DAYSPA is the business resource for spa & wellness professionals! Each issue covers the latest in skin care, spa treatments, wellness services and management strategies.
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[ 62 ] • # dayspamagazine • december 2017 management workshop Failing to consider all the lease terms— not just rent. Monthly rent is only one element of a retail lease. If you decide to renew, you're not just paying money for real estate, you're off ering your landlord the security of years of cash fl ow. In exchange, think about what you want in return. This might mean a reduced monthly rent, free rent for an agreed-upon period, improvement allowances to cover any desired remodeling costs, a refund of your deposit, the rolling of taxes or utilities into basic rent, or the removal of a personal guarantee—a clause that can put the signee on the hook for tens of thousands of dollars. Consider nonfi nancial incentives too: Would you like reserved, closed-in parking spaces for your clients, or free parking for your staff ? Your name on the side of the building, or prominent marketing in the shopping center's newsletter? "The average business owner is so focused on not losing the negotiation that they forget to actually try to win it," says Willerton. He points to one of his clients, a salon owner with seven locations, who not only saw their rent reduced on renewal but received three months' free rent as a further incentive to stay. Their deposit was returned and their personal guarantee removed from the lease. Indeed, says Willerton, as a renewing tenant you should never have to pay a deposit or sign a personal guarantee, because your landlord has recouped their upfront investment and knows you're reliable. Get that deposit money back so you can put it to work for your business. Most importantly, negotiate from a position of strength. "Create competition for your tenancy" by showing that you've researched the market and found other potential locations, even if you'd really rather stay, he adds. That negotiating tactic gives you leverage at renewal time to ask for new incentives and fi x the parts of your lease that you dislike. Focusing only on the present. A savvy business owner thinks long term. If you plan to grow, you need to be realistic about your future bottom line. If you increase staff and add new services that the market demands, will you have enough treatment space, changing rooms and parking? It's important to consider these issues during—or preferably before— renegotiation time, so you can be realistic about what your spa (and employees) can handle. In addition, if your eventual plan is to sell your spa, being locked into a high or escalating rent makes it less attractive to a potential purchaser, points out Willerton. Ultimately, it may be in your best interests to move rather than accept a rent increase. But if you do decide to stay, you'll be fully informed and ready to stand your ground the next time a rent increase rolls around. u dayspamagazine.com/freeinfo t © GETTY IMAGES