Jim Culverwell

There are so many factors to consider in relation to the space a business occupies. People tend to look at it only from their own perspective. What it really comes down to is whether you, as a business owner/operator, view your premises as an asset or as a cost. If you look at your premises in the same way you would a member of your staff, then simply put, you get out what you put in.

To begin with, you have to make the right decisions at the time you acquire (lease or buy) space. Allow plenty of time for this analytical stage to avoid having to make compromises you may live to regret. It forms the basis for everything else you do. How big, where, what specification and more subtle things like natural light, parking and mobile signal – think of it like a ‘job spec’ for the property. What does the business need? It requires interrogation of the business plan, which is not always an easy exercise from within the business.

Then, once you have committed your business, during the period it occupies the property you may need to adapt and alter to suit the changing requirements of the business so it can make the best use of what it has; moving internal walls, for example, or even just decoration and carpets. The comparison is training a staff member to keep them fresh and relevant.

Lastly, there needs to be an exit strategy which has been ‘planned-for’ and which does not disrupt the business with unforeseen costs and upheaval. This is the same as when it is time for an employee to move to pastures new. You don’t want a big bust-up or worse, for it to go legal!

Look upon your business accommodation as you do a member of your staff and it will become an asset, adding value to the business and facilitating its growth; and not just a high cost, inflexible business overhead.

Don’t have business premises unless you absolutely need them.  That is one of my mantras. I recently had my windscreen replaced.  The process was interesting but the really interesting thing was to hear from the guy on the tools, how the screen replacement company has changed working practices and so reduced its property overhead quite dramatically.

Instead of having a portfolio of industrial units across the country for fitting glass, at a cost of millions every year, they all operate from vans.  The orders are sent to the van and the materials are picked up from a sort of oversized safe-deposit box.  There is an office somewhere dealing with the administration but, for that business, the industrial units are a thing of the past.

The rationale is that carrying a vast property estate makes the business cost heavy and therefore vulnerable.  Better to run vans you can sell if you need to and flex the headcount to meet demand.

The main point being the company profits are increased by not carrying the massive liability premises represents, some of it unquantifiable, and using innovation and technology to deliver the service.

So, think about it – don’t have premises unless you absolutely need them!  If you do, have the right premises in the right location, on the right commercial terms.

 

If you need the flexibility to break your business lease; or if you believe you have a break clause in your lease and would like to use it, understanding more about the realities of break clauses could just save you enough to be able to take that cruise or dine out every weekend for a year.

A bit about break clauses:

For the purpose of this article, a break clause enables a tenant to end the lease and leave early, as if it were the expiry of the full term. They have become common, even ‘normal’ as the level of certainty in everyone’s markets has diminished. Do you know what your business will look like in three or five years, let alone in ten years’ time?

However, conditions placed on the operation of a break clause can have a catastrophic effect on the ability of a tenant to exercise the option

How conditions affect break clauses

A landlord concedes a break clause to entice a tenant to take a lease but is allowed to add ‘conditions’. The effect is that what is given with one hand is taken away with the other.

The tenant may have made compromises like accepting a shorter rent free period or paying a higher rent in the belief he has secured a break opportunity. In fact there is only cost and disappointment to come, not a break.

This is because any condition will be strictly interpreted and if not fulfilled, enables the landlord to refuse to accept notice. The lease is not broken but continues to the end. There are dozens of court reports of failed litigation by tenants seeking judgment in their favour when a landlord refuses to accept a break has been validly operated.

Conditions include the requirement to give vacant possession, to maintain the property or even to pay the rent. None is necessary to activate the clause save perhaps, for providing reasonable notice of the intention to break.

At first sight, you might say “well fair enough, the landlord doesn’t want to let the tenant off if there is a breach of a lease clause”.

Conditions relating to lease clauses are all unnecessary because, by definition they are already in the lease along with another clause saying you can’t escape from a breach at expiry.

Don’t be caught out with a conditional break clause in your lease. Ensure, preferably at “Heads of Terms” stage, that it is worded in the simplest terms without conditions whose purpose is nothing more or less than to stop you from operating that break clause.

In the world of networking, there are hunters and there are farmers.

Hunters go to an event armed with leaflets and their elevator pitch with one objective: to sell, sell, sell.

They will ram raid groups of people, hijacking conversations and talk, talk, talk.

If they have a simple low-cost offering, they may claim some success. If they can make sales they may come away thinking their time was well spent and of course, at one level it was – at least for them.

That, however, is not networking… it is selling.

Let’s look at what has really happened and then at the farmer’s approach.

The hunter is out for as many sales as possible in as short a time. Along the way, he will alienate people, be shunned by others and avoided by the rest.

Networking is about forming, building and developing relationships. It is about knowing, liking and trusting. It is about being able to identify the sort of business your network members are seeking and making a referral – putting the requirement with the provider.

So what about farmers? Well, they are networkers really but they prepare their networking ground, sow seeds of business relationships, nurture those relationships and reap rewards through referrals.

They are in the room, talking, yes but also listening. Listening to what others are saying, looking for common ground, finding connections and getting to know.

Not everyone the farmers meet will become a member of their networks. Sometimes the relationship doesn’t get beyond the ‘know’ stage. That is not to say that a referral cannot result.

The farmers will keep moving around the room and metaphorically, ‘touch’ as many people as possible. Renewing and reminding those they already know and meeting as many new people as they can. They don’t get stuck in one group; they don’t stay with people they already know. They give and ask for business cards.

The farmers may leave the meeting having not met anyone who would buy from them and yet knowing the time was well spent. How?

Because all of the people they met will in time hear the need which the farmers business can answer and make that referral.

If the farmer met 15 people at that event who each have 200 people in their network, that is 3000 potential customers for the farmer’s business. That is a lot more than the hunter can hope to get from that meeting.