Get out of a sublease and get your own location!

Hey guys! Stoked to be invited back to the blog to share my experiences with you all. In case you missed my last post, I’ll reintroduce myself. I’m Dallas Wicker, and I own Santa Rosa Fit Body Bootcamp with my partner, Katie Switzer.

In my last post, I shared some of our business experiences that led to developing the strategies we’ve used to cultivate a tribe-like following of clients who are genuinely excited to be affiliated with us. My hope is that in this new post you’ll find a few useful nuggets of information to help you move from a sublease into your own permanent location. This post may also prove to be helpful for you if you’ve got plans to open a second, third or forth location.

So, a little background. When we started our fitness boot camp, we subleased space in a karate dojo. This was a difficult arrangement for us because our growth was restricted by the constant competition for use of the space during prime-time hours. After 3 months, we made the decision to move so we could expand our training schedule.  We chose a large public gym that also rented to freelance trainers. While our scheduling limitations were pretty much solved by moving to the gym, we realized that our growing business was infringing on the territory of some of the long-time trainers who also called this gym “home”.  As tension built, we moved yet again to sublet space from a CrossFit studio. But unfortunately, we again found ourselves competing for use of the space during prime hours.

It became abundantly clear that running our business in subleased space was creating a huge bottleneck. Being the optimists that we are, we decided to start looking for our own space to allow for the huge expansion we were forecasting for our business. We knew that renting our own building would create an increase in overhead, but we also knew that we could afford to make that leap by effectively removing the restraints that had been confining business.

So, in October 2011, we employed the services of a commercial real estate to begin looking for suitable locations to house our boot camp. Surprisingly, he found only a few that fell into our rather broad search of spaces ranging from 1800 square feet – 3000sf. And most of which were cost prohibitive due to their location or cost per square foot.

Shocked that there were so few options to choose from, Katie and I decided to do a little searching of our own. We spent a weekend driving up and down every street, dirt road and back alley in town (I highly recommend doing this – many commercial spaces are not listed on the internet) and we found a couple possible spots that we decided to look into.

One of the spaced we found was a large retail space, smack dab in the heart of downtown Santa Rosa. In the front window we saw a hand written “For Lease” sign hanging. Clearly the space was being advertised directly by the owner – this was likely why the place didn’t come up in the search our agent performed.

After meeting the owner for a walk through, we learned that the space was only $1.00/sf, which was approximately half of the cost per foot of the space we were comparing it to. And not to mention, the downtown location of this less expensive space was far superior. I have to admit, the size of the space made me pucker my behind a little since (it was almost 4000sf ) we’d be signing a lease to rent a space that was $3000 more per month than what we had grown accustomed to paying for our sublet.

With the advice of our business coach, Bedros Keuilian, we made a full price offer with the caveat that we needed a $10,000 tenant improvement allowance and 6 months of free rent so we could get up and running. (My advice: don’t do that – you’ll likely piss off the landlord and they’ll either tell you to get bent or not respond at all).

But, we did get a call back from the landlord. By the tone of his shouting voice, I could tell just how absurd he found our terms. Nonetheless, we were able to negotiate back and forth until we settled at 4 months of free rent. Unfortunately we were not granted the tenant improvement allowance, but we were able to sign a lease that allowed us enough time to ramp up our revenue to cover the expense.

Moving out of the sublease and into our own spot is a decision we’ll never regret. In fact, being in our own space has allowed us faster growth in the last 12 months than we’ve had in all the rest of the time we’ve been in the industry.  So much so that we’ve recently began negotiations on a second location in Petaluma. Needless to say, the experiences we had during the search for our first space have proven useful in procuring the space needed for this second location.

So if you’ve hit a sticking point in your business, figure out what you want and make it happen, don’t let your fear hold you back.

If your business is evolving into something new, believe in yourself, dive in headfirst and make it happen.

If you see a roadblock looming, don’t procrastinate on finding a solution. Figure out what ideal circumstances look like for your business, then reverse engineer the process to get you there. Move the puzzle pieces one at a time until you get it right.

It required a few stepping stones for us to finally end up with our own space, but it was the solution our business needed in order to continue rapidly growing. And I’ll reiterate, there were definitely times (like right after closing the deal) where we wondered if we’d bitten off more than we could chew. We were a little apprehensive signing a lease for a 3700sf of commercial space that added over $3K to our monthly overhead expenses, but it’s like Cabel always says: the magic happens just outside your comfort zone.