A Checklist for Moving Your Business Into a Leased Location

Hi, welcome to the Pelby Biz Podcast. Are you a pelvic health PT or ot? Struggling to start your own practice? This podcast helps pelvic health PTs and OTs get out of debt, gain the income they desire, be able to treat patients without insurance restraints, and learn how to create time freedom for yourself and your family. I'm your host, Dr. Kelly Alhui, founder of Ortho Pelvic Physical Therapy, Pelvic health Business grower and Pelvi Biz. Over the last two years, I went from a solo entrepreneur to a seven person team in counting. I'm here to help provide a clear path to grow your pelvic health business as fast as possible so that you can gain the time freedom, decrease debt, increase income and live the life that you desire. Before we get started today, make sure you click the link in our bio to grab your ticket for Pelvi Biz. Now let's get into today's episode. What's up guys?

Welcome to Pelvey Biz Podcast. I'm your host, Kelli Alhui. Today we're going to talk about can you afford office space? It's a big question people have and it's a scary step to take because you just don't know if you can take on this lease agreement. So we're going to talk about things that you need to have in place and things that you need to understand before taking on a lease agreement. Okay, so number one, what is your business budget? What is it? And you may be like, well, what's a business budget? I just did a podcast on this, so hopefully you listen to it. Okay, number two, how much do you charge per patient? So on average, pelvic health pts cash. Pelvic health pts charge about $200 a visit. And then I need you to know how many patients are you seeing weekly? So for those that think, Kelly, my schedule fluctuates and I don't know how many patients I see weekly. Take an average. So I would do a month and then take an average of what you saw, just divided by four of each week, divide it by four and see what you get. For your average of what you see weekly, how many patients do you see in a month? We need to know that. So this is the formula that really is kind of the standard to the industry of if you can do you actually know if you can afford the space that you're in? So what you do is you take, I would write this down what you charge an hour. So let's just say I charge 200 an hour, and you times it by the patients that you see in a month. Okay, so let's do the math. I'm gonna do the math as we're talking to this. So let's just say I charge $200 an hour and I see 50 patients a month. So I'm gonna do 200 times 50. That equals $10,000. Okay, $10,000 a month. Then what I'm going to do is I'm going to times that by 0.10 by 10%. That then gives me $1,000. That is what I should be paying in rent is $1,000. Okay. Or less. So in general, the gold standard for rent is anywhere between 5 to 10% of what you're actually bringing in per month. Okay. So in the case I just gave you, $1,000 would be accurate on that for a space. Okay. And that make. That would make me feel like, okay, yes, I feel confident in going forward with this decision. There are some cases that you do have to initially be over that 10% just to get your business up and running. There are cases where you can be under that 10%. So just know that that's kind of the gold standard and that's something to go off of. If you're like thinking, well, can I afford the space, can go off of that and then adjust accordingly, saying, well, if it's more than that, can I fit another five patients on my schedule to make that up? Is that something that's doable or is that not? Here's the other thing. On average, office space runs about 14 to 20 a square foot. And that's kind of nationally, okay. Some places can be more, some places can be less. This is another question I want you guys to ask. When it comes to a lease agreement, if there's any build out, who is going to pay for that? So typically how this works is, let's say I go into a facility and I'm like, man, it would be nice if I had an extra wall here. Because we can create a room, especially for us pelvic health therapists, we need rooms. So walls have to actually go up. So if I need a wall to go up or a room to be created, who's responsible for that? Typically, this is how it goes. If I want the building to be responsible or the landlord of the building to be responsible, what they'll actually do a lot of times is just say, okay, instead of a one year lease, I'm going to now have a three year lease because this build out is going to cost me 10k and over the next three years, I'm going to spread out that 10k to get my money back and they'll have you sign for a longer lease term because you're going to be paying them, you know, 40, 50k for the whole year just to have that lease. And so basically times three, okay, let's say it's 50k. Well, that's like $150,000 that you're actually going to be paying them. So is it worth it for them to put up a 10k room in the office space? Yes, it is. So this is why they have you sign a longer lease term. Conversely, if you have the money, you can put the money up front and say, no, I will pay personally for the build out and have a shorter lease term. A lot of times, I mean, that's okay if you want to do that, but I just don't recommend that because if I feel that I'm going to be moving out of this space within the year, I just wouldn't invest that much money and try and throw up walls. I would just have them do it and then make sure that the facility that I get, I don't outgrow it that quickly. It happened to me and I'll tell you about that in a minute. But yeah, I think that's really important to kind of keep in the back of your head. Is this something I can grow into? What are my options? Can I take, you know, maybe there's space next to my suite, Can I take that? If I start to grow, Is there space with the same landlord and other buildings and other places? A lot of times if there is a landlord that has one building and then they have another building like right down the road or you know, in a different location, a lot of times you can upgrade and you won't have to pay a fee to get out of your lease. If you, if you have to get out of your lease early, let's just say you're, you're growing so fast and you had to get it out of your lease early. You typically have to pay one to three months of rent when you get out of your lease. That way it gives them time to find someone else to bring into that space. Okay, so that's, that's just for, just so, you know, for build out as well. Okay, so how long will the lease term be? This is kind of important if, you know, if you're thinking like, hey, this is just a small room, I would then just sign a year term. I would not sign longer than that because Within a year, all of you guys should be outgrowing a single room. Personally, when I got my space, I signed on. My first ever space was a gym space with two rooms and it was just me at the time. I had no one working for me, I had no admin. And yeah, it was probably too big for me, but. But within a month, two, no, within three months I grew into it and the rent was super cheap. It was like $900. So I could pay for it. I could pay for it and still be okay. If you get a bigger space as well, guys, you can also sublease the rooms out for like four or $500 a month. So that's another way to look at it. And then as you continue to grow, then you don't sublease those rooms out and then you put an actual therapist in there. That will make you more money than getting four or five hundred dollars a month from that. So it's another way to help, you know, build the revenue at first when you're getting the space. Okay.

