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The 5 Types Of Landlords Businesses Will Encounter

Here are the five types of landlord, and how you should deal with each of them.

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Securing a commercial lease — office, retail or industrial space — is a complicated process that requires much time and effort. As a business owner, there are several different types of property owners you may encounter in your initial search and even during your occupancy, ranging from small individual owners to multi-rand dollar real estate investment trusts.

Working efficiently with each kind of owner requires a basic understanding of their preferences and priorities.

Related: Choosing a Retail Location: 3 Priorities You Might Be Forgetting

Here are the few key characteristics of each group:

1Mom and Pops

Mom and pops are owners with smaller portfolios who obtained property as a primary investment. They are not as formal in business practices as other types of owners. Often personally vested in their space, they favour tenants who will treat their space well.

Characteristics

  • Usually straightforward and easy to deal with
  • Great for those who desire a close landlord/tenant relationship
  • May be flexible on terms for the right tenant
  • Best fit for smaller businesses with simple needs.

Tips

  • Communicate with a personable and warm manner
  • Highlight what makes you a good tenant
  • Convey your willingness to take ownership of the space
  • Share creative ideas on how your business can indirectly benefit them.

2Family investors

Unlike Mom and Pops, family investors are ‘real estate families’ who have amassed a sizable portfolio over tens or even hundreds of years. The tenant/owner relationship may not be as intimate but nonetheless, family owners are still materially involved in the leasing and management of their properties.

Characteristics

  • Still operate with a personal touch and often handle leasing in-house
  • Generally cash flow driven; prefer stable tenants over the highest possible rent
  • Have intimate knowledge of every building in their portfolio
  • Tend to have long-term tenants that they have accommodated over many lease periods
  • Best fit for small to mid-size businesses who are looking for a landlord that is willing to build space and accommodate their short-term growth needs.

Tips

  • Check out other buildings within their portfolio to get a better sense of what they have to offer
  • Be warm and personable because it’s not only the bottom line that drives these owners
  • Clearly communicate your needs and limitations; they will do the best they can to accommodate
  • Be prepared to put down a significant security deposit if you don’t have strong financials.

Related: Location, Location, Location!

3Management companies

rent-management-companies

While technically not an owner, management companies act on behalf of the owners that hire them. For the purposes of leasing and day-to-day property management, they are the de facto owners. Management companies typically have access to a large portfolio of properties with a variety of options to fit any business needs.

Characteristics

  • Very knowledgeable and can accommodate a wide range of needs
  • Allocated budgets for building improvements and capex
  • Offer standardised and less flexible lease terms, especially for smaller tenants
  • Best fit for businesses that have established credit, as these owners often have specific requirements and operating rules.

Tips

  • Expect to sign a five-year lease
  • If you are a high profile tenant who’s well recognised or generating a lot of buzz, use this to your advantage, as these landlords like having notable tenants in their roster.

4Real estate developers

As the name suggests, real estate developers develop and acquire office, residential, hotel, retail and mixed-use properties. The properties they construct are typically Class A buildings designed by award winning architectural firms and feature some of the best amenities offered by any landlord.

Characteristics

  • Extremely well maintained common areas and large lobbies with strong security
  • Looking to capitalise on the quality of their buildings and generate the highest rents in order to maximise property value
  • Often limited to major markets/cities
  • Usually more than willing to build space for long-term tenants or provide a significant tenant improvement allowance
  • Best fit for companies looking for premium space.

Tips

  • Plan well in advance as deals can take a long time to close
  • Ask for specific details and changes to the space that will help your business
  • Use time as a negotiating factor; many new buildings need to secure tenants even before new buildings are completed.

Related: Choosing the Right Location

5Institutional investors

Institutional investors are money managers who invest in various asset classes, including commercial real estate. Of these investors, real estate investment trusts invest solely in real estate properties but most funds will also invest in properly as part of a diversified portfolio.

Characteristics

  • Most assets are Class B+ to Class A buildings that generate strong cash flows for investors
  • Driven by occupancy rates and margins, not personal preference.

