Real Estate on a Budget

By RALLE KARADJOV With the economy in a slow upswing, many people in the United States are leaning toward opening a new franchise. New business owners who pursue the franchise route now have ample choice for their new venture, and many of them can get started with less than $100,000. However, before locking up what appears to be the perfect opportunity, there are many factors that go into making a business successful, starting with real estate. Signing on with an established franchise lends a franchisee convenience and support when it comes to real estate. Franchisees receive guidance and a firm set of criteria when looking for a space to open their business. Despite this advantage, many factors must still be assessed. Anchoring yourself to a shopping center or grocery store may be more useful for retail franchises, whereas a consumer power center with major players may make more sense if your business is service oriented. Randy Trotter, an area developer for Boneheads restaurants, believes that location is key for a low-cost startup. “Brands without name recognition need to be in better centers to survive,” Trotter says. “Once a concept has brand recognition, they can develop in different locations.” Visibility, access, parking and demographics are all essential aspects of choosing the perfect space to maximize your brand and potential business. These factors should be considered, and there is no need to rush into signing a lease on the first property you see. Mark Weaver, partner at AmCheck of Bolingbrook, Il., says he spent around three months finding space for his new office location. “I looked at 25 different office spaces in this general area and just happened to come across an office space that was nice. It was also good for us because it’s located right off the highway--it puts us close to freeways going in all the important directions,” Weaver says. Starting a business is no easy task, but there are many resources available to the new franchisee including the International Franchise Association and the Small Business Administration.  We’ve also compiled a list of helpful tips for you to help cut down real estate costs when opening your new business. Do your homework on rental costs Average per-square-foot cost is important to know when shopping around. This allows you to have a basic knowledge of the area you’re targeting and it ensures you aren’t overpaying for a space. Find representation A lawyer or retail broker can negotiate your lease and can ensure you will be able to run your business properly, “Once you find a place, make sure you know what you’re getting and what you’re paying for, and specifically, what is not included,” Weaver says. “I never even considered the possibility that our garbage would not be taken care of, but using the dumpster wasn’t part of our lease agreement. Location, Location, Location! Decide whether having a high-traffic location is really worth it, or if you can still work at optimal capacity in a less populated area. Seasonal Startups Many low-cost startups operate seasonally. See if short-term lease options are available for the duration you will be open for business. Scope out the competition Many times, a lawyer or a realtor can add a clause in your lease to assure you the landlord cannot rent properties to a direct competitor within a certain distance of your location.