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I am in the process of putting together a business plan for the landlord of the space I like. This will be my first restaurant and I don’t know how much information I should give him. I have a few partners but we do not want to spend a fortune on rent. Can you help?
Thanks. Frank Harris, Knoxville
The questions of where to begin, how much to include, and when to end a request for a business plan from a landlord are often difficult to answer. The decisionn on what to include in the document should be given a lot of thought. I have always developed my business plans in sections so that various individuals or entities can receive the portions that are pertinent to them.
When raising money from investors you need to adhere to the rules of full disclosure. But, when presenting a plan to a landlord on what you are going to do with his space, there is a fine liine on what to divulge durinig negotiations.
Often a landlord will want to look at a business plan to get a better idea on how much rent he can justify out of the budget that has been inluded in your plan. This is a fair question if he is concerned about your financial experise and abillity. But, it is also a tacic used, on occassion, to find out if he has to reduce the rent for tennant improvement of if he can hold firm on the price.
Another consideration is giving the landlord too much information. In our first venture we had a number in mind that we thought we would offer the owner for his grocery store. When a request for a busines plan and an oultline came we were so excited we developed a book with about 50 pages of concept design, budgets, projections and other data that could have secured enough money to open a small unit chain.
The owner took the book home, leafed through the pages and came back a week later asking for four times what we were about to offer.
He claimed that the store looked so professional that he was sure we would make a small fortune and he wanted his cut. Unfortunatley that design book and business plan set the deal back a year until we negotiated back to reality.
A comprehensive plan should include a concept statement, a design outline, a budget, and your bio and experience. You must also answer these questions because it makes a difference in your presentation. And, there are a few questions that need to be answered before you begin any presentation.
1). How well do you know he landlord?
2). How long have you been in negotiations with him?
3). Do you have the money at hand to complete the deal if the negotiations go well?
4). Are you represented by an attorney?
Remember, this is your first restaurant. You may have more experience, financial backing and associates with culinary skills than the entire group running the ten-unit chain down the street, but you do not want to show your hand to the landlord. He is going to become your partner once the lease is signed. Keep in mind a partnership is an agreement where both parties bring something to the table, compromise a bit, and develop a long standing relationship. Look at your first business plan presentation as your offering at the table. You can always add to it, but it is difficult to take things back. And, although it may seem tough in the beginning, your landlord will respect you more in the long run if you negotiate a fair and affordable deal in the beginning.
Good luck with your new venture.