Hey there, it's Kaitlyn from the Jane team. Finding a practice management software can feel like a daunting task. But with Jane, it doesn't need to be. With helpful features like client friendly online booking, efficient charting and online payments, you'll find it is possible to love the software you use every day and you'll be backed by a real in person team by phone, email, email or chat support. Head to Jane app to see how our features can save you time and get you back to doing what you love.

Also, just so you guys know, it is normal that every single year they add a 3% upcharge onto what you're currently paying. So let's just say I sign a three year lease and they're like, okay, Kelly, the first year is $1,000. The next year they're going to add on 3% and then the next year after that they're going to add on another 3%. So just so you guys know, that's, that's normal. So rent does go up every single year when you're renting? Typically, not always, but typically that happens. And then I want you to think about how can you max out the facility that you have. So let's just say I'm like in California and I have super high rent and I can only afford just a room. Okay. Most people will say to me, Kelly, I can't bring on another therapist because I only have a room. Well, that's actually not the case. You guys can adjust your schedule so that Both therapists can work out of that room. So you want to take the space. You want to say, how much time do I have this space? Is this a space that you have on the weekends? That's important to ask, by the way. Do you have access to it 24, 7? Do you only have access to it, you know, Monday through Friday? Can you get in the building? Like, when can you get in the building? And then can we build a schedule around that? So can we build a schedule that one therapist works from 7:00am to 2:00 clock and the other therapist works from like three to seven or three to eight, whatever that may be? Maybe a therapist works on a Saturday. Maybe a therapist works on a Sunday. People do this, guys. I mean, we do it. My therapists work on Saturdays. Right, but how can you utilize the space that you have? And if you're thinking, well, where's my admin going to go? Well, maybe you have a virtual assistant. Maybe you don't need to spend money on an extra room just for your admin. My first office, I put my admin in my gym area. She took up half the gym area, but that's where I put her. Okay. And then also it's a really important to ask, like, what is the responsibilities that you have versus what your landlord has? So who's in charge of the Internet? Typically that's going to be on you, the business owner who's in charge of electricity. If it's kind of an all inclusive, then they'll be in charge of electric. Sometimes they'll also pay the cleaning fee, which is great. Sometimes if there's like, it's called a cam. They have a cam on there. What that means is, let's just say, like, here we have snow days, okay? And let's just say it cost them $30,000 to put the salt on the sidewalks and to remove the snow. What could happen is they can say, well, that cost us $30,000 that we didn't budget for.

