew, but if you don't, no problem. Whatever you've downloaded during that subscription is yours, royalty free. And you can use it on your website. Commercial license is totally fine. Obviously also okay for personal projects. So. So you could use it on your website for your business. If your kid's doing a project at school, you know, they can use some of that, that, that art that's there. No problem. It's all good. You want to use it as your jingle. You want to use it as your podcast theme music.

Yeah. You're on hold music in your phone system if you got it needs it. Your vid, some videos running in your lobby. It's pretty cool.

It's really cool. Yeah. And don't, don't, don't think that people haven't been dinged for using commercial music, unlicensed commercial music in their whole thing. It happens all the time. Yeah. So really, it's a great service. We've been using it here for some of the stuff that we do. Really, you got to check it out. And for $149, it's an easy expense to capitalize across a full year. So check it out. Go to storyblocks.com SBS S-T O R Y B L O C K-S.com SBS to get all the stock images, video, and audio you can imagine for just 149 bucks. Our thanks to Storyblocks for sponsoring this episode. All right.

Sweet.

Yeah.

Good deal. So, yeah. So back to, you know, paying attention to all these details. You know, no matter what you do, a lot of the things we're going to repeat here and the rest of the show, but the details are, what is the killer in these things? And if you've done a few of these deals and look at these leases and we're going to get into the lease here in just a few minutes, but let me run through a few other things on the space type and then we'll jump in. I know lawyer Dave loves to talk about this paperwork stuff. So we talked about retail, office. That's right, that's right. One of the things, no matter what type of space you get, you really have to think carefully is how much space do you really need? I mean, it goes both ways. If you have calculated out that you can squeeze into X number of square feet, is that going to give you enough space to grow? If you're planning on growing your business, adding employees, storage, inventory, whatever it is, meeting rooms, think about it, you don't want to move in and 10 days later when you move all your stuff in, go, wow, we don't have enough room.

Yeah.

And, and this has definitely happened to me. On the flip side, if you only need 5,000 square feet, don't rent 10. Think about things to ask the, the, the landlord or the owner of the building is, hey, is there additional flex space available? Do we can, if you're in an industrial area, can we dump a container, a shipping container in the parking lot so I can get an additional, you know, eight or you know, few hundred square feet of temporary storage? Lots of stuff like that. Think about what you can go in and out of and can you shrink and can you grow in that same development without having to pay massive moving costs? So onto the next industrial space, which I know and love very well because I've been in it most of my life, but these are, you know, larger warehouses, flex space, whether it's office, lab spaces, that kind of stuff, typically higher ceilings, you know, 25, 30 foot ceilings, much lower cost per square feet typically than retail and, and even office space because you're probably out in, you know, maybe in the middle of nowhere.

Right, right.

And where the, the land is cheap. And you know, one of the things I love about, about spaces is coming up with creative ways to gain more space. And, and I always, probably about 15 years ago we rented a spot and we didn't have enough space and we built a mezzanine and you know, a second story out in the warehouse and over a certain portion of it. And I've just fallen in love with the space like this because it's so flexible. You can put people up there, you can put storage up there and it's typically space you're not paying extra rent for.

Right? Yeah, it's a one time cost of building whatever that mezzanine costs.

Yeah. So you could have just added, you know, a couple thousand square feet to your. To your. And lowered your occupancy cost, you know, dramatically.

Yeah.

And along with the same, you know, whether it's retail, office industrial zoning is a big deal. If you've listened to the show for a while, you might have picked up that. I'm not a big fan of authority and having people tell me what I can and cannot do, I really kind of dislike. But I live within the realms of that. But you want to be careful in when you. Before you sign that leases, it will. Okay, I've got two businesses maybe, or something else. Can we want to do this? Want to do that? I want to store my. This here. Like I mentioned, a shipping container. You know, are people going to freak out if you start doing some kind of, you know, crazy stuff or pushing the envelope? You got to think about it, who your neighbors are, you know, and how that impacts what you're going to do. What's it zone for?

Have you ever petitioned to have zoning changed for a space you own?

You know, I'm a big fan of asking forgiveness and not asking permission. So no, I have not. But I've had to rein things back in. In one of the things that we had done as we were in an industrial building and we started pushing the envelope on space and we kept raising the height of our pallet storage and just took it to the absolute maximum of everything. And we ran up against a fire marshal that just wasn't really happy with how things were going. And primarily built around the sprinkler and the volume of sprinklers that. The volume of water that these sprinklers could put out in the case of a fire, even though everything was, you know, we didn't have a lot of fire hazard stuff there, they wanted these things covered. And we had. Basically what it came down to was the. The pipe into the building was not large enough to handle the volume for the type of storage that we wanted to have. And we actually had to move. We got out of the lease. Out of the lease early. We only stayed a year. We fought the fire department for about eight months out of that year, and we had to move down the road into a building that had that bigger volume. Never would I thought to ask, hey, what are the. The. The, you know, foot per second, you know, ratings on your fire system? Because I just didn't think, well, they built these for high storage. Doesn't matter. But it does matter. And these kind of obscure things that you that you run.

Yeah, I know. My father in law runs a land care business down actually in Florida and he's grown it substantially. I think he's got close to 300 employees now.

Yeah, maybe have him on the show.

Yeah, yeah, actually, it'd be great to have him on the show. Yeah, yeah, yeah. He's a fascinating guy and really obviously smart about how to do this stuff. And I. And he, he got some new space, got some new land, rather built his new space. And in part of that, you know, he has all of his trucks leaving from there every morning at about the same time to go out and, you know, go to wherever they're gonna go to do their work for the day. And so he had to work with the town or the city to put a traffic light in on this street.

Oh, wow, right. That's a big deal.

So, yeah, you want to, you want to think about red tape and headaches. That's it. But they wouldn't let him build there if he didn't. So I think he covered the cost of the traffic light. But even if you're willing to pay for it, you know, you're now disrupting a road. Like there's, there's a lot of people that have a lot of opinions about that.

Oh, yeah, sure. Yeah, that'd be a great story, I'm sure.

But that's, that's the kind of thing is just, you know, thinking. Thinking about, okay, what, you know, where am I now? Especially if you're talking about getting your own industrial space where you're the one doing the improving on there. And part of the reason you're buying it is so that you can expand. Thinking about, all right, well, at what point are the people around me, like you said, you're pushing the envelope with perhaps what you're doing. Maybe what you're doing isn't. Isn't the problem how much of what you're doing. Yeah, that's true.

Problem. You got it. You got it. When you have people coming and going, or, you know, vehicles or this or equipment, I mean it, Everybody starts to look and like, what's going on, you know, And I've had that over and over and over. Really pushing the envelope of what you could do. Because that's a fun part of business, right? Yeah, I love that stuff. I'm like, well, sure, we could do that. I'm always open for ideas. But everybody around you may have a different. Yes. Different thing. And I want to come back and talk about that. Owning versus, you know, renting, leasing. Because there's some significant, a friend who's.

Got a T shirt, uniform business that is thinking about buying some land and doing this. And so I know, and of course I've heard people suggest this, but I think it's what you've done. They talked about him owning the land with one company, owning the building with another, or maybe owning the building and the land with one company and then leasing that to your business so that you're in both businesses separately.

Well, owning it in a simple thing, it's just owning it personally and then leasing it to your business has some dramatic tax advantages for both your individual taxes as well as your company. And if you ever go to sell your business, oftentimes they may not want your land or your building. So you can keep that asset even though the company has paid for it over the years and made the mortgage payment, the SBA loan, however you have it structured and then you have this asset that's performing and generating revenue that you get to keep and manage. So we can do a whole show on that because it is such a powerful way to build wealth. In some parts of the country it's a little harder. Namely where I'm at in California, in the Bay Area, where real estate is just insane. But in other parts of the country, you can buy a building for the price of a car and that can be income producing for multiple generations and you can become a whole nother business for you to own. Managing real estate that you didn't even think of. It's powerful. It's powerful. So let me talk about the one last type of what I would classify real estate is. I kind of call it the combo, which is industrial. It's kind of like your office thing we mentioned earlier, but it's an industrial space. But it's got signage towards a road or something where there's a lot of traffic. And it may have, you know, a storefront or a little bit of retail that you're. You could kind of convert to retail up front. And I love this combination because it allows you to capture maybe a new type of business that you otherwise wouldn't do. If you're in the box business or whatever kind of, you know, whatever inventory business. And maybe you can throw a sign up in the parking lot and people can walk in and buy your product that you otherwise are missing out on. Retail sales, you know, same if it's, if you're web based, typically you're paying an industrial rate to rent it or to own it. And there are none of the typical retail or maybe Even office type of regulations and things that would keep you from experimenting with new things. I really like the concept of it. It's worked really well for me over the years.

Huh. Yeah, it makes sense. And, you know, when you're improving upon the land, either building a building if there's nothing there, or, you know, expanding the building that's there, always thinking about not just what you need it for today, but making sure, like you said, with your mezzanine, doing things that can be used in very flexible ways going forward, either by you for things that you haven't thought of yet or if, like you said, if somebody buys your business but you retain the building, you can lease that out to somebody else. And the more flexible it is, well, the more customers you might have. Yep.

Yeah. You just don't know where it's going to take you. You know, you're, you're, if you're highly motivated to, you know, come up with new ideas and new things, having that flex space to do those things. I mean, I remember the first, you know, giant electronics load that we bought from Best Buy many, many years ago. Well, Best Buy just said, okay, here's what you have to have. We have to be able to back our semi trailer into your building.

Whoa.

We're going to leave it there for 24 hours. You can unload it and sort it, and then, then we're going to come pick it up. So we had that flex space because we had, you know, huge empty bay and they could back into all that kind of stuff. Otherwise, I'd have been thinking, okay, how the heck I'm going to do it?

And then when I made the awful building tents.

Yeah, well, you know, on the flip side, when I made the horrible decision to try to get in the TV business, I said, well, we'll just, we don't have enough room. We're going to, you know, we dumped five EMP shipping containers in the back parking lot and we filled those full of what was, you know, worthless televisions eventually. But at the time, it was a great idea, or I thought it was, but. So you want that flex space, man, it can really lead you down to stuff you haven't even thought about. But to get any of those spaces, if you're, if you're renting, you're gonna have to sign a lease, right?

Yeah.

And, and let's spend a few minutes talking about the lease. We're just barely going to touch it. And then we'll give you some, you know, some good resources to, to, you know, find more. The first thing to remember is no matter what real estate agent you're using is, you know, these guys are going to make, you know, 5 to 6% per year for the life of your lease. So you want to be sure you're really getting some good representation that you're not, you know, maybe getting pushed into a spot that is going to make someone else more money than you, you know, versus what's going to meet your needs, you know, for your, for your building.

Right.

And before you again fall in love with this place, you need to see what the terms are and you need to kind of familiarize yourself with what some standard lease terms like industrial gross, triple net and that kind of thing. We'll put a link up from eforms.com I love their site because you can basically go through and create a sample lease, doesn't cost anything. And you can see all these terms that start popping up and you can become familiar with them and educate yourself. Like you mentioned, Dave, a couple of, you know, very basic, two different kinds of leases gross, one monthly fee, pays for everything. Those are fantastic. I love it. There's no surprises.

Yeah, that's, that's kind of like a lease that you might have on an apartment.

Yeah.

A lot of times it includes your, you know, your utilities or whatever and it's just one price and you're done. Yep.

Or you got it. Which is nnn, as in sometimes I would say no, no, no, because it can save you money, but it can also really, you know, kind of sneak up on you with some, some surprises. Yeah, it's basically, you know, monthly rent plus expenses for things like common area maintenance, which could be, hey, the parking lot has to be repaved and it's going to be $40,000. And if there's, you know, four tenants and you're going to split it be 10 grand.

10 grand. Yep. And I've, I've been. My first triple net lease. I had heard about them, but I never had seen one before and it was presented to me and it was just, it was like boilerplate and probably the same lease that most people sign everywhere. But because it was my first one, I'm like, oh, this is crazy. Like you have a, you can like the, the rent that you're charging me is almost irrelevant. You have the ability, as I said to our landlord, you have the ability to force me to write you a blank check every month because your common area maintenance is very loosely defined. And so I went through and I said, what are these things? They're like, well, it's just common area maintenance. Just any fees. I'm like, that's great. Yeah, yeah, no problem. I get it. We're on the hook for that. Let's list what they are. And so I sat down with them, and we listed all of these things and we put it in the lease. Great. And then six months later, we get a common area maintenance bill. Normally it was like, you know, whatever it was, maybe I think we were paying. It was office space, so it wasn't really retail. It was one of those sort of things. It was actually for Backbeat Media down in Austin. But it was, you know, I think we were paying, let's say, 500 bucks a month in rent, and then our common area fees were like 150 bucks. So, okay, fine. One month, I get a bill, and it's $1,500. And it's like, okay. They're like, well, you have to pay this.

Yeah, we needed the new xyz.

Well, no, they said, well, we had some legal fees because somebody slipped or. I don't know. It was very nebulous. They wouldn't tell me what they were. But I said, well, it doesn't matter. Legal fees are not on our common area maintenance. Like, that's not on the list. And they're like, what do you mean it's not on the list? I said, well, go ahead into your file and take that lease out. I've got copy here, but I know you're going to want to see it on yours. And they pull it out. And of course, there's addendum one that has this list. It's like, yeah, there's no legal fees there, so why don't you recalculate that? And they did. They recalculated. Was 150 bucks or whatever, you know, whatever it was.

Yeah, yeah. And so you just. You got to be careful, you know, because it's also things like property taxes.

Yep.

And if, you know, if they sell the building and you're still there and the property, you know, if the building was worth 200,000 when the guy bought it, you know, 20 years ago, and now it's worth $2 million. This is, you know, if you're in Californ, all those taxes are going to skyrocket, and you're going to be on the hook for that based on your square footage. So if you only have 5,000 square feet, you're going to pay less than the company that's got 50,000 square feet in the same building.

Right. That's usually how it works. They take the total square footage of the building and divide that up percentage wise by how much you have versus the total square footage, and then that's the percentage that you owe of your common area. Area maintenance.

That's right. And so I would argue that you should try to negotiate industrial gross leases as much as possible. I think it's much harder to do in a retail and maybe even an office space. It's a little easier in an industrial spot, but you got to know what's going on. I really like that idea, Dave, of listing anything that it could be to help you avoid them, just adding whatever they want.

I don't like surprises. I mean, you're going to wind up with surprises anyway. But I like to limit them and just like, okay, what do you, you, what do you, what you've run this. You're not the first, you know, this isn't the first time you're leasing this. What. Show me an example of what these things are. Great, let's list it down. You want to look at the last 12 months? No problem. What's in here? Let's, let's put it down now. We're all signing the same agreement. Now we all know the same thing.

Yeah, yeah, it makes sense. And yeah, I mean, we're running a little long, but I still, I want to kind of hit some, just graze over a few of these other things and then we'll give you some links to learn more. But you know, some of the things in the lease that you need to know, you know, what kind of rent increases are the going to build in over time? Because you know they're not going to be happy just collecting the same amount every year. What utilities are you responsible for? Responsible for really important. What insurance are you required to have in order to be in that building that can really impact your bottom line? And if they sell the property, can they cancel your lease so you could be forced to move? You know, really important. And also, what happens if things go wrong and it turns out you don't need the space or you don't need as much space? Space. Can you sublet. Is there, is there an addendum in there that if you know, they approve the person, can you sublet it? And then, you know, one of the negotiable parts of looking for a space and in that lease is what improvements is the building owner willing to do for you? Are they, will they build out offices? Typically they want to do paint and carpet and then leave it as is. But do you need some walls built? Do you need, you know, whatever. Do you. Does it have a kitchen? Do you need to build a kitchen? And, you know, my experience, the more stuff you continually ask them to do, the less chances of getting a really, you know, a discount on the rent. You know, we found. Try to get them to throw in, you know, couple months free rent or whatever it is in the beginning, and then we'll pay for those improvements. We typically saved money, but your, you know, mileage may vary on that.

I never, I never thought to negotiate that way. We weren't doing major improvements anywhere. But that's really interesting is saying, hey, look, let us paint the, the, the thing and we'll. We'll roll carpet in here.

Yeah, we'll do it.

Yeah. Huh?

Yeah. Because they're going to use the cheapest stuff they can get their hands on. Of course, you're trying to, you know, you're trying to build out a nice lobby or you need some special this or special that. Say, look, you know, give me three months rent, you know, free. And oftentimes what they'll do if they're smart is they give you those three months free on the back end.

Yes. Yeah.

Because they want the money.

Yeah. You get months, 10, 11, and 12 free.

And so, you know, that's just the basics. There's a lot to delve into. We'll put some really good links up on the in the show notes and up in the Facebook group@businessshow co Facebook, and we encourage you to dig in and learn more and to also share your stories and give us your feedback@feedbackusinessshow.co. we'd love to hear your stories about your lease and your successes and your horror stories, too, because, you know, we love those.

We do love horror stories. And yeah, make sure you visit that Facebook page because I think we're going to have a little giveaway going over the next week or two. It's, you know, it's the holidays, I think we are.

Right. You know. Yeah. Giving Tuesday or something like that. Giving Wednesday.

Oh, yeah, that's right. We're recording this on Giving Tuesday.

There you go. There you go. Perfect.

Cool.

Good stuff.

Thanks so much. This was fun. I like this. Now I want to go, like, rent space. I don't need space, but I don't.

Go buy a building and become a landlord. Lord, that's what you want to do?

Yeah, that's what. Yeah, maybe it is. Yeah. Thanks so much for listening, folks. Make sure to check out storyblocks@storyblocks.com SBS for that deal that helps us, and it helps you. That's all we got. Hey, make sure you keep living that charmed life. See you next time, Shannon.

Take care, everybody.