Thursday, January 20, 2011

What's the Difference Between a Triple Net Lease and a Gross Lease?

The last two weeks I started looking at office spaces. So many variations in what an office space is! I just need a large room, big enough for a large table with eight chairs around it, a desk for myself with wifi and a bathroom. It's exhausting, I go in there with high hopes and my dreams are dashed when I see things I don't like. One ad boasted the space "has great lake views!" Who cares? The poorly laid out floor plan for the square footage was sad for my usage. I couldn't put more than one person in one room. The realtor wanted me to "bust out a wall" at my expense to make the rooms more user friendly. And a vanity with a sink in the middle of a small room with awful heating boxes on the wall, which took up more valuable real estate (who's going to sit there??) Uh, no thanks.

I go see another space that is going under a renovation, freshly painted walls and the carpet was ripped up leaving plywood. Would I want to put down flooring again, at my expense. Uh, no thanks. How about pay for all the electric and electric heat for the entire second floor since I would be the only tenant there until more renters come in. Uh, no thanks. 6% of the school taxes? Village and county taxes? Variable sewage and water costs? Waste removal? Parking fee? $1,000,000 insurance coverage? and do that for 10 years please? Uh, no thanks. What I thought was a nice little rent of $1025.00 turned into about $1,500 pretty quick. And we know how taxes go: UP. Could I keep up with that pace or keep the business in my kitchen and double up on my own mortgage? Tough choices! I really want to get it out of here though....

I just explained Triple Net Lease. It's set up more for the investors, buying the property, making money from the rent and getting the renters to foot the bills to cover expenses. It could work to your advantage because you can negotiate a lower rent. I'm not ready for this sort of deal yet, that's for sure.

I need the Gross Lease. One price, everything covered by the landlord. Usually electricity is on you. But watch out if the heat is electric! Cable will be covered by you too. I'm looking at one that the landlord will give two months rent free for build out, which is renovation. The space may need painting or flooring and the landlord will let you do what you want but you pay for it. Luckily this space has new carpet and new paint. I'm not fussy about the paint and I will have to work with the carpet. With the jewelry assembly, lots of cut chain link pieces falling to the floor all day, bummer I can't just sweep it away. It's same floor too, another negotiable leg you can stand on. The triple net lease was one flight up. Dragging fifty pound boxes of stones and chains up one flight would mot be fun. Oh! I just found out the heat is included in the gross lease! All I have to pay is my own electric.

I'm waiting for the proposal from the gross lease landlord. This one is right down the road, a little more than a mile, I could ride my bicycle there! Fingers crossed the numbers are in my favor! I love the idea of keep this right in the neighborhood, right down the road.

Wednesday, January 12, 2011

So Happy to See The SCORE Crew!

I finally got to a SCORE meeting last week. Ever since the deluge of orders that happened in Necklace Town, I haven't been able to see the gang over in the Carmel, NY chapter. And I was in desperate need for advice, a business pick me up. I'm not a business person. I am an artist, a day dreamer, an inventor, a tinkerer, a renovator. I make jewelry all day. I do not like to add numbers, keep records, fill out forms, or do that Quickbooks. I last entered Quickbooks on November 9, 2010 and became so frustrated that I never went back to it. I'm back to pencil and ledger. It works better for me.

To see my retired business titans again today after nearly two months gave me such a relief. Down to business. Ben said I need an accountant right away. Jim the retired accountant, got on the phone and called one to get me going on getting my books in order. When I came home from the meeting, I had a phone message from a CPA. Ben said that my jewelry contractors meet the criteria of a 1099 and gave me a printout from the IRS outlining this. I mentioned this in "Who is a SubContractor or an Employee?" I met a new guy today, Ken. Ben filled him in on what I was about and what was going on and asked me what I want by the end of the month:

  • Get the books together, get my numbers straightened out. NOW. I have 1099s to get out
  • Get the big order at Necklace Town finished and put to bed.
  • Find a space to move this operation. It's too much for my kitchen. I need more room for more people and room to store this material. I want to be able to go there, work, and lock up. We talked about a temporary spot, like a church or a synagogue to rent a space for short term but I can't drag these rolls of chain back and forth. Jim also called another associate on this one, who has offices to rent.
  • Handle new inquiries to new business. How was it to be handled, what were the needs?
  • Establish a strong core team that will be there for important clients at a notice to fill an order, establish other teams to handle other clients as their needs arise. Train them to my specific needs and expertise to be able to attend each client specifications.
Ken asked how I got all this business. I told him it was all the internet. That's how I started. The website, the blog, craigslist, Facebook, Twitter. Google jewelry assembly, jewelry outsource and I'm number one, two, three. Ben thought I paid for the spots! It's Search Engine Optimization. SEO has finally worked for me. And tending to social media has worked too, spreading the word of what I do. No paid advertising, no knocking on doors. It's like a garden, you do have upkeep and maintain the website.
I don't blog enough, I'm still kind of new to it and there's so much more I should be doing but right now, focus is on jewelry assembly.

On the way home, I pulled over at every sign I saw "Office For Rent" and left messages. I saw my first office yesterday. It had a listing price of $650 per month BUT it didn't include electricity, did include heat, ac and water (I didn't know you had to pay for water!). I learned what CAM was: Common Area Maintenance. I spoke to another realtor about another space that was $1780. That didn't include HVAC (air conditioning!) or heating (gas!) there's business taxes and proportional fees for the building. So why don't you just say it's $2,500 then?? This is going to be a picnic, finding a space that's going to fill my needs. Ben said don't take the first one I see. I didn't, it was too small. And did I need a sink vanity in one of those rooms? Strange....

I really needed a shot in the arm from SCORE today. Sometimes I come in there so bewildered (what am I doing??) and they take everything step by step, solve, find solutions and I leave more confident and relieved. I have help close at hand, expert advice that's free! and I'm so grateful to those SCORE guys! If you are just starting out in a small business or already in the thick of it and things are getting crazy, find your local chