Negotiating a Commercial Lease Part 1

This is going to be a series of articles covering some of my experiences and techniques I have used to successfully negotiate Lease Terms. This article is simply an introduction to negotiating a lease and will serve as an outline to the articles to come.

These articles are not going to cater to those of you who own businesses working from home. However, I believe that the tips shared here could be valuable for you in other aspects of your life that concern negotiations. So, you might want to check it out anyway. For those of you who already lease commercial property or are thinking about leasing commercial property I hope these tips help.

This is one area that I did not do a very good job at when I started my first brick and mortar retail store. I really didn’t know how much I could negotiate and I was not very patient during the process. I was amped up to start my business and wanted to get started as soon as possible so I failed to negotiate my terms very well. However, because of that experience I have since learned to better negotiate lease terms upon obtaining a new lease and when renewing my lease.

Now, keep in mind as you are reading this article that a lot of your negotiating power depends on how hot the rental market is or how high the demand is for a particular location. The more demand for a location the less negotiating power you are going to have.

Location

First, I want to talk about the location of your business. The location of your business is definitely crucial to how successful you can be (Location will be discussed in another article in detail). However, you do not want to lease an amazing location that you are not going to be able to afford. It’s not a good idea to think that just because you are in an amazing location that you will be able to afford that huge $10,000 or whatever a month lease payment. Even if you are in a great location it still takes time to build up your customer base and generate any substantial cash flow.

So, as a starting point for negotiating a lease I suggest, especially if this is your only store to open and you are just getting started, to find a location with the following criteria

  • A lease payment that you think you will be able to afford per month based on your projected sales even before negotiations begin.
  • A location that is visible and easily accessible
  • A location that has an “anchor” store nearby and plenty of complementary businesses

Those are just a few criteria to get you started. As mentioned before location will be discussed in depth in another article. Now, let’s get to actually negotiating your lease.

You can negotiate just about any area of your lease but from my experience I have been most successful and I think most beneficial from negotiating the following areas:

  • Length of the Lease
  • Rent and Rent Increases
  • Common Area Maintenance Fees or CAMS
  • Tenant Improvements

The Art of Persuasion and Negotiation – 3 Useful Tips to Get What You Want From People

The art of persuasion and negotiation is a much-coveted skill. For hundreds of years, humankind has been using these skills to survive. The ancient Greeks negotiated with their neighboring lands all the time. Leaders of different nations always send ambassadors to settle peace negotiations. Traders of both the old and the new world use their powers of persuasion to sweeten their deals.

If you look at today’s environment, the art of persuasion and negotiation has only become more relevant. The most successful people in the world know this all too well. By reading this article, you, too, can learn how to channel their powers of persuasion and negotiation.

1) Knowledge is power.

In the art of persuasion and negotiation, knowledge is very crucial. How much you know determines the extent of your power over the other. Before attempting a negotiation, you have to know everything there is to know about the people you’ll be speaking with.

Find out what their weaknesses are, what they want, how much they are willing to put out, etc. Knowing all these can help you come up with better points for arguments and negotiations. You’ll have an easier time persuading people to see things your way as well.

2) Establish common goals.

When dabbling in the art of persuasion and negotiation, you must remember that both parties should benefit from the deal. As much as possible, make the deal a win-win situation for everyone.

One way to cinch such collaborations is by establishing common goals – goals that are in line with you and your prospect’s plan. Doing this gives the client a sense of solidarity, which will make them more agreeable to whatever it is you’re cooking up.

3) Try the grassroots approach.

Gone are the days when you don’t care about the person you’re negotiating with over the phone. The grassroots strategy is once again earning popularity.

Instead of treating your clients like cash cows, try to develop a certain relationship with them. Ask about their family or their dreams every once in a while. The grassroots approach requires you to relate with the people you’re trying to persuade or negotiate with. Drop your high and mighty attitude and start knocking on doors.

The art of persuasion and negotiation has long been practiced. Anybody can try the different strategies one step at a time. Try it on your parents, your friends or the local shopkeepers in your town.