Tips

You are unlikely to deal directly with these owners unless there’s a major dispute, you’re an anchor tenant and/or a large tenant improvement (TI) allowance is involved. If you do, make sure you sweat the details. These are not your typical landlords, so make sure all of the right paperwork and documentation is in order.

This article was originally posted here on Entrepreneur.com.

Justin Lee is the COO and co-founder of TheSquareFoot, a technology-fueled commercial real-estate brokerage and listings platform that modernizes the search for office and retail space. Lee began his career in commercial real estate as a leasing representative for Boxer Property and has overseen hundreds of leasing transactions over the course of his career. He also served as project manager at Oakmont Group, a diversified Houston Real Estate development firm.

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Researching a Franchise

Maximise Your Social Media Reach This Holiday Season

Quick and cost-effective, social media is your best tool to reach target markets when it matters most – during the holidays.

Diana Albertyn

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It’s not just the end of the year that can be lucrative for businesses. School holidays and other major breaks during the year present consumers with more time to spend shopping. Why not ensure money is spent at your franchise by capitalising on the minimal cost and maximum exposure of social media?

You don’t have to create entirely new deals or promotions from what you may already have running on your store, but find a way to make it special for your social media followers, suggests Kelly Mason, marketer at Customer Paradigm.

Holiday campaigns on Twitter, benefitting from popular hashtags, streaming live content, and receiving information instead of just distributing it via social media are just some of the ways to stay ahead of the competition.

Related: Why Your Business’ Social Media Marketing Strategy Is Probably Wrong

Know your customers well

The first step to attracting customers and getting them to complete a sale is understanding their customer journey.

“Being able to document where they spend their time online, which social channels they use most, and what they’re reading or watching on those channels is a huge plus. Finding that crucial information is fairly easy to do, thanks to modern-day marketing tools and resources,” advises Paul Herman, ‎VP: Product and Solutions Enablement Group, at Sprinklr, a unified customer experience management platform for enterprises.

The better you understand your customers, the easier it is to reach them through a campaign optimised for their interests.

Master social listening

You could be using social media all wrong in the run up to all your holiday campaigns. Perhaps it’s time you used this platform to listen to your customers?

“Through social listening, marketers can identify major trends and product keywords in their industries,” says Herman. “For instance, knowing those keywords can help marketers identify which social platforms are more popular for a target audience. With that information, they can make smarter decisions about where to spend their money and which products or services to promote on each platform.”

Related: 10 Laws Of Social Media Marketing

Use the information gathered to determine what customers like about your product, what they dislike about it, and how you can improve upon it so they can buy more of it. The more of this data you collect, the better and more effective your interactions with customers will be.

Try something new

50% of consumers look for a video of the product they want to buy before going to an ecommerce store to buy it, according to a 2016 Google survey. “Video can be an extremely effective way to get your customers to take action – in this case, to make a purchase with your store,” adds Mason.

Video adverts are often used as an experimental tool in social marketing and switching it up on platforms such as Facebook Live, Instagram Live, Instagram Stories, or Snapchat – depending on your brand’s activity and your audiences’ interests – can help attract customers during seasonal periods.

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Researching a Franchise

Selling Your First Franchise? Consider These Key Pointers

You’re ready to franchise your business, but who do you sell to and how? Your first few franchisees may be the hardest to acquire, but the process will be smoother if you get some basics right.

Diana Albertyn

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Business experience gained running your independent brand will come in handy, but looking for franchisees is a different ballgame. “We have to attract the right people in enough numbers to make the difference; and, the key to more leads is to have a multi-prong strategy to marketing,” says franchise strategist and expansion expert Lizette Pirtle.

Using media (social, or otherwise), trained experts in franchise sales, and keeping in mind that whoever you sell to will become an extension of your brand, are important considerations before selling your to first franchisee:

1. Use (all) media wisely

Website marketing, print advertising and social media are just some of the many different ways to attract potential owners to your franchise. But the most cost-effect of the three may be a ‘tweet’ or ‘post’ away, says former Director of Marketing at the International Franchise Association and owner of Burris Branding and Marketing, Jack Burris.

Related: To Buy Into A Franchise Or Purchase A Licence? 3 Factors To Consider

“Three out of four people using the Internet are either on Facebook or LinkedIn or Twitter or all of them. Take advantage of social media,” he says.

