Everything is Negotiable
Just assume that anything that you need to buy – that you are paying a monthly payment on – or that you owe is negotiable.
Clearly some things are more difficult to negotiate than others – but ultimately just about anything can be negotiated.
Did you sign a five year or ten year lease when you opened – perhaps with stars in your eyes it looked like the greatest thing ever – suddenly a couple of years later the payment begins to look like the “national debt.”
Well start by taking a look at your situation from the other side of the table.
Does your owner have a full center and a waiting list to get in at 20% more than you are paying? In that case it might be real easy to sublet – or, just be excused from your lease so that the owner can shift to a “more substantial” client with an even higher lease payment.
If you were in that owner’s place – wouldn’t you be in a huge hurry to release a tenant at a lower rate – to be able to release to a higher paying tenant and possibly even to a national credit tenant.
Discuss the situation with the owner – or with a realtor. Look for alternative space that is either smaller – or that leases at a lower amount per foot – or both. Sometimes it’s also possible to move within the same center to a smaller space or to a less desirable space either way lowering your monthly outlay.
Are you really about the only substantial tenant in a shopping center that looks like it’s about to be condemned. That’s a perfect opportunity to renegotiate your lease. Why? Well what happens if you go out of business – or, just walk on the lease? First the owner has to go looking for another tenant. If he already has vacancies – he’s been doing that without a lot of luck already hasn’t he? Once he finds a new tenant then he has to pay realtor a commission, possibly pay for tenant finish, maybe provide some free rent, and definitely wait another two to six months to start collecting rents until the new tenant opens.
You may have to be pretty tough in the negotiations in this case. Your owner may already be operating on a negative cash basis. You really have to make sure he believes that you are either:
On the brink of insolvency. That without a break you won’t stay in business much longer.
That you are ready to “walk away” from the lease and that you are really unconcerned about his possible legal remedies.
Both of these examples were obviously at the extreme but they give you the idea. If you want to pay your landlord $500 less per month for three years that adds up to $18,000. What’s it going to cost him to release the space. Figure out the downtime, realtor fees, tenant finish, and free rent the owner will have to incur. Also figure out what you real market rental should be – if you are paying over the market that’s a negotiating point in your favor – but, is one reason the owner may fight to keep you in your lease rather than putting the space on the market.
As an aside: You are much better off in dealing with your lease if you are NOT Personally Signed on the lease and don’t have a lot of assets in the corporation that runs your school – more on this later.
Let’s say you spent $10,000 with your local television station, radio station, or newspaper. The ads ran – and not too unusually the phones didn’t ring. Rather than the flood of calls you expected you get 4 calls and 2 enrollments. Then the bill shows up. What do you do?
Well you can do several things:
Just pay the bill – take your lumps and walk away;
Sit down with the ad rep, his supervisor, and anyone else you can get in front of – explain you dilemma. Explain that $25 per call would be great. $50 per call okay – that maybe you could even live with $100 per call.
Offer to either pay your maximum – $50 per call on what you’ve already run or
Explain that you’d be happy if they kept running the commercials – they can even tweak the ad and the run times until you are up to 100 to 200 calls (walk them through what you will do to keep excellent track of the results.)
If they refuse the options above either:
Send them the check for $100 per call – with an endorsement that spells out that with depositing the check the invoice amount is paid in full;
Put the bill in your drawer. Six or eight months later when their collections people call – explain the situation and offer to settle for the amount previously offered.
Example Number Three:
The sales rep for your local newspaper shows up and practically guarantees that the ads in his/her newspaper will be the greatest thing ever for your business.
Explain to the sales rep that if what he explains turns out to be true then you’ll both be overjoyed – but ask what guarantee do you have?
Explain that you are willing to pay $50 per call – no more.
You may be able to negotiate one of several things:
First. To pay per inquiry rather than just buying space, or
Second, An agreement for “make goods” free of charge if the initial run does not Get the needed response.
At the very least – you have established your negotiating position properly when the bill comes due.
To contact Stephen Oliver and his Martial Arts Wealth Mastery visit their listing on the Martial Arts Schools and Businesses Directory by clicking on the image on the left.