Advice on shop letting
Discussion
Hi,
My wife has been running a company for just under a year now selling wooden dolls houses, pirate ships and castles on-line - took a while to get some trade going and the web-site up to scratch but all happy with that now and getting a decent flow of trade through it.
We are not sure on the sustainability of the model though, pay-per-click costs plus the willingness of some competitors to sell at very thin margins are make look at different channels an option now we have the product sourced and proven. Also I've been amazed at how much people will bid on pay-per-click - I'm sure some competitors must be operating at a loss if the totalled up to a full cost of a sale.
So thoughts are going towards a starting with a small shop (to trigger the impulse purchase rather than already knowing what they want) and have identified a few options, also it would be bringing some employment to the local region and she would rather pay some staff over Google...
Can someone help with explaining exactly what a phrase such as "£65,000 Remainder of 12 year lease, Rent passing £6,500 per annum" means - I'm assuming it is 65k up front for the 12 years with £6.5k on top each year and all negotiable
I've also seen the phrase £xx,xxx per annum with premium payable - no idea what the premium payable means?
Any general advice as well? We've been doing the reading up and following this forum for years so getting schedules of condition, using a chartered surveyor and avoiding dilapidations are already on the list.
Thanks in advance,
Phil
My wife has been running a company for just under a year now selling wooden dolls houses, pirate ships and castles on-line - took a while to get some trade going and the web-site up to scratch but all happy with that now and getting a decent flow of trade through it.
We are not sure on the sustainability of the model though, pay-per-click costs plus the willingness of some competitors to sell at very thin margins are make look at different channels an option now we have the product sourced and proven. Also I've been amazed at how much people will bid on pay-per-click - I'm sure some competitors must be operating at a loss if the totalled up to a full cost of a sale.
So thoughts are going towards a starting with a small shop (to trigger the impulse purchase rather than already knowing what they want) and have identified a few options, also it would be bringing some employment to the local region and she would rather pay some staff over Google...
Can someone help with explaining exactly what a phrase such as "£65,000 Remainder of 12 year lease, Rent passing £6,500 per annum" means - I'm assuming it is 65k up front for the 12 years with £6.5k on top each year and all negotiable
I've also seen the phrase £xx,xxx per annum with premium payable - no idea what the premium payable means?
Any general advice as well? We've been doing the reading up and following this forum for years so getting schedules of condition, using a chartered surveyor and avoiding dilapidations are already on the list.
Thanks in advance,
Phil
Edited by kent_phil on Sunday 27th December 15:45
Edited by kent_phil on Sunday 27th December 15:46
Pretty much as you think, 65k for the benefit of the lease (ie, buying the right to trade from that location) then 6.5K PA rent.
Much same in reverse where it states the rent pa plus a premium, that's the purchase price in the lease.
Given most high street locations are on their ass 65K ingoing???!!! Unless there is 65K on fixtures and fittings (or gold bullion in the stock room) then that sounds a little optimistic!
Obs. all depends on where and what it is but round here ingoing is normally nil with rent holidays offered to secure tenants.
Any links to the property?
Much same in reverse where it states the rent pa plus a premium, that's the purchase price in the lease.
Given most high street locations are on their ass 65K ingoing???!!! Unless there is 65K on fixtures and fittings (or gold bullion in the stock room) then that sounds a little optimistic!
Obs. all depends on where and what it is but round here ingoing is normally nil with rent holidays offered to secure tenants.
Any links to the property?
Really a premium should reflect the uplift in rent from rent passing to market value. Therefore at rent review you'll be paying market value and ideally will be writing off the premium up to the first rent review only.
Premiums of £65k on a £6,500 pa rent sound odd, unless this is a kiosk type thing in a shopping mall. Even then I think the rent would be higher.
Don't forget that your like;y at least to be PG on the lease.
Premiums of £65k on a £6,500 pa rent sound odd, unless this is a kiosk type thing in a shopping mall. Even then I think the rent would be higher.
Don't forget that your like;y at least to be PG on the lease.
Try to avoid paying any premium at all, not necessary unless the shop is in a prime location, and then you will be paying sky high rent and business rates, hardly sustainable if you are only selling dolls houses, castles etc.
How much do you anticipate your turnover will be? Does common sense tell you if there would be a worthwhile profit in it for you, after expenses, after all, that's what you go to work for.
