Leasehold on shop

Flyonthewall

Thanks.

I'd certainly get the business sorted before considering renting out the flat.

I understand what you're saying about friends and renting, but I know she'd put payment of rent as top priority and she's not one for having a night out. When it comes to money she's one to give and help out, not one I'd worry about having to lend money too and never see it again.

We'd only be a minute away from family help and two free to use washing machines lol. I know that's not really the point, it would be costly obviously, but it wouldn't be much of a bother in any other respect. It's something to think about of course as if I don't end up with this shop I may end up at another with a flat.

My main aim is to get a shop first, but it's good to know what else could happen in the future

Savvy_Sue

chalkie99 wrote: »

Above all else - Do not sign anything until you have had a solicitor (and one who is experienced in commercial leases) go through the lease. Don't persuade yourself you cannot afford to do this as it will be a false economy.

chalkie99 wrote: »

BTW - Editing to add - Be very clear that once you sign a lease you are liable for it even if the business doesn't work out and you decide to close the shop.

These two points: essential. Commercial leases are nothing like domestic / residential tenancy agreements, where the tenant has some rights which cannot be taken away.

paddyrg wrote: »

They may be leaving after a few years, but may still be under contract until someone else comes in...basically they could be still paying rent on it and praying someone else will take it on. In fact, the fact they are trying to get out so soon would make me more nervous than confident. Also, a recent refurb may be structural, or skin deep. This is why you spend real money on real lawyers - if you can't afford to do that, you can't afford the lease.

And this.

Flyonthewall wrote: »

Before the latest owners there may have been someone else for a number of years, but previous to that I think one person ran the newsagents for years and years. I do think the shop must do alright and hopefully with what I want to do it'll be fine.

What you have to bear in mind is that the retail scene has changed beyond all recognition in my lifetime, and continues to change at an increasingly rapid rate in the electronic age. Newspaper and magazine sales have declined: my parents' generation would have the paper delivered every day, and they'd expect it delivered before the man of the house left for work so he could read it on the train / bus to work.

Look around the train or bus now, and see who's reading an actual paid-for newspaper. On my commute, it's all the (free) Metro, or e-books.

Books the same: there are fewer and fewer bookshops, and you can now buy books in the supermarket and online. No-one pays the cover price (or very very rarely). People may come in and browse, but will they buy? Showing my age here, but DH used to work in a bookshop when the price printed on the cover was the only price which could be charged if the book was being sold new.

You think (from your other thread) that people will definitely come in and buy other items, but the margins on everything in a newsagent are smaller and smaller, and getting tighter and tighter.

You'll also have very early starts and long hours in a newsagent. One of BIL's friends runs a few near where he lives, and can only do it with the help of an extended family, so the wage bill is minimal and the profits are not great. One of DS1's friends has also taken one over in the last few years, with his wife, and is finding it incredibly hard work just to break even. They used to have regular get-togethers but these friends are now rarely able to come: they just can't take the time off.

I'll repeat my advice from that other thread: if you've never worked in a newsagent, go get a Saturday job. If you've never done a paper round, get one. Know what you're letting yourself in for ...

paddyrg

By the way, don't let this get you down about the idea, you're young and bursting with energy and that will carry you a long way! You will make mistakes of course, and mistakes are how people learn, so that's not a problem either. You seem to be taking the thoughts of people here seriously which bodes well, sometimes in life we get the luxury of learning from other people's mistakes too This forum is slightly different from the other ones on this site, people will generally cut to the chase but you don't usually get gloaters and idiots, and nobody here generally wants anything but for your businesses to succeed.

Take or leave any thoughts or advice you get, you may identify a niche that turns around a whole industry. Coffee shops were dying out then the American chains exploded convincing us coffee was a £3 drink, not a 50p drink. At one time the high street was all shoe shops, then all estate agents, things change and if you spot the opportunity then that's what makes you a business owner.

I think you're wise to defer the flat letting idea. Personally, I would still strongly advise against letting it to any friend, especially a close one. Sounds harsh, but it changes the relationship, no matter how much you both enter into it with the best of intentions. Letting to a stranger would be easier. But if you want to keep this friend, either marry her and set up together and you jointly pay the rent as a family, or keep all financial dealings out of your friendship. (And by all means take or leave this advice, just know it comes from my own experiences so yours may differ!)

eschaton

Do yourself a favour and look at something with growth potential.

News & Magazines are a quickly declining market. Sales down year after year with no sign of it ever ending.

Never ending increases in carriage charges from your wholesaler.

Margins that used to be a straight 25% being cut by certain publishers all the time.

Titles being promoted or in a price war often used to maintain cash margin - not anymore. Imagine a TV magazine being priced aggressively at 20p with cash margin not maintained as has happened recently - 5p profit per copy. You sell 60 copies in a week and make £3 profit - but the title at 60p that would normally sell is down 30 copies at a 15p margin so you lose £4.50 profit. A loss of £1.50 instead.

Books - a lot of money tied up in dead stock. Who goes to a newsagent to buy a book? Amazon with free delivery would be my choice.

My advice is - don't do it.

Flyonthewall

eschaton wrote: »

Do yourself a favour and look at something with growth potential.

News & Magazines are a quickly declining market. Sales down year after year with no sign of it ever ending.

Never ending increases in carriage charges from your wholesaler.

Margins that used to be a straight 25% being cut by certain publishers all the time.

Titles being promoted or in a price war often used to maintain cash margin - not anymore. Imagine a TV magazine being priced aggressively at 20p with cash margin not maintained as has happened recently - 5p profit per copy. You sell 60 copies in a week and make £3 profit - but the title at 60p that would normally sell is down 30 copies at a 15p margin so you lose £4.50 profit. A loss of £1.50 instead.

Books - a lot of money tied up in dead stock. Who goes to a newsagent to buy a book? Amazon with free delivery would be my choice.

My advice is - don't do it.

I don't want to sell news and magazines, that's just what the store currently is.

It wouldn't be books at a newsagents. I have an idea of what I want to do but books is really the simple way of explaining it. I really just wanted to know all about leasehold shops.

Thanks for the advice though.