All new businesses need to keep overhead costs low to survive, and sports facility-based businesses are no exception.
The most significant overhead cost that sports facilities typically have is their monthly rent expenses. Obviously, your property is a huge investment. It has to be big enough for sports teams to practice, which often requires thousands of square feet.
Unfortunately, I’ve come across several businesses that are paying far more than they should on rent each month. Below are some points to consider before you find yourself locked into a lease that might end up putting you out of business.
Never underestimate the real costs of a high rent.
Cash flow should always be at the top of your mind as the owner of a new business. Starting out, most business owners are far too optimistic about the amount of monthly revenue they’ll be able to generate, so their monthly rent expenses quickly become a big problem. You will thank yourself later if you do everything you can now to ensure that your rent is as low as possible.
Make sure common area maintenance (CAM) is included in monthly costs.
The cost of your rent should include things like lawn care and snow removal. It should also include day-to-day maintenance on things such as outdoor lighting, parking lot maintenance and malfunctioning equipment.
Pay attention to taxes.
Are there any hidden taxes or fees that you’ll have to pay as part of renting this property? Don’t forget to include those in your financial plans.
Estimate energy costs carefully.
When budgeting, always overestimate the costs of heating and cooling your building. Unfortunately, your landlord has little incentive to give you accurate estimates. It’s better to be pleasantly surprised than the opposite.
Get it in writing.
Make sure all the points mentioned above are addressed in the lease before you sign it. If anything is not in the lease, it’s fair to assume that you’ll have to pay for it. You should plan accordingly.
For more advice on how to improve your sports facility, book a consultation today.