Costs of operating a small shop

[larn]

Hi

I've been considering opening a shop, I was making a summary of all of the costs associated with the first year of operation. There is just one thing I was unsure of, if you are renting a shop do you pay this monthly or yearly? When i see them advertised it always shows the annual rent.

thanks

 

[Twoscoops]

Annual rent is a guide for comparison. Most retailers, as far as I know, pay quarterly rent on the 24th of March, June, September and December. However, there are retailers on my high st who pay rent monthly.

 

[k100danny]

usually quarterly in advance.

 

[fairdealworld]

When you are negotiating a lease remember that you are doing just that i.e. negotiating. The landlord wants the best deal from their side, you want the best deal from your side. You can suggest anything which you like as part of the deal, the landlord can say yes or no. Some landlords - particularly if they are large companies - will tend to have one way of doing things and not want to consider anything else. Some landlords may be individuals owning just one or a few commercial properties and they may be more open to negotiation, particularly if the premises have been empty for some time.

It is certainly worth proposing monthly rather than quarterly payments, it is very good for cash flow and also has some advantages for the landlord.

The big thing when negotiating a lease is not to become too attached to the idea of one particular property. If the negotiations don't go well from your point of view, then be prepared to walk away. Sometimes if you do walk away the landlord will hastily contact you and try to do a deal so that you will take on the property, more often they won't but you'll still be better off getting a better deal elsewhere.

 

[Chris Ashdown]

Dont forget most landlords require a guarantee from a person even if its to a ltd company so if you have say a three year lease andit all goes wrong in the. First year, you still have to pay for the remaining lease period
Also normally you pay all the landlords legal costs and the building insurance which the landlord normally buys and then invoice syou

 

[fairdealworld]

Chris is right. Unfortunately there are so many expenses involved in running a shop that many people get caught out by something or other.

Just to mention two: fees to PRS and PPL if you play music in the shop (even just having the radio on); cost of commercial waste collection which has to be paid for in addition to business rates.

 

[promdressers]

Chris is right. Unfortunately there are so many expenses involved in running a shop that many people get caught out by something or other............
cost of commercial waste collection which has to be paid for in addition to business rates.

When I opened my first shop many years ago, I made SO MANY mistakes! Bin collection was one.
First, I assumed that they were roughly the same cost - big mistake. It is a cut throat industry, and will charge any individual as much as they can. My first year with a large outfit did not appear too bad, but the costs kept creeping (jumping) up. I was so busy with my work that I did not notice the increases until they sent a huge back date demand for an "environmental charge" or
some-such. They would not back down, so said I will cancel and find another collector. The operative was quite smug when she pointed out I ha to give 28 ays notice BEFORE the anniversary of the contract, That is to say that potentially, you cannot cancel for nearly 13 months, regardless of how long the contract has been running. I am now aware that this is tactic is used quite often. I said that there is no way I would have agreed this, and have they got it in writing? YES she said, and will post a copy straight away (pre email as standard!). When I read the contract again, I had, indeed, agreed to the clause. Unbelievably, and through sheer luck rather than judgement, I had something like a 3 day window to cancel - which I did. Henceforth, I always managed to get that clause written out of any contract. When arranging bins, make sure you know EXACTLY what is included, and ensure that all prospective suppliers know you are talking to their competition.

 

[fairdealworld]

Yes commercial waste collection is a minefield. Fortunately the Local Authority where I trade offers commercial waste collection itself. They are not the cheapest but I've stuck with them because they are reliable, never change rates more than once per year and give long notice of any rate change.

 

[Vectis]

And another thing...try and get any service charges nailed down as these can be an open cheque book (especially if you are dealing with an agent).

 

[himanshu_Vesture]

monthly is the best procedure for paying the rent of business shop.

 

[Talay]

monthly is the best procedure for paying the rent of business shop.

So, as a landlord, you as a tenant are telling me with this request that you don't have the cash for 3 months rent in advance ?

And you want me to give you the keys to my £500,000 investment ?

 

[mhall]

We have always paid quarterly up front because that was considered the "norm" and landlords want the money, but everything is negotiable and the last two leases we have moved to monthly payments with nothing up front - I am sure the landlord hates it but it frees up our cash flow a little and is much nicer for us. We still "pay" quarterly but simply keep the money in a saving account and get the pennies interest.

 

[fairdealworld]

Oddly enough my landlord actually suggests to leaseholders that they might like to pay monthly though they can pay quarterly if they prefer. It is clear that he sees an advantage to himself in this as well as to the tenant.

Paying three months up front guarantees nothing in particular. Most people can find a way to get hold of three months rent at least once. Some of the methods will be extremely stupid and turn out to be non-repeatable in the long run.

 

[Stuart Bailey]

check out this link for advice on agreeing heads of terms. Heads of terms guide
Most landlords prefer the rent to be paid quarterly but quite a few agree to it being paid monthly. If you share a building with a someone else then you may have to pay service charge. If its a shopping centre this will be a regular amount. If its a shop shared with a flat above or a parade of shops then the service charge may be more sporadic.
You will also have to pay the insurance premium for the building which the landlord organises.

best wishes Stuart