I cannot help but feel heartbroken and empathetic for all my friends & clients who are going through extremely challenging times right now.
Each day, companies are looking for ways to cut cost and unfortunately, this often means letting go of the folks who helped them reach new heights. It seems like just yesterday these same people were hiring at a record-breaking pace and now many businesses have come to a crashing halt (no matter the industry). With these mass layoffs comes a huge need to cut costs within organizations, and right behind the cost of employment is the cost of real estate (rental and purchase costs).
Candidly, I cannot tell you how to save employees or pivot your business during these times, but I can give some perspective on how to cut back on real estate expenses. Please remember, you are not alone, we are in this together, and this too shall pass.
To get the most cost-saving benefits you’ll need to cover your bases. Below is a few items I put together to hopefully help you stay afloat and continue weathering this storm:
Define Your Strategic Plan
Understand the options that are available to you that align with your business’s goals. With the market evolving so rapidly, there may be only one chance to make adjustments so ensure you take your time and come up with a thoughtful strategy.
Communicate Early and Often with your Landlords
Demonstrating to them you will be a going concern. If your landlord knows you’re in a rough patch but has seen your track record, they may be willing to make an exception or work out a plan with you. Think of your landlord as not your enemy, but your partner.
Be Specific on How Your Landlord can Help You
Depending on your relationship, you may be able to ask for:
- Abated / free rent for some time
- An opportunity to defer rent and tack on those costs to the end of a lease term
- An extended lease term in exchange for immediate concessions
- An agreement to pay the landlord’s hard costs such as CAM / Operating expenses
Fully Vet Your Relief and Assistance Programs
An evolving situation calls for evolving relief. It seems, the longer this situation continues, the more relief is available to businesses like yours. Do your research to make sure you qualify for different loans, grants, and relief opportunities—it could be the difference between life and death for your business.
Consider Subleasing Your Unneeded Space
If you’re still looking for relief, this may be a great time to sublease some or all of your space to accommodate your new business needs. Typically, it does take a few months to sublease space, so this may not be the best solution for those who looking to get cash quickly. However, it will significantly lessen the weight of your monthly costs going forward. Moreover, with a significant shortage in move-in-ready spaces, this could serve sublessors quickly and play to your advantage.
This is a time for us to come together and remember we are all humans. Landlords, tenants, lenders, attorneys, etc. are all in this together. Please be kind, empathetic, and compassionate to others as this is unthreaded territory. I am here to help however I can and would love to take an opportunity to serve my community. If you would like to help to strategize and putting together a game plan, please do not hesitate to reach out.