Presenting – Lido Chilelli – Founder of the Toronto International Beaches Jazz Festival

Every year one entertainment event in Toronto’s Beach neighbourhood attracts huge worldwide attention: the Toronto International Beaches Jazz Festival. Lido Chilelli, a local entrepreneur, is the person who came up with the idea and who keeps organizing the event year after year, and he definitely had to be included in the Beach article series.

I met Lido at his private home / office located on Queen Street East. The office was buzzing, mail was just being delivered, and important news from sponsors was just coming in. I realized I had to be speedy to catch this busy man in a few free moments.

Born and raised in Toronto, Lido has been living in the Beach for 25 years. His two children attended neighbourhood schools and are active in local sports and culture. Of Italian heritage, he originally grew up in Downsview and studied urban geography at York University. His early work experience included a stint with a special events tour company that would take visitors to NFL games, provide souvenirs for the Grey Cup as well as the papal visit. Event management has long been in Lido’s blood. He ventured forth to become an entrepreneur and opened a bar / restaurant called “Lido’s in the Beach” that was in operation for 17 years. Lido adds that he chose the Beach neighbourhood because it is a close knit, unique community with a wide Torontonian appeal.

He liked the neighbourhood so much that he wanted to open it up to the rest of Toronto. So he got to work, hired live bands, put on some jazz music and dancing at his restaurant. People from all over Toronto started flocking here. Lido’s drew thousands of people into the Beach neighbourhood.

Based on this experience Lido took his ideas to the next level: he concluded that there should be a jazz festival. He said “We have the park, we have the musicians, and we have the music lovers.” All the ingredients were there. Lido admits he knew nothing about festival organization; he simply used his common sense. In 1989 the first Beaches Jazz Festival was kicked off. It was held in the park – Kew Gardens – and lasted for two days with an attendance of a couple of thousand people. The great thing was that the festival was free, and its popularity exploded virtually overnight. A trip to the park to see some live jazz was the perfect family outing. Lido describes the setting in the park as “a recipe for a musical love-in.”

The residents wanted more, so he decided to develop an activity during the week and that is how Streetfest was born. Streetfest came into being as an original event showcasing bands between Woodbine and Beech Avenues. During the first few years it was held from 7 to 11 pm, and the roads were still open to traffic. The event’s popularity spread like wildfire, people were dancing on the sidewalks and spilling out onto the streets. Queen Street was finally closed off to road traffic in 1995, and as Lido says “The rest is history”.

The local impact of the Beaches Jazz Festival is enormous: Lido recently commissioned an economic impact study which concluded that the Beaches Jazz Festival directly or indirectly attracts about $38 million every year to the City of Toronto. For many local businesses it is the best time of the year. This year the Beaches Jazz Festival will generate over 120 million media impressions, and during 2006 the website had 25 million hits from all over the world. The Beaches Jazz Festival has become a tourist stop for people from all over the world and provides a tremendous boost to local hotels and restaurants.

But not only business people love this event, local and international music aficionados alike have fallen in love with this festival: in a recent ECOS/ Toronto Star Poll the Beaches Jazz Festival was voted Toronto’s favourite music festival. Now in its 19th year, musicians come from all over the world. They love the crowd and the area because it offers so much fellowship and a really special atmosphere.

The costs of putting on a free festival are funded almost exclusively through corporate sponsorships. Less than 10% of the budget is covered by funds from public sources. Lido adds it has become increasingly challenging to find sponsorships; particularly this year he has noticed a change in the corporate marketplace, and some corporations are moving away from sponsoring community events. Lido commented that it is a challenge every year to put the festival on because things like policing, insurance and garbage removal cost more. Every year it gets harder.

He calls the festival a labour of love; it is “like a baby that you care for”. He concludes when you are in the arts that’s the way it is. Next year the festival is going to celebrate its 20th anniversary and Lido sighs that “even after all these years essentially you are still a starving artist”.

Getting a street festival off the ground is not easy, and Lido adds that you have to be sensitive to the needs of the local residents. Working with the businesses and residents involves an educational process, and all the stake-holders need to find a good way of co-existing. What worked in Lido’s favour was that he himself is a resident of the neighbourhood, he is part of the community and works with the neighbourhood all the time. He would find out right away if something needed adjusting.

