You own a business or you are the decision maker for a business and are under pressure to save money. Your company’s biggest cost is labor and you know the minute you go to cut costs in that area, you are making headlines you don’t want to make. How do you cut costs and come out ahead? You look to your second (or maybe third) largest business expense – your real estate. Below are 5 meaningful ideas to save in potentially significant ways:
Evaluate your real estate portfolio, whether one building or many
Is it time to consolidate? Are lease options coming up that allow you to move to more efficient or less costly space? If so, take advantage of them by knowing about them ahead of time and acting on them for leverage.
Create a lease requirement and priority list
This will streamline your efforts when looking for space or evaluating your current space and gives a great head start to your local broker in finding the right place for your business. All Landlords are not created equal – some are long-term holders, some are short- term investors. Some are motivated by establishing a higher rental rate and providing a much higher tenant improvement allowance while others are willing to give a little on rental rate in order to avoid the capital outlay a tenant improvement allowance requires. If you are a business that relies heavily on drive by traffic and signage but you have a smaller square foot requirement, you may be less worried about the net rental rate. How does creating this list save money? By prioritizing what is most valuable to your overall business strategy which in turn helps you reach and maximize your goals.
Leverage your real estate portfolio costs and buying power: Do you have more than one site?
If so, there are ways you can improve your buying power. Even if you can’t consolidate space, you can analyze how you are buying supplies and services and look to work with less providers to leverage your real estate spend. Another way to create portfolio savings is to use a provider whose buying power you can leverage (ie: work with a cleaning company who has many clients and therefore buys more product at a lesser cost).
Catch hidden costs through Lease Administration/Audit
Believe it or not, many business owners sign a lease, breathe a sigh of relief that it is over and tuck it away nicely in a binder in a filing cabinet never to take it out again. Having a clear understanding of what costs you are responsible for vs. a Landlord can save you thousands of dollars a year. And, it is important to audit these costs from time to time to ensure accuracy.
Hire a commercial real estate broker
Brokers do more than find your space and negotiate your base rent or purchase price. A good one gets to know your business goals, how you want to grow, what your priorities are and uses that to negotiate on many different levels. They have market experience beyond quoted rates, they know Landlords and how they operate, and potentially what they are motivated by. They know how to mitigate risk on your behalf in your lease or sales contract. The real estate market is complex; count on an expert you can trust to guide you.
Bottom Line: Your real estate is important and costly and likely a source for savings that can accrue to your bottom line. It deserves attention and expertise to make it work on your behalf!
Contact us today to discuss how we can help improve your bottom line