And.

And so now every single tenant in that building, we're all going to split that. And so they could literally just come to me that month and say, oh, because this costs $30,000, you now owe me $4,000. This is why you want to try to stay and avoid cam leases. Okay? If you can't avoid it, then you can't avoid it. But what I would try to do in that lease is then see if you can cap it to where the cam can only be up to $1,000 or up to $2,000, because it can vary based on building expenses. And if they don't have a good accountant or manager of the actual building, then you can get stuck with some pretty crazy, you know, fees that all of a sudden you have to pay. Pay this. So just so you know, you want to ask, like, what is included? Is cleaning? Is electric? Like, is Internet? Like, what is included in this space? Is water included? Like, what is it? So these are things, guys to think about when you're actually leasing space. What do. What do you want to ask for? You can also ask for in this, like, to not have another PT clinic next to you in the same facility. You can also ask for that. You can also, if parking is crazy, like, we're by D.C. so if parking's crazy, you can also put in your lease that you want four parking spots up front so people don't have to walk far. And it's a hazard to like, get into your building and at least limits people from coming in to your business. You can also ask to put your name on the building because that's marketing, right? What else can you ask? There's just, there's so many different things I would ask them, hey, if I break my lease, what do I actually then have to pay? That's an. That's an important question, just in case. You never know. Or ask them, like, if I have massive growth, is there another facility that I can move into that would have room to fit three treatment rooms? And they may just say, hey, it depends on when that happens, but please, you know, let me know and we can kind of work with you on that. And another, another question I would ask them is, overall, you know, once you really start, maybe this is your second space that you're going into. Like, can you buy the space? Because overall, that's when you're not going to waste 40 to 50k a year just on rent. You'll be able to get that back. So that's just something to keep in the back of your head. I won't go over that now. But that is something like, is there potential to buy the space? If you really think, like, hey, this is a great location. You know, I really could see myself growing into this. Maybe that's something you can think about. And I would highly, highly recommend you guys getting a commercial realtor. They do not cost you anything. They do not cost you anything. Let me say that again. And what happens is the property management companies of, or the building owners of these big buildings will then pay them for bringing clients into their facility so you don't have to Pay them a fee. So it is completely free to you guys. Some commercial realtors are better than others, especially if it's, you know, you're just looking at a $900 a month facility. They're probably not going to make much profit off that. But still, at least they could help you. And potentially, if they're really good, they can look at it like a business deal of, hey, when she starts making more money, then maybe she's going to buy this place and maybe then I'll get a return on, you know, return on helping her. Okay, so definitely, highly recommend getting a commercial realtor. You may have to look into a couple to help you out, but they're going to know the best places to actually go into and what buildings are actually running really well. And that's the other thing, building management, it's different. Sometimes the building management is not good and there's like bugs in the ceiling and just whoever manages the building, they can be horrible. So that's something else to think about is who manages this and how well is it managed. So that's another thing to think about. But hopefully this helps you guys. Anyone that's looking for space or, you know, trying to figure out can they afford space, how to even, like, what to even negotiate in a lease, you know, hopefully this should be helpful and you guys should go in asking and what, not asking, telling them what you want. Like, you should go in and be like, I need this, I need this, and this is what I expect. And then we can negotiate from there. Do not let the leasing agent or, you know, the person that owns the building determine kind of what your faith is in the building. Like, you need to go in with a plan. So you need to go in saying, this is how much I want to pay a month. This is, you know, where I'm at. This is what I can afford. This is how much I want my lease term to be. And I would also have, like any lease agreement I've gotten into. I also had an attorney for like three or four hundred dollars look over the contract just to make sure I wasn't missing anything. And so it's a commercial attorney, and they look over contracts to make sure that all the wording and everything's right before you sign it. So I'd also just hire on an attorney to look at that for like an hour, maybe two hours. It may cost you $700 for two hours to look it over to approve that. So. All right, guys, so hopefully you learned something about leasing office space, and hopefully that gives you confidence and you know, you know if this is the right move for you or not.

If you are ready to change your life, click the link in the show notes to get your ticket to Pelvis.

Let's go. It.