Lido works with a staff of 12 employees and about 200 volunteers. The Beaches International Jazz Festival Society is a non-profit organization that gets its funding solely through corporate sponsorships. But Lido’s organizational and promotional talents are not limited to the Beaches Jazz Festival: for 2007 his event management company, Beach Towel Productions, will handle a whole series of other events:

- The 3rd Annual Barrie Waterfront Festival featuring buskers, music, street theatre, fireworks and other activities.
- The 3rd Annual Distillery Blues Festival, highlighting Rhythm & Blues at Toronto’s Distillery District
- The 5th Annual 95.3 New Country Canada Day Festival, including food, arts & crafts and free concerts at Sunnyside Beach. http://www.country953.com
- The 10th Annual Toronto Fiesta, with more than 50 bands performing on St. Clair Avenue West near Landsdowne.
- Parti Gras! at the Distillery – Toronto’s very own “Mardi Gras” party, complete with live music, New Orleans style cuisine, street performers, artisans and a fashion show.
- The 19th Annual Beaches International Jazz Festival, featuring over 70 bands.
- The 2nd Annual Y108 Picnic in the Park where Y108 presents Canada’s premier up and coming bands at Gage Park in Brampton.
- The 2nd Annual Wasaga Beachfest, featuring Canadian performers, arts & crafts and a children’s play area in Wasaga Beach.
- The 16th Annual Beachfest – MIX 99.9 – showcasing top level Canadian bands, arts & crafts and a children’s play area at Sunnyside Park.

All the special events that Lido organizes take place in the busy summer months from May to September. He says you have to be really organized and work together with a good team of people to make it all happen. This year the Toronto International Beaches Jazz Festival will be held from July 20 to 29 and will be kicked off with Parti Gras! – a New Orleans style celebration in the Distillery District. The Ovation of Jazz will be held on July 25, 2007 at the Balmy Beach Club as the official launch of the Beaches International Jazz Festival. It is a tasteful event offering ample opportunity to rub elbows with the Who’s Who and Future Stars of the Jazz industry!

The TD Canada Trust 2007 Jazz Workshop and Lecture series provides a number of workshops such as “Afro Cuban Rhumba”, “The Art of Jazz Singing”, jazz composition workshops and others more. Streetfest serves up a whole smorgasbord of live music, from the finest Big Band, Jazz, Rhythm & Blues and Soul in Canada to an international collection of Acid, Bebop, Columbian, Dixieland, Flamenco, Folk, Funk, Latin, Reggae and Samba performers. The biggest stars are featured on the Main Stage on the Saturday and Sunday of the event.

Queen Street has been hopping east of Woodbine, and every year the festival gets bigger. At the moment discussions are underway about expanding the programming to the area immediately west of Woodbine. The merchants in that area have indicated an interest in becoming part of the festival, and even last year there were a couple of bands playing there on the street in front of local businesses.

Lido Chilelli has become a fixture on Toronto’s entertainment scene, and for his work in the community Lido has won numerous awards from community organizations, the city and the province, including the Queen’s Golden Jubilee Medal. He was also honoured as the Lion’s Club’s ‘Lion of the Year’. He has been featured in a variety of national magazines and is a founding member of the Community Police Liaison Committee for the Beach.

One project that is dear to Lido’s heart is fundraising for the Toronto East General Hospital. The Beaches Jazz Festival raised $200,000 for the Hospital and built the brand-new maternity ward at Toronto East General. Lido and his organization work with the hospital on a regular basis.

His work day is packed, a standard work day goes at least from 9 am to 6 pm. Much of his job involves organizational duties in-house and meetings out of the office. The average work day has about one or two meetings, sometimes there are three or four. He says he has good staff members that he can rely on to help him get all these events off the ground.

From left to right: Rico Ferrara: Artistic and Stage Manager; Lido Chilelli; Diane Wilson: coop student from George Brown College, and Pat Carpignano: Operations Manager.

With almost 20 years of experience and diverse events throughout Toronto and Southern Ontario, Lido Chilelli is definitely the go-to man to bring together free music, special events and fun for the whole family.