Finding the right premises for your salon business is one of the most important steps in launching your business. When you start looking at locations for your business you will soon learn that there is a lot of room to negotiate. In this article, we’ll look at some of the best ways to negotiate rent on your salon.
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As part of your salon business plan, you should create a cash flow forecast that will outline how much money you can expect to make from your business. This will give you a better idea of how much you can afford to spend. It’s tempting to be optimistic about your future, but you should always stress-test your finances by taking away 10% of your monthly sales and then 20%.
Make sure that your monthly costs would still be affordable if you took this kind of financial hit. Once you have a number in mind, this should be the absolute maximum you are willing to pay. Getting stuck in a lease that is more expensive will just prove to be stressful in the long term.
Before you start looking for salon premises, create a list of needs and wants. It’s important to be able to distinguish between the two. You might need your premises to be accessible but a specific location should be considered a “want”.
If you are going to be able to negotiate a better deal on your rent, you have to keep a level head and not get wrapped up in the idea of a “dream location”. If a landlord gets a hint that you are set on a location, they will be less likely to negotiate. And if you can’t find any room to negotiate, you need to be willing to walk away.
Don’t stop looking once you have found one potential location. There are many things that could go wrong with the negotiations, so it makes sense to keep an open mind. It’s also much easier to negotiate if you can play two or more landlords against each other. When a landlord knows that you have options, they will be more inclined to work with you to find a satisfactory middle ground on the rent.
Choosing a space that is too small and then being forced to open a second site is an easy trap to fall into. When you first start looking, it’s hard to imagine being able to grow your business. It’s tempting to choose a small space to keep costs down. But this could be a false economy in the long term. If you need to expand in six months, you could be left paying rent, rates and utilities on two premises. And if your salon software isn’t equipped to deal with multiple sites, this can further complicate your business.
Don’t worry if you don’t feel completely confident negotiating, not many people do. If you are worried, you can ask your estate agent or a solicitor to do the negotiating for you. Let them know how much you would like to pay and how high you would be willing to go to secure the property. The final decision will still be with you, but you can avoid all of the awkward negotiating stages.
Many landlords will be willing to drop the price of your rent if you can commit to a longer lease. This can be daunting if you are just starting up, but if you have a solid business plan and a loyal customer base, it can be worth it to free up a bit of extra money every month.
This option might be riskier for a new salon, but if you’re expanding to a new location, then you will be able to move forward with more confidence. And while you’re at it, make sure you negotiate down any early exit fees so that you won’t be left struggling if you have to close down your salon for any reason.
You don’t have to ask for a rent reduction outright, you could ask for a rent-free period which would offer the same benefits. Some landlords will offer a rent-free period every year. For example, if you have 1-month rent-free every year, this equates to an 8.3% rent reduction.
If you ask for a 3-month rent-free period at the start of your lease, this can give you time to get established before you have to start paying rent. Remember that everyone has their own business to take care of, even the landlord. They want you to succeed, as it means that you will pay the rent without fail every single month. Negotiating a rent-free period might be easier to achieve than getting money off your rent.