In addition, when small business owners have found their niche, they are often irresistible to their clientele, which can also be a dream for property owners.
So let’s talk about the folks that are the backbone of the Canadian economy – small business owners.
Local population is key for business
Mom and pop shops often centre on a particular neighbourhood and community. When serving a local population, initial market penetration is largely stimulated by word of mouth. This can be a powerful tool to get customers in the door, and often, small businesses can become a destination all into themselves.
As an example, one of our tenants Toast, a successful breakfast and lunch spot, was started by a husband and wife team. The eatery has become a destination for locals and is a great example of a thriving mom and pop shop with local charm. Neighbouring businesses have benefited from the increased foot traffic as a result of Toast being a tenant in the plaza.
Occupy those hard-to-fill spots
It is likely that once a small business becomes a destination, there will be a steady flow of customers who visit with regularity – not on impulse. This makes such tenants precious because they can occupy hard-to-fill spots on your property.
A national tenant may demand a location with higher visibility, which may not be as crucial for a small business owner who can attract customers through word of mouth. Plus, the more “hidden” a location feels, the higher the appeal to customers who feel they’ve found a destination off the beaten path.
Educate and over-communicate
Small business owners wear many hats, so the more information you can provide upfront the better. For example, introduce your tenants to contractors you know and trust to ensure renovations go off without a hitch.
You want to make sure building codes comply and that accredited trades are used.
It is also helpful to provide a to-do list of each step that should be taken to get their business up and running. This process may require some patience, education and time compared to a national tenant, but it will be well worth the investment.
Act like a small business advisor
For long-term success, monitor and keep an interest in how well your tenant’s business is doing. If your tenant’s business is growing, it allows for room to accommodate expansion within the centre. If sales go down, don’t panic – just have a discussion. It’s natural for sales to drop at certain points of the year; it will likely take one to two years (at the most) to know this cycle.
Also, consider assisting with the facilitation of opportunities for cross-promotion with neighbouring tenants. Nail and hair salons often find success with this, each of which have a steady client flow who ask for referrals. Make the introduction and let them decide how they might help each other. The better they do, the better it is for you as a long-term property owner.
Hire a stellar leasing agent or broker
Having an agent on the ground who has intimate knowledge of a particular geographic area can be a huge competitive advantage. It’s difficult for large investment property owners to keep tabs on everything that’s happening locally because they have so many clients across the country.
An agent who has established relationships with small business owners in the neighbourhood can be invaluable. When an owner is in search of, or expanding to a new property, that agent can be there to present your space and introduce new locations within your other properties.
Finding the perfect tenants
The final piece of advice: make sure you do your due diligence. Ask to see a business plan and do a credit check. Make those important phone calls. Not only will this put you at ease, but it also gives you a quick sense of how organized your potential future tenant is and if they will be able to handle the ups and downs of business.
As so much of the Canadian economy is built on small business ownership, it’s important to know the intricacies of building a long-term relationship with these types of tenants. Knowing your tenants are set up for success will put your mind at ease. Their success will add long-term value to your properties.