One of the most daunting challenges associated with leasing commercial space for a small or new business is showing sufficient financial strength to satisfy a cautious landlord.  I tell my clients to pretend they are going into the bank to get a line of credit or are pitching an investor.  Present yourself in the best possible light.  Be honest but at the same time optimistic.

 

Pitching your financial strength is like telling a story.  There are two key aspects to the story: the numbers and the narrative.  If your rich uncle Albert is prepared to back up the lease with his $22 million net worth, that’s about all the story the landlord needs.  But short of raw, financial heft, there are any number of other things that indicate business savvy and staying power.

 

• Longevity – How long have you been in business?  If you have been operating profitably for five or more years, say so.  A long history suggests continued stability.  If the enterprise occupying the space is a relatively new venture, then tout how long the principal has been in the subject industry.  That will give the landlord confidence that the tenant understands the business and knows what they are doing.
• Trajectory – Have revenues been growing over time?  Share profit and loss statement over the past 2-3 years that plot a pattern of growth.  Most landlords will envision continued growth.  Even if you have just been in business for a year, showing sufficient revenues to back up the rent and positive forecast for future revenues will give the landlord some comfort.
• Business Plan – Share some knowledge of your industry and your specific niche.  Outline the profit potential and show the landlord how you are smartly targeting that opportunity.

 

I not only coach my clients on how to formally present this information, but I insist on understanding the story myself so I can confidently communicate with building brokers when they inevitably ask “What does your client do?”

 

Know that the landlord’s imagination will fill in the blanks.  No news is bad news.  But if you provide compelling facts that resent a vision of success, the landlord’s imagination will just enhance it.  Graffiti or Goya…it’s up to you.