Don’t let unexpected costs derail your retail dream.
You’ve ﬁnalized your retail concept and are ready to secure your retail space. You can already hear the beautiful sound of the cash register ringing up those sales. But before that can happen, there are a lot of things you need to have in place. Sadly, for many people who are new to retail, those things haven’t even entered their minds – let alone their budgets.
We’ve put together this budget reality check to help you understand and plan for some of the unexpected costs associated with creating a new retail space.
Budgeting for leaseholds
Signing a lease in a retail space is often your largest, and easiest-to-budget line item. But there are many other costs associated with leasing a space that often don't get considered.
Knowing what you want and what you can afford ahead of time could possibly save your business.
1 Your leasehold budget checklist
Below is a list of possible expenses over and above the cost of your lease. Knowing and planning for these costs will help with your business plan and negotiating with your landlord.
- Is your landlord providing a Tenant Improvement allowance? This can help to spread your construction costs over the term of your lease.
- What will your landlord do or not do to prepare your space. (know before you sign your lease)
- Does your potential landlord have a design criteria you must follow? (example: Complete new build of space. This can include removal of existing construction, material restrictions, sign placement and size).
- Beware of chargebacks. These are costs you may be required to pay. Some of these costs can include: The purchase of floor tile to be installed from the lease line to the closure line, building automation system tie-in, fire alarm tie-in, and water, gas and/or electrical meters which are supplied by the landlord, and connected to the landlord meters.
- Do you have to submit full renderings and material sample boards to your landlord? Hiring a retail space designer is an important part of the process that will assist with approvals from your landlord, help budget for construction, and provide a vision for your business plan.
- Do you require building permits, architectural, mechanical, structural or electrical submitted drawings? (These fees can often be missed when budgeting for construction)
- Are you planning on tearing out any existing parts of the leased space? If yes, you’ll need to budget for demo, removal, and disposal.
- Will you leave the paint as is or repaint the space? There is a significant difference between do it yourself or hiring someone.
- Do you want to keep the existing ﬂooring or install new? If keeping, do they need repair?
- Do you need to repair or ﬁx any areas of the space? What wall materials will you be using?
- If you are modifying the ceiling or changing the layout of the space, you may need to update sprinkler and plumbing to meet fire safety requirements. There will be extra costs and inspections associated to this.
- Will the existing lighting work for you concept? Will you need to add any more lighting to make your products pop?
- Will you need to upgrade or change any of the windows, doors or the storefront to suit your concept?
- Is there a washroom in the space? Do you need to add one?
- Does the HVAC need to be modified or rebalanced at all?
- Do you need to change to upgrade the electrical service connections? Are you adding a new alarm system? Do you need additional communications or AV allowances?
- Do you have an occupancy date? Depending on the scope of your construction, it could take 16-24 weeks from concept to completion. It is important to consider this in your lease agreement. (Often called construction or fixturing period allowed where you do not pay rent)
- Will the existing ceiling work for your concept or will you need to replace it? If you can keep it, will the ceiling need any repair work?
- Will you be financing your construction costs through a tenants improvement allowance, bank financing or personal funds?
Did you know? There is a canadian small business financing program (CSBFA) which allows you access to financing not available under conventional loans that can provide financing up to 100%? Find more information here
Budgeting for store fixtures
Store fixtures are anything you need to make sure your retail space can display your merchandise to facilitate sales. Fixtures, like most things in life, come in a variety of styles and price points. Researching what you need and what you can afford ahead of time can really help keep your launch plan on track.
Remember that fixtures play a huge role in selling your products, so think them through to make sure you're setting your merchandise up for successful sales. Whether you decide to budget for custom fixtures or off-the-shelf solutions, you'll need to make sure your choices are aligned with your retail space requirements and your timeline.
2 Your store fixture budget checklist
Here is a list of some of the ﬁxtures that most retail spaces require. Check the ones that apply to your concept to keep you focused when researching options.
- Cash desk and service counters
- Wall systems and hardware
- Racks, shelves & Bins
- Professional installations and on-site set up for all of the above
A retail space designer can help make your vision a reality.
Budgeting for displays and signage
The next time you’re at a grocery store, check out how many signs you see in a single area. There are wall signs, shelf signs, price signs, signs for sale items, signs for where to pay, signs to help with wayﬁnding. That’s not to mention the outside signage, store hours display, etc.
Every single one of these signs and displays help to create a good customer experience. As a ﬁrst time retailer, you probably won’t need that volume of displays and signage. However, make sure you leave room In your budget to create the retail experience you have in mind.
3 Your display and signage budget checklist
- How will you be producing your signage? Every production method – from printing to custom construction/installation– carries a cost.
- Do you need to purchase sign system hardware for your exterior and/or interior signage? Or backlit frames?
- Do you need to hire a graphic designer to create artwork for various signage? Or are you counting on using your printer or sign company to create the artwork?
- Do you need to purchase images for your signage?
- Will you need to pay for installation of your signage or displays?
- Do you need wayﬁnding for your retail concept to work?
- Will you be creating specialty packaging for your products?
- Do you need any branded displays or promotional items?
Budget for success.
Knowledge is power. The more you know about the overlooked costs of opening a retail space, the better oﬀ you’ll be. The last thing you want is to have your retail dream derailed because you didn’t understand the leasehold requirements, or the costs and timelines required to get the ﬁxtures or signage you need. Ask questions, do your research, and work with partners who are willing to help you ﬁnd your way through.
If you have any questions we’d love to help in any way we can. The Fixture Store website and blogs are great resources for anyone new to retail or anyone just looking to stay on top of what’s possible oﬀ-the-shelf. Helping new retailers is what we do. And we do it very well.
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