How to Build Your Business on Solid Footing

Every business needs a place to live, and how you choose your real estate can have a huge affect on the success of your business. I’ve learned a lot over the years as a real estate expert and an entrepreneur, and the same rules apply to any business. If you’re looking to rent an office, lease a retail space, or buy a piece of real estate to house your business, here are a few guidelines that will help:

1. Rent on the right side of the street. There’s a right and a wrong side of every street, and before you rent a retail space it’s smart to stand out front and count how many people walk by the door at different times of day. Every main street in America has double the foot traffic on one side over the other, which translates to more customers walking in your door and making a purchase. Rent the space on the right side of the street.

2. Opt for a longer lease. For a young business, signing a lease for two whole years sounds like a heck of a long time, but when you’re busy building a business, time flies. Be brave enough to sign a longer lease, say for four to six years instead. Your biggest fixed overhead cost is often your rent and if you can lock it in that puts your business on a secure foundation. Even if you have to agree to give your landlord incremental rent increases within the terms of the lease, it will cost you far less in the long run. Later if you want to unload the space before the lease expires, you can as long as the lease provides for the right to sublet. Most landlords readily give that option when you sign a longer lease.

3. Rent twice the space you actually need. New offices are like empty closets; they never stay empty for long. When you have extra space to fill, it forces you to grow your business faster. Too many businesses are held back because they simply don’t have the space to grow. When my brokerage business was still young, I moved 50 sales people into a new space that had room for 100. With the enormous pressure of desks to fill, my little business grew at rocket speed and the office was filled and churning within six months. Always rent more space than you need.

4. Count the windows. Fresh air and good light make workers happy and more productive, no doubt about it! The sun-filled corporate office I moved my company to in midtown Manhattan cost 20% more than every other space on the block. But I filled the 200 desks with very happy people and that happy space made my staff twice as productive. Before you decide which commercial space to rent, count the windows.

5. If you’re opening a store or restaurant, try to buy the building. Smart landlords try to up your rent in line with how well your business grows, and they often succeed. In no time your shrewd landlord will feel like a greedy partner taking the lion’s share of your profits. The number one reason small restaurants and retail shops close up is because the landlord eventually doubled their rent. But if you’re smart enough to buy your building early, even when it means taking on a mortgage you don’t think you can afford, you’ll thank yourself later! When it comes time to sell you’ll have not only a successful business but also a valuable piece of real estate, often worth more than your business.

Want more advice? I recently sat down with LinkedIn Executive Editor Dan Roth to share my thoughts on building successful businesses, hiring the right people — and using rejection to your advantage.

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