How to Sign a Lease
Step One In Building-Out Treat Bake Shop’s First Commercial Kitchen
As fortunate as I’ve been to launch my business in a wonderful commercial kitchen where I rent space, the truth of the matter is that I’ve been looking for a place of my own since the first day I opened Treat Bake Shop.
About one and a half years ago, I found that “perfect” space. And then it fell through. Six months later, the same thing happened, again! They say “everything happens for a reason” – and as annoying as that is to hear while you’re sulking in self-pity, looking back, and “knowing” what I do now, both would have been a huge mistake, as I was going about the process all wrong.
The following is a summary of what I’ve learned to be the necessary steps to take before signing a lease. And while it became a long, drawn out, exhausting process that feels like each “almost check mark” actually ended up opening an (expensive) can of worms I hadn’t anticipated or accounted for, leaving “no stone unturned” has hopefully allowed Treat to enter into a commitment I am financially and psychologically prepared for.
I should mention that this was experienced through the lens of trying to build out a kitchen on an extremely small and tight budget. This process has taught me that throwing money at things can quickly make a problem go away. But that said, just because you, hypothetically, have the money, doesn’t mean it’s a smart business decision to do so. Treat Bake Shop is a business. Therefore, all decisions made had to be weighed in that mindset.
True. You could do this part on your own. But I’m becoming a huge proponent of hiring those that are experts in their field, so that you have the time and energy to focus on growing the business you are trying to build a home for.
The broker’s job is to find available locations, schedule showings, and, most importantly, negotiate the deal – with your interests in mind. This is a huge help when you have no idea what to even ask/negotiate for.
When the broker is “finished,” you should have agreed upon terms (i.e. rent, renewal options, who (landlord vs. tenant) is paying for what build out, etc.). You then need to take this to an attorney to make sure everything is correctly represented in the lease (see below).
2) Get a great commercial real estate attorney
This is no small hire. Attorneys are e.x.p.e.n.s.i.v.e. (And once you learn their hourly rate, you may question the career path you’ve chosen.) But the attorney’s job is to protect the large investment you are about to make. Having gone through three lease attempts, I can attest to the confusing amount of legalese minutiae that is easy to miss if you don’t know what you’re looking for. A good attorney will, hands-down, pay for themselves in the long run by making sure you are walking into a lease on solid footing.
Figure out all the equipment you are going to need (i.e. ovens, mixers, sinks, refrigerators, etc), as the architect will need the cut sheet for each piece of equipment when making the plans.
This is also a good way to start tallying up your equipment budget. And don’t forget about garbage cans, brooms, a hand towel dispenser, etc. These may seem insignificant, but when it comes to your budget, the little things quickly add up.
It helps to have an architect that is familiar with commercial kitchens, and, more importantly, the codes you will need to adhere to.
Once you receive the more-or-less final architectural plans, you should start doing two things:
a) Get estimates from each of the necessary tradesmen (i.e. carpenter, electrician, plumber, flooring, HVAC/hood, etc.).
* To note, you could also hire a General Contractor to take care of all of this. But the GC estimates I received for the “full package” service, were far greater than if I just piecemealed each of the tradesmen individually. Of course, what you save in money, you pay for in a lot of stress and headaches, especially when you don’t speak the lingo and have no idea what you are doing. It is my hope that a GC would have shielded me from a lot of the regulation rigmarole I suffered through. You need to decide which tradeoff is best for you.
b) Submit plans for approval (i.e. from your city’s Health Department, the Department of Agriculture or whichever jurisdiction needs to “bless” your project). It is essential to follow through with this task before you sign the lease, as, depending on The Department’s interpretation of your plans, they can require additional equipment/construction that could greatly change your project’s budget.
* To note, you need to take your timeline into consideration. Is it more essential that you save money in your build-out, or that you get your doors open for business? I initially tried to submit plans that did not account for a hood (a ~$20k expense). The Health Department wouldn’t approve the plans. And I spent a good amount of (wasted) time trying to convince them otherwise.
**If you do need to get a hood, make sure the design is submitted to the Building Inspector. You will need them to sign off on where the hood will vent. Venting directly out a window is much more economical then having to bring it to the roofline. If money is of any issue, know what you are in for before committing to a space.
5) Secure Financing
Wherever your money is coming from to pay for this project, make sure it is secure and that the amount available is still in line with any budget alterations you have had to make.
6) Sign the Lease
Enjoy this HUGE milestone! Celebrate the moment!! (As there will be, no doubt, more headaches in the future. :-) )