As always, with any business, you must aim to keep your expenses down to a bare minimum,... expenses down, profit's up.
Also, once you have signed on the dotted line you are fully committed, if the business is not viable you will have a millstone around your neck which you cannot walk away from, worst case scenario you could lose your house and the shirt off your back.
I have seen all my competitors come and go in my trade in various towns over the last forty years, mainly because excessive overheads have killed them, they have usually been working three or four days a week for the landlord.
Sorry to sound so negative, but please do your research before you sign anything, if possible try and test the water by signing a short term lease, (maybe six months or a year).
Good luck.
How much do you anticipate your turnover will be? Does common sense tell you if there would be a worthwhile profit in it for you, after expenses, after all, that's what you go to work for.
As always, with any business, you must aim to keep your expenses down to a bare minimum,... expenses down, profit's up.
Also, once you have signed on the dotted line you are fully committed, if the business is not viable you will have a millstone around your neck which you cannot walk away from, worst case scenario you could lose your house and the shirt off your back.
I have seen all my competitors come and go in my trade in various towns over the last forty years, mainly because excessive overheads have killed them, they have usually been working three or four days a week for the landlord.
Sorry to sound so negative, but please do your research before you sign anything, if possible try and test the water by signing a short term lease, (maybe six months or a year).
Good luck.
Not sure where you are located but I have just moved from a workshop just out of town to a "proper" shop in town and have a years lease (which I can renew) and also, no premiums etc. Basically I pay a monthly rent, pay shop insurance and just have to insure the windows - my landlady does the rest of the insurance. We didn't enter into a lease but an agreement - I know this works both ways as she could kick me out after a year but in this year, it will see if I have made the right move. Since getting the keys, 1st November and opening the doors on 1 December, so far, so very good and was the best thing I have done. I am mainly online so have that fall back too (paying rent etc) but sounds like your wife may be in a similar position.
Of course, these kind of shops may be hard to find in your locality but it has really helped me take the next step and getting out there to the public (with so far, an amazing response). It may be worth checking local papers and trying to find a sympathetic landlord who wants to try and help small/local businesses.
ETA, I don't have staff, I do it all - make stuff to sell, and buy stuff in - and am in the shop as much as I can be.
ETA: my previous shop, I used as a workshop and was in a lease for 3 years - lots of fees involved and a pain in the arse in comparison to now.
Of course, these kind of shops may be hard to find in your locality but it has really helped me take the next step and getting out there to the public (with so far, an amazing response). It may be worth checking local papers and trying to find a sympathetic landlord who wants to try and help small/local businesses.
ETA, I don't have staff, I do it all - make stuff to sell, and buy stuff in - and am in the shop as much as I can be.
ETA: my previous shop, I used as a workshop and was in a lease for 3 years - lots of fees involved and a pain in the arse in comparison to now.
Edited by cslgirl on Sunday 27th December 18:35
cslgirl said:
Not sure where you are located but I have just moved from a workshop just out of town to a "proper" shop in town and have a years lease (which I can renew) and also, no premiums etc. Basically I pay a monthly rent, pay shop insurance and just have to insure the windows - my landlady does the rest of the insurance. We didn't enter into a lease but an agreement - I know this works both ways as she could kick me out after a year but in this year, it will see if I have made the right move. Since getting the keys, 1st November and opening the doors on 1 December, so far, so very good and was the best thing I have done. I am mainly online so have that fall back too (paying rent etc) but sounds like your wife may be in a similar position.
Of course, these kind of shops may be hard to find in your locality but it has really helped me take the next step and getting out there to the public (with so far, an amazing response). It may be worth checking local papers and trying to find a sympathetic landlord who wants to try and help small/local businesses.
ETA, I don't have staff, I do it all - make stuff to sell, and buy stuff in - and am in the shop as much as I can be.
ETA: my previous shop, I used as a workshop and was in a lease for 3 years - lots of fees involved and a pain in the arse in comparison to now.
Is your lease (or agreement) contracted out of the L&T act? There would have been specific paperwork related to this....
I suspect things are not as simple as you think....
Of course, these kind of shops may be hard to find in your locality but it has really helped me take the next step and getting out there to the public (with so far, an amazing response). It may be worth checking local papers and trying to find a sympathetic landlord who wants to try and help small/local businesses.
