Office Max Roundtable: Relationship Building and Competition


Last week TAG had the privilege of attending the Office Max Roundtable event for business owners. Senior Vice President Steve Sunderland and Executive Vice President Kim Feil facilitated the panel discussion of what it’s like to run a business and how a large corporation such as theirs could connect with us. From there we were broken into smaller groups with managers from OfficeMax stores all across the country.

Kim Feil and Steve Sunderland on stage at the OfficeMax Roundtable

 

We found that there were a huge variety of businesses, but the commonality we all shared was our desire to build relationships. For businesses and especially small businesses building lasting relationships is key. The strength that businesses have over huge corporations is our ability to make altruistic gestures and more importantly work together. The layman might say, “You’re just a wolf in sheep’ clothing; there’s no such thing as a free lunch”. In business we know that you make one person’ day and it comes back ten-fold.

Having relationships with your competitors is a positive, not a negative. This was one of the hot topics: Do new businesses need to scope out their competition? Not necessarily. As a general rule, it’s always a good idea to be aware of your surroundings. However, it is a waste of energy worrying what the competition is up to. There is enough business out there for everyone.

There was a consensus amongst business owners that retaining and acquiring clients is based on the quality of your work. If your customers can count on your expertise to complete the job, it’s highly unlikely that they will be looking elsewhere for a “deal”. One of the business owners I had the pleasure of meeting mentioned that he charges just a little bit more than the status quo, but continues to have a healthy flow of clients. When they come to him they know exactly what they are getting and are assured of his superior work. Additionally, he donates that little bit extra to several nonprofits.

From this roundtable discussion we reiterated:
1. Relationship building is key.
2. Retaining and acquiring clients is based on the quality of your work not the price as compared to the competition.

We learned:
3. Big corporations are finally listening and even asking advice.

10 Tips to a Succesful Lease Negotiation


 

Bill Himmelstein speaks frequently about the importance of negotiation and how to become a successful negotiator. His last seminar honed in on the importance of negotiation when securing your lease. Below are his 10 Tips to a Successful Lease Negotiation.

1. Business terms– Double check that the business terms agreed to in Letter of Intent are the same as in the lease document.
2. Sublease clause– reasonable consent should not be withheld by landlord. Landlord will ask for 100% of profits. A 50/50 split is fair. Seek to minimize notice to landlord and response time from landlord. Consent shall not be necessary for purchase, sale, or merger.
3. Hold-over clause– landlord will ask for 200% of rent, however, 150% is fair and market.
4. Renewal Clause– landlord may ask for automatic renewal if no notice. This is not acceptable. It’s nice to have rights to space. Negotiate rate when possible as it will still be negotiable at that time.
5. Work letter– this should be studied closely to make sure everything matches up to what LL said he was going to deliver. If there is an allowance, base building items should be taken care of by landlord. If landlord constructing, make sure liable if no deliver on time.
6. Right to Terminate– this can be a great source of leverage to restructure lease regardless of how market has changed since execution.
7. Surrender of Premises– space shall be returned in broom clean condition, nothing more. Landlord may ask for space to be returned to white box. That is unacceptable.
8. Taxes & Operating Expenses– it is important to make sure capital improvements are not passed along to tenants through operating expenses. If gross lease, should be a Base Year.
9. Insurance requirement– have a qualified insurance broker review coverage requirements.
10. Damage or Destruction by Casualty– seek to minimize time in which lease can be terminated, and maximize the remedies available to the tenant.

When negotiating the details of a lease it’s important to be familiar with even the most infinitesimal details. An experienced real estate attorney will be able to facilitate this by reviewing the legal terms of the lease. Also, it can be advantageous to have an experienced commercial real estate broker negotiate the business terms of the lease. Both are paid by the landlord through a fee that already exists. This will save you time, money, and hassle!

 

 

For more information on this topic check out our post: The Definitive Guide to Finding Your Perfect Office Lease in Chicago

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