Obtain Space and Design the Physical Layout Lease

Obtain Space and Design the Physical Layout

Lease or Buy Space l Unless you run a business out of your home, you will need to lease or buy business property.

Kinds of Commercial Leases l Tenant- person who pays rent to occupy space owned by someone else l Landlord- person who owns and rents out buildings or space

Kinds of Commercial Leases 1. gross lease- tenant pays rent each month for the space occupied, and the landlord covers all property expenses for that space 1. property taxes, insurance, and building maintenance 2. net lease- landlord pays building insurance, and the tenant pays rent, taxes, and any other expenses 3. percentage lease- tenant pays rent each month, plus the landlord receives a percentage of the tenants revenue each month

l Commercial lease agreements are usually long and complex. l You should never sign one without consulting an attorney.

Compare Different Locations l Once you have selected some possible locations for your business, you will need to compare the costs and benefits of leasing each property l To accurately do this, you will need to calculate how much rent you will be paying per customer ¡Estimate the number of customers and divide the rent expense by this number

Practice

Answers

Checkpoint>> l What formula do you use to calculate rent per customer?

Design the Layout of Your Business l The layout must include enough space for employees, customers, merchandise, and equipment ¡It must also have space for restrooms, stockrooms, storage, and offices

Create the Floor Plan l You will need to prepare a scale drawing of the layout. l Graph paper will help you draw the layout. l To create a scale drawing, one inch should represent one foot. ¡For example: a 4 -foot by 3 -foot room is represented by a 4 -inch by 3 -inch rectangle

Layout of a Retail Business l Appearance is very important for a retail store. To send a positive image about your store, do the following: 1. Choose lighting that is appropriate for the kind of merchandise you sell- good lighting is important when customers inspect merchandise closely. 1. Avoid florescent lighting which causes an unattractive glare 2. Think carefully about window displays- use to display new or seasonal merchandise 3. Make the entrance inviting- will put customers at ease

` 4. Use common sense when organizing the merchandise in your store- customers should easily find what they want 4. 5. 6. 7. 8. Inventory and supplies should be well organized Leave at least four feet of aisle space- makes it easy to move around in the store Create attractive in-store displays- customers are drawn to displayed merchandise Use wall space wisely- use space that is too high to reach for displays Place the cash register in a central locationcustomers shouldn’t have to search for a cashier

l The goal of your layout should be twofold. It should: l Attract customers to your store l Make their experience a pleasant one

Checkpoint>> l What should you do to create a positive message about your store?

Layout of a Service Business l Service businesses can be divided into two categories: 1. Service businesses where people come to the business location to receive a service. 1. Restaurants, hair salons, tax preparation 2. Laid out similar to a retail business 2. Service businesses that travel to the customer’s location and perform the service onsite. 1. Exterminators, plumbers, cleaning services 2. Never visited by customers, so an attractive layout is not important

Layout of a Wholesale Business l Customers of wholesales businesses are concerned with price and quality not appearance l Should be well organized

l To facilitate shipping and receiving, wholesale businesses should: 1. Locate in a one-story warehouse. 2. Keep merchandise close to the shipping dock. 3. Store popular items in accessible locations. 4. Be sure there areas that can accommodate merchandise of all sizes. 5. Keep walkways free of merchandise so employees can exit the building quickly in an emergency. 6. Store items safely.

Layout of a Manufacturing Business l For manufacturing businesses, efficiency, not attractiveness, is what counts. 1. Work teams should be situated close together. 2. Supervisors should be able to easily observe the people they supervise- They should sit near each other. 3. Exits should be clearly marked and easily accessible so that employees can quickly leave in the event of an emergency. 4. Any hazardous materials should be stored safely. 5. Equipment and machinery should be positioned in a way that reduces the chance of an accident.

Checkpoint>> l What factors are important in laying out a retail business? A service business?

Assignment l Thinking Critically l #1 -2