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Old 12-21-2011, 08:37 PM
 
6 posts, read 38,357 times
Reputation: 15

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I have a cell phone repair business that I want to expand. Business is good so far, and I want to move from a home office to a small retail space. Problem is when I was younger I made some bad choices which led me to file bankruptcy. The good news is I've worked hard to get my credit back on track, but I'm still about two years out before my BK drops off my credit report - but I can't wait that long to expand my business. Really I don't need much space - just enough so I'm able to have somewhere my customers can drop off their phones a little more easily and professionally than at my house.

I wanted to ask for some advice before I start calling up management companies and getting laughed at. My business is still fairly new, and I don't have a lot of business credit built up yet. I would like to avoid a co-signer if possible.

Any advice?
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Old 12-21-2011, 08:56 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
33,093 posts, read 60,101,561 times
Reputation: 36567
For commercial real estate leasing credit record is not as important as having surety. If your credit is mediocre you can still get a lease but may have to put up 6 months rent in cash, a letter of credit or bond that will not be released until the term ends. You will also need business insurance with the landlord as additional insured and they will have specific requirements for
the liability, property damage etc.

You will also likely have to put up sizable deposits for utilities, internet, garbage, and may have problems getting equipment leases and credit for materials/supplies if needed.
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Old 12-21-2011, 09:02 PM
 
69,360 posts, read 58,064,785 times
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You'll be fine. Most landlords can appreciate the fact that entrepreneurs have filed bankruptcy and in todays economy, they will be willing to take a chance on renting out space rather than leave it vacant.

The bk will probably never come up, and they wont ever know unless you tell them.
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Old 12-22-2011, 01:56 AM
 
11,282 posts, read 46,201,163 times
Reputation: 15240
What type of retail space are you considering?

While a stand-along retail storefront may have it's advantages for traffic/parking ...

It doesn't sound like you need a lot of space for your business.

So, rather than getting into sizable obligations for utilities/insurance/ground rent ....

How about renting a small office suite, a couple of hundred square feet? That would be a "professional" location for your purposes and would give you a retail exposure without the cost of a retail storefront.

Or, how about a kiosk at a shopping mall? An 8' x 10' booth would be a professional location, require minimal overhead and expenses, and would have retail traffic as well.

Whatever route you take, as a new small business operation you'll be signing personal guarantees and posting deposits for the obligations you take on. Most insurance companies will require payment in full or a very substantial down payment against a monthly payment schedule for business coverages, and the utility companies will require several months worth of historical consumption charges for the location on deposit before even turning on service in your name.
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Old 12-23-2011, 09:16 AM
 
28,900 posts, read 48,685,833 times
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Good advice all around. The question I have is one of visibility. Do you need any kind of foot traffic at all, or just need a place that's reasonably convenient. If foot traffic isn't a major need, then I suggest finding a retail space that seems to always have a problem being fully leased. Chances are, the owner will jump at the chance of having additional cash flow on what has heretofore been a marginal property. That gives you greater leverage in what you negotiate and your past bankruptcy will be less of a factor than with a property that enjoys high foot traffic and high demand.

That being said, even though the property might be marginal, you could probably use all kinds of grassroots tactics to increase traffic. A banner, some yard signs, whatever. Yeah, it's bare knuckle marketing, but it would be effective in your case. So a retail space will confer some advantages that operating out of your home will not. To be sure, your operating costs will be higher (Which will affect what you charge. Make sure you factor all that into a pro-forma), but the increased legitimacy of an actual retail presence may offset that considerably.
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Old 12-23-2011, 10:23 AM
 
6 posts, read 38,357 times
Reputation: 15
Thanks for the advice everyone it's greatly appreciated. Right now my business is in demand basically for the simple fact that I don't have much competition. There are a few places in town that do similar work, but they aren't very reputable. Of course that could always change...that's how business goes.

So my plan is to go with something less visible/less rent until I can afford to move to a more high visible area. I probably could move there now, but it would put a strain finances - I'd rather continue to build my business carefully and controlled.

Quote:
What type of retail space are you considering?

While a stand-along retail storefront may have it's advantages for traffic/parking ...

It doesn't sound like you need a lot of space for your business.

So, rather than getting into sizable obligations for utilities/insurance/ground rent ....

How about renting a small office suite, a couple of hundred square feet? That would be a "professional" location for your purposes and would give you a retail exposure without the cost of a retail storefront.

Or, how about a kiosk at a shopping mall? An 8' x 10' booth would be a professional location, require minimal overhead and expenses, and would have retail traffic as well.

Whatever route you take, as a new small business operation you'll be signing personal guarantees and posting deposits for the obligations you take on. Most insurance companies will require payment in full or a very substantial down payment against a monthly payment schedule for business coverages, and the utility companies will require several months worth of historical consumption charges for the location on deposit before even turning on service in your name.
Good points - I've considered a office location vs retail, but I'm not sure how that would appeal to others tennents in the building with off the street customers coming and going. Most likely it would work, but I would prefer something with dedicated access for my customers.

I've thought about a mall space...but around here mall leases tend to be pretty expensive.

Honestly, I'd be happy with something the size of a guard shack - space not really an issue at the moment, just accessibility is.
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Old 12-23-2011, 10:46 AM
 
19,160 posts, read 58,217,060 times
Reputation: 34670
Since all you want is drop-off and pick-up, and you will still be doing the work at home, why not approach an existing store to perform that part of the operation? Example: a travel agency might like the extra walk-in traffic, as would a gift shop. You supply the signage, rent a few feet of counter space, and pay existing employees on a piecework basis, while you man the counter only during peak periods.
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