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In your
business plan you determined whether your city or town as a whole would support your store and perhaps you even decided upon a particular section of town. Now it's time to get down to the nitty-gritty and look at specific properties. As with buying a house, the rule of thumb is location, location, location. If you can afford to purchase your building that it is usually the best long-term investment for your business, but for the purposes of this article, I will assume that most of my readers will be renting their spaces.
It's best to think of your rent expense as part of your marketing budget. If you pick a bargain-basement-priced unit way off the beaten path, you're not really saving that much money since you'll have to spend more in advertising to let people know that you exist. Whereas if you have a huge building with a gigantic sign right on the main thoroughfare, you may not have to advertise at all. The ideal location for your business is most likely going to fall somewhere in the middle of the two as you try to find a visible, easy-access spot whose rent doesn't break the bank and still leaves some money left for advertising.
Writing your business plan should have given you a general idea of the size space you need. For the average used bookstore, 1400-1700 square feet is probably adequate. My shop is 1600 square feet with 2 bathrooms, a back hall, and a back office. We could have easily gotten by with 1500 square feet with a better configuration. Keep in mind that the larger the shop, the larger the expense.
Commercial real estate is often divided into different classes. Class A is the best and usually refers to top-of-the-line new construction in the best locations. Think the Fifth Avenues of your city. My city, Greenville, South Carolina, has at least three Class A areas: Haywood Road (the city's primary enclosed mall is on this road), Woodruff Road (home to the newest open-air shopping centers), and our revitalized downtown. Class B real-estate is usually a bit older and in a commercial retail area, but not on the very main drags. For example, my shop is located on a 4-lane street that runs for a couple of miles from an older, affluent neighborhood to our downtown; I'm near its intersection with Haywood Road (a class A area) in a small shopping center anchored by a well-known restaurant that's been around for 10 years. Class C real estate is the bargain-basement stuff that's offered at a discount price for a good reason - it's impossible to turn in and out, it's not visible from the road, it's on a little-traveled road, it needs major repairs, etc.
I would suggest telling your real estate broker - if you don't have one, see
this article - that you wish to look at non-mall Class B real-estate ranging from $12-14.00 per square foot per year. This amount should include your base rent and any charges for common area maintenance (CAM), taxes, insurance, etc. If you are in a big East Coast or West Coast city you may have to pay more, and in a small town you may find even cheaper space, but the above figure works in Greenville, South Carolina and even in St. Louis, MO (per the proprietor of a 5-store comic shop chain) if you negotiate well enough. If you don't like anything in this price range, look a little higher but be prepared to negotiate hard. After six years in business, I'm paying just under $15 per square foot, and if I'd known all the lease-negotiation tips I'm going to share with you in the second part of this article, I'd be paying even less.
When I first opened Fiction Addiction, my shopping center had two well-known restaurants that had been open for 6-10 years, a Medicine Shop drugstore, an independent kitchen shop, a Papa John's Pizza, a well-known kid's haircutting salon that brought people from the next town over, and a couple of other shops. I'd have preferred a few more retail shops but this mix worked quite well. The pizza place, drugstore, and haircutting salon were all places that customers expected a bit of a wait and so often wandered around the shopping center and into my store in the meantime. The restaurants and kid's haircutting salon were destination businesses that brought customers from all over and could be used as landmarks when giving directions. The kitchen shop's clientele were older, affluent women - a good customer base for me. When evaluating shopping centers, consider not only their location and price but also the synergies you can expect between the other businesses there. Some businesses may even have negative synergy - for example, grocery stores also sell books and their customers usually have to run right home to put the refrigerated/frozen goods away and so are unlikely to stop in your shop.
When evaluating different locations, here are some other factors to take into consideration:
Keep in mind that an open space is not usually good for the existing owners, and so they may try to gloss over any negatives.
If you have any questions about choosing your business location, please email me at fictionaddiction@juno.com
or post your query to the
BookThink Open Shop Bookstores forum, and I'll do my best to help:
Once you have one or two prime candidates for your storefront location, it's time to start negotiating. Stay tuned for Part II of this article: Lease Negotiation.
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