“There’s typically no cost to play in the space except for the time that you need to invest to build your brand with a social media presence.”

2. Seek out franchise coaches or brokers

While this is a more traditional method of making reliable franchise sales, it’s a great way to form lasting associations that will take you beyond your first few sales. “Using broker networks is a great way to supplement your own efforts. However, you must spend time developing relationships with these people if you want to get results,” advises Pirtle. “Don’t think that just listing your opportunity with them is sufficient.”

Franchise coaches and brokers have multiple options for potential franchisees, so to put yourself high on their list of consideration when prospects enquire, you have to form memorable relationships.

Related: 3 Factors To Focus On When Opening Your First Franchise

3. Always consider the bigger picture

Out of all the people your marketing efforts attract, always keep in mind that few will check all the boxes and compromising could cost you in the long run.

“The franchise relationship is a long-term one. If you’re going to be successful as a franchisor, you should start with the attitude that every franchisee will be someone who you’ll have to live with for years to come. And nowhere is this philosophy more important than when awarding your first franchise,” says Mark Siebert, CEO of the iFranchise Group, a franchise consulting organisation.

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Researching a Franchise

3 Factors To Focus On When Opening Your First Franchise

To become a successful franchisee, there’s lots more to learn. Take notes and this will be an adventure still with its challenges, but less stress.

Diana Albertyn

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Experts and those who’ve gone through the launching, managing and successful running of a franchise will tell you that owning a franchise can be just as risky as owning an independent small business – and it doesn’t get easier after signing on the dotted line. But that doesn’t mean it isn’t worth giving franchising a shot.

“The hardest part of being a franchisee is learning and adopting all the processes that exist in the brand you’re buying into. But it’s important that a customer can walk into any franchisee’s property across the country and have the exact same experience,” says Jeff Chew, Pizza Factory franchisee.

With that in mind, remember the financial, emotional and physical investment you’ve made in this new venture and let it fuel your success, from before you even serve your first customer

1. Financial and intellectual wealth

Don’t buy into a franchise where you might be undercapitalised, advises Paul Durant, a Junk King franchisee.

Related: Expansion Funding Options For Your Growing Business

Keep in mind that running a new business isn’t challenging only mentally strenuous, but financially too, because you’re not always immediately profitable. Ensure you have enough runway for a few years at a loss or minimal profit.

“I did not do a thorough job in my initial research and discovery calls. I used a lot of my own assumptions and luckily they were fairly close,” recalls Durant.

“I would, however, suggest that you ask very detailed questions during the discovery process and listen carefully to the responses. Often what is not said is equally as important as what is said.”

2. Remember the purpose of the manual

The point of buying into the concept you’ve chosen is to ensure success based on a roadmap that’s already been drawn out for you. Straying from this plan unnecessarily is a shortcut to failure. This doesn’t mean you cannot make changes, but always ensure your growth is where it needs to be by following the system completely.

Franchisee Mark Arduino thought he was taking the advice he’d been given countless times: Just follow the system. But he quickly realised he wasn’t when all the franchise-specific training he’d been through was forgotten in favour of easier shortcuts.

“Then I realised my mistake. I came to see that it’s very user friendly. I’m sorry I didn’t use it from the start!” he says.

Related: How To Choose The Right Finance For Your Business Or Property Portfolio Expansion

If you think you have a better way of doing something detailed in the franchisee manual, do your research. Your decision should follow a discussion with your franchisor, then align to the business plan.

3. Learn at every opportunity

It’s great that you have previous experience in business. It’s a huge bonus that could put you ahead of other franchisees in your network. But, always be willing to learn and put your hand up or open a book if you’re not sure. A vast business background doesn’t guarantee automatic success as a franchisee, so be open to learning from others.

“I have learned more from two of the franchisees in my area than I could ever have imagined and I owe my early success in large part to their willingness to help,” says Jeff Steele, a CMIT Solutions franchisee.

It may sometimes seem like you can do it all on your own, but even when you feel you can do anything, you cannot do everything. That’s why you joined a franchise that (hopefully) offers good support structure.

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