ETA, I don't have staff, I do it all - make stuff to sell, and buy stuff in - and am in the shop as much as I can be.
ETA: my previous shop, I used as a workshop and was in a lease for 3 years - lots of fees involved and a pain in the arse in comparison to now.
Is your lease (or agreement) contracted out of the L&T act? There would have been specific paperwork related to this....
I suspect things are not as simple as you think....
Edited by cslgirl on Sunday 27th December 18:35
21TonyK said:
Pretty much as you think, 65k for the benefit of the lease (ie, buying the right to trade from that location) then 6.5K PA rent.
Much same in reverse where it states the rent pa plus a premium, that's the purchase price in the lease.
Given most high street locations are on their ass 65K ingoing???!!! Unless there is 65K on fixtures and fittings (or gold bullion in the stock room) then that sounds a little optimistic!
Obs. all depends on where and what it is but round here ingoing is normally nil with rent holidays offered to secure tenants.
Any links to the property?
Thanks to all for the useful inputMuch same in reverse where it states the rent pa plus a premium, that's the purchase price in the lease.
Given most high street locations are on their ass 65K ingoing???!!! Unless there is 65K on fixtures and fittings (or gold bullion in the stock room) then that sounds a little optimistic!
Obs. all depends on where and what it is but round here ingoing is normally nil with rent holidays offered to secure tenants.
Any links to the property?
Here's the 65k ingoing one - it's the least attractive one to us but worthwhile understanding the market
http://www.rightmove.co.uk/commercial-property-for...
Wacky Racer said:
Try to avoid paying any premium at all, not necessary unless the shop is in a prime location, and then you will be paying sky high rent and business rates, hardly sustainable if you are only selling dolls houses, castles etc.
How much do you anticipate your turnover will be? Does common sense tell you if there would be a worthwhile profit in it for you, after expenses, after all, that's what you go to work for.
As always, with any business, you must aim to keep your expenses down to a bare minimum,... expenses down, profit's up.
Also, once you have signed on the dotted line you are fully committed, if the business is not viable you will have a millstone around your neck which you cannot walk away from, worst case scenario you could lose your house and the shirt off your back.
I have seen all my competitors come and go in my trade in various towns over the last forty years, mainly because excessive overheads have killed them, they have usually been working three or four days a week for the landlord.
Sorry to sound so negative, but please do your research before you sign anything, if possible try and test the water by signing a short term lease, (maybe six months or a year).
Good luck.
Useful input and negative input I'm entirely happy to listen to, it has to be a commercially balanced and intellectually honest decision.How much do you anticipate your turnover will be? Does common sense tell you if there would be a worthwhile profit in it for you, after expenses, after all, that's what you go to work for.
As always, with any business, you must aim to keep your expenses down to a bare minimum,... expenses down, profit's up.
Also, once you have signed on the dotted line you are fully committed, if the business is not viable you will have a millstone around your neck which you cannot walk away from, worst case scenario you could lose your house and the shirt off your back.
I have seen all my competitors come and go in my trade in various towns over the last forty years, mainly because excessive overheads have killed them, they have usually been working three or four days a week for the landlord.
Sorry to sound so negative, but please do your research before you sign anything, if possible try and test the water by signing a short term lease, (maybe six months or a year).
Good luck.
Shortening the lease period and commitment is I believe going to be key and ensuring the other half of the business can cover the overheads in case we end up just shutting the shop and leaving vacant to the end of the lease if it doesn't work out.
On the other hand branching out and building a physical presence has to be worth the risk if we can keep the money at risk to a sensible and affordable amount - scaling on the internet is just a race to the bottom.
cslgirl said:
Not sure where you are located but I have just moved from a workshop just out of town to a "proper" shop in town and have a years lease (which I can renew) and also, no premiums etc. Basically I pay a monthly rent, pay shop insurance and just have to insure the windows - my landlady does the rest of the insurance. We didn't enter into a lease but an agreement - I know this works both ways as she could kick me out after a year but in this year, it will see if I have made the right move. Since getting the keys, 1st November and opening the doors on 1 December, so far, so very good and was the best thing I have done. I am mainly online so have that fall back too (paying rent etc) but sounds like your wife may be in a similar position.
Of course, these kind of shops may be hard to find in your locality but it has really helped me take the next step and getting out there to the public (with so far, an amazing response). It may be worth checking local papers and trying to find a sympathetic landlord who wants to try and help small/local businesses.
