When considering the idea of starting a business, there is an important decision to be made. Should my business be home-based or should I go out and lease a storefront? There are advantages and disadvantages to both.
Probably the most advantageous aspect of a home-based business is that it is at home.
Interestingly, this is also a disadvantage. Having your business at home is very convenient. But working from home requires a great amount of self-discipline. There are just too many distractions and temptations that can cause you to lose your day-to-day business focus. But if you can keep your business face while working from home, it can be very satisfying.
With any business, there are some equipment requirements and you will need space to efficiently operate the equipment. And this is in addition to space needed for storing inventory and office space for administering your business. Maybe that means conversion of a spare bedroom or dining room, or both. Or, if it’s available to you, maybe you have a garage or other free-standing outbuilding that can be converted to you new home-based World Headquarters. One warning…don’t be surprised if, as your home-based business gets going or, God forbid, it actually grows, that the business starts spreading into other areas of your home. Plan for it. It will happen. That’s when you start considering whether it makes sense to rent a storefront.
The biggest disadvantage of a home-based business has to do with the act of showing or displaying the products you may have depending on the type of business you decide on. Most homes, either by design, location or both, are not conducive to having customers stop by for a visit. And although there is no doubt that home-based businesses have come a long way over the last several years, it is still true that most prospective customers have a reluctance to go to someone’s home to do their shopping. So, assuming this is true (it is), this means that any solution will include that you show your products outside the home. This may include gathering up certain products and going to the client’s premises or location, or by utilizing catalogs and other visual media. Can you spell
A-D-D-E-D E-X-P-E-N-S-E ?
A storefront location outside the home solves the problem of how to display your products. But a storefront also represents the main reason that folks consider trying to have a business based out of the home. And that reason is monthly rent. To think that there is a rent payment to be made each and every month whether or not anything sells is a serious and rude awakening. Frankly, many owners of businesses that ultimately fail can point to the fact that they were paying too much in rent as one of the significant factors contributing to the failure. This may or may not be true. Every situation is different. But one thing is absolutely true. If you are going to be leasing your business space (premises), it is absolutely essential that you not overpay for the space and that you not lease more space than you need or will need in, say, 12-36 months, and that you not obligate yourself for more than one (1) year at a time.
Did you catch that last comment? Let me repeat it. When it comes to negotiating the lease, do not obligate yourself for more than one (1) year at a time. The ideal would be to only be obligated on a month-to-month basis. But in the world of business, a month-to-month rental agreement is not going to be realistic. Actually, from the landlord’s point-of-view, it is in his or her best interest to have a stabilized tenancy of multiple years, generally 3 years give or take.
The phrase “lease negotiation” is just that. A negotiation. If the owner or leasing agent wants a 3 year lease, and you want a month-to-month agreement, a 1 year lease with options to renew for years 2 and 3 is quite realistic. Of course, ultimately the desirability of the space, its location and the rental market will determine what the landlord is willing to negotiate.
As I mentioned earlier, in addition to negotiating the term of the lease (how long the lease runs), it is essential that you not overpay for the space. The amount of monthly rent you will pay is generally based on what you will be paying per square foot. The market generally will dictate the amount of rent per square foot. Some property owners think that their space is deserving of rents higher than market. Others are more realistic and will negotiate based on how motivated they are to have an occupied space rather than a vacant one. In the end, do your homework. Check out what’s going on in the rental market. Consider whether you must have the very best location or if a second or even third best location with a more desirable lease and monthly rent might still be adequate for your needs.
By the way, there are alternatives to being home-based or having a storefront in the traditional meaning. One alternative has to do with having a booth at craft fairs, home shows and/or swap meets. Technically, this is probably just another form of being home-based, but it solves the problem of displaying your awards & trophy merchandise.
Another alternative is the Internet. The world wide web. To say that the Web is over-saturated in general might be an understatement. And I will warn you, there are a lot of businesses using the internet to generate sales. This means lots of competition. But if planned and executed properly, there is still money to be made selling on the Internet.
If any of this is of interest, and you would like more information or you have questions, please post a comment here and I will respond. Just click on the link at the top of this article, next to the date. Thank you.