ETA, I don't have staff, I do it all - make stuff to sell, and buy stuff in - and am in the shop as much as I can be.
ETA: my previous shop, I used as a workshop and was in a lease for 3 years - lots of fees involved and a pain in the arse in comparison to now.
Sounds ideal, early days so will see what the options are - having scouted the area heavily I'm amazed some of the local shops can cover the rent levels let alone rates and salaries - turn-over in shops does seem quite high. Although having spoken to a local shop owner the opportunity is definitely there, she has just retired at the end of her lease and had a good lifestyle from it. Had no angle to come from having just retired so was a great source of experience in the local market.Of course, these kind of shops may be hard to find in your locality but it has really helped me take the next step and getting out there to the public (with so far, an amazing response). It may be worth checking local papers and trying to find a sympathetic landlord who wants to try and help small/local businesses.
ETA, I don't have staff, I do it all - make stuff to sell, and buy stuff in - and am in the shop as much as I can be.
ETA: my previous shop, I used as a workshop and was in a lease for 3 years - lots of fees involved and a pain in the arse in comparison to now.
Edited by cslgirl on Sunday 27th December 18:35
I should stress I'm an employee so I could be talking out my arse due to not having the bottle to go it alone.
However, when I read "wooden dolls houses, pirate ships and castles on-line" I must admit my first thought was "how many people are likely to impulse buy one of those when they walk down the high street?" and whilst I don't know the answer, my gut reaction was probably not very many.
Then I saw the location and thought "tourists" and "footfall".
It feels like the kind of thing where people might see it in person and decide to have a think on it rather than buy there and then, but again that's a gut reaction and I wouldn't know the first thing about the market for such things.
Given the location have you thought about throwing in things like gifts to make it a bit more of a "wander in off the street" place?
However, when I read "wooden dolls houses, pirate ships and castles on-line" I must admit my first thought was "how many people are likely to impulse buy one of those when they walk down the high street?" and whilst I don't know the answer, my gut reaction was probably not very many.
Then I saw the location and thought "tourists" and "footfall".
It feels like the kind of thing where people might see it in person and decide to have a think on it rather than buy there and then, but again that's a gut reaction and I wouldn't know the first thing about the market for such things.
Given the location have you thought about throwing in things like gifts to make it a bit more of a "wander in off the street" place?
65 grand upfront? Jesus wept, I'd be expecting a double shop front on Oxford Street for that! 
I set up a shop-based business right in the heart of one of the wealthiest and desirable South Coast cities a while ago, where despite the recession, shops still tend to make a profit because of the spending power of the people living here.
I paid nothing upfront, and negotiated the rent down to a grand a month fixed for 5 years. I started it up from scratch, ran it for 4 years and sold the business on for a nice profit. This was, however, with a private landlord and not a big commercial owner.
The only curve-ball I failed to recognise, which you also might want to look out for, was the clause which stated I was liable to pay for the preparation of the new lease for the Landlord. I had no idea that his ridiculous solicitor would charge me TWO GRAND for basically changing the names on the existing lease and pressing 'print'...
Good luck anyway and let us know how you get on.
I set up a shop-based business right in the heart of one of the wealthiest and desirable South Coast cities a while ago, where despite the recession, shops still tend to make a profit because of the spending power of the people living here.
I paid nothing upfront, and negotiated the rent down to a grand a month fixed for 5 years. I started it up from scratch, ran it for 4 years and sold the business on for a nice profit. This was, however, with a private landlord and not a big commercial owner.
The only curve-ball I failed to recognise, which you also might want to look out for, was the clause which stated I was liable to pay for the preparation of the new lease for the Landlord. I had no idea that his ridiculous solicitor would charge me TWO GRAND for basically changing the names on the existing lease and pressing 'print'...
Good luck anyway and let us know how you get on.
how you feel now, won't be how you feel when another recession bites
My missus had a high street salon for 30 years. It became a pita
If it were me. I'd be looking at renting a space in a shop on a monthly basis
It'd have to be somewhere arty-farty tho, didsbury Chester Harrogate Windsor that sort of a place
Good luck
Also get one of those firms that get your google rankings up
My missus had a high street salon for 30 years. It became a pita
If it were me. I'd be looking at renting a space in a shop on a monthly basis
It'd have to be somewhere arty-farty tho, didsbury Chester Harrogate Windsor that sort of a place
Good luck
Also get one of those firms that get your google rankings up
j4ckos mate said:
how you feel now, won't be how you feel when another recession bites
My missus had a high street salon for 30 years. It became a pita
If it were me. I'd be looking at renting a space in a shop on a monthly basis
It'd have to be somewhere arty-farty tho, didsbury Chester Harrogate Windsor that sort of a place
Good luck
Also get one of those firms that get your google rankings up
Nobody would rent you a shop in those kind of towns...(Didsbury...lol) on a monthly basis.....why would they, when they could tie somebody up to a high rent for many years? Maybe if it was in a quiet street with hardly any footfall, and then what's the point?My missus had a high street salon for 30 years. It became a pita
If it were me. I'd be looking at renting a space in a shop on a monthly basis
It'd have to be somewhere arty-farty tho, didsbury Chester Harrogate Windsor that sort of a place
Good luck
Also get one of those firms that get your google rankings up
If you are selling watches at £10,000 or mobile phones it helps to be in a prime position, but you don't need to be to sell the OP's kind of stuff.
How about renting some concession space in a busy department store on a short term basis?, (if you can)....you get the footfall but you are not paying for the bricks and mortar.
Also the internet is very important, you don't necessarily have to sell online, but it's a great (almost) free advert that let's people know about your products, if you have something unique they will travel to you.
In conclusion, forget any thoughts of paying thousands of pounds "premium" for a lease.......nonsense....
As others have said the premium looks crazy.
It should reflect an underrent for the period until the next review.
As the rent is modestly above the rateable value it would be surprising if that were the case.
The sale signs in the photo males me think a desperate lessee trying to recover their losses over 2 years of failed trading.
Other thoughts include the fact that most of your customers have kids yet the shop is up lots of stairs...
I'm oot.
Edited for chuffing autocorrect.
It should reflect an underrent for the period until the next review.
As the rent is modestly above the rateable value it would be surprising if that were the case.
The sale signs in the photo males me think a desperate lessee trying to recover their losses over 2 years of failed trading.
Other thoughts include the fact that most of your customers have kids yet the shop is up lots of stairs...
I'm oot.
Edited for chuffing autocorrect.
Edited by loafer123 on Tuesday 29th December 09:53
Funnily enough, we were actually in the Padstow shop in the link on holiday a few months back, Mrs WR bought a couple of small items and we had a very nice meal in the restaurant in the bottom right of the picture.
Padstow is always booming in Summer, but can be like a ghost town in winter, many shops close down for a couple of months.
Padstow is always booming in Summer, but can be like a ghost town in winter, many shops close down for a couple of months.
Bricks and clicks could work well but the rent costs there will kill you. What about rates as well?
Have you thought about doing regular markets with them? or a concession inside another existing craft shop or similar? Either would be a stepping stone without the commitment of that shop.
Have you thought about doing regular markets with them? or a concession inside another existing craft shop or similar? Either would be a stepping stone without the commitment of that shop.
There might be an element of impulse buys but I would have thought this is more likely to be a specialised purchase and people may want to see and feel the quality of what they have seen online. So it does depend on the number of potential customers within a set drive time.
I would be looking more at relevant craft fairs etc and trying to find others to stock them as well.
I would be looking more at relevant craft fairs etc and trying to find others to stock them as well.
loafer123 said:
As others have said the premium looks crazy.
It should reflect an underrent for the period until the next review.
As the rent is modestly above the rateable value it would be surprising if that were the case.
The sale signs in the photo males me think a desperate lessee trying to recover their losses over 2 years of failed trading.
Other thoughts include the fact that most of your customers have kids yet the shop is up lots of stairs...
I'm oot.
Edited for chuffing autocorrect.
I think this is right on both counts, has been useful understanding the whole process and speaking with the various agents though.It should reflect an underrent for the period until the next review.
As the rent is modestly above the rateable value it would be surprising if that were the case.
The sale signs in the photo males me think a desperate lessee trying to recover their losses over 2 years of failed trading.
Other thoughts include the fact that most of your customers have kids yet the shop is up lots of stairs...
I'm oot.
Edited for chuffing autocorrect.
Edited by loafer123 on Tuesday 29th December 09:53
Thanks to everyone for input, will update the thread as we proceed.
Cheers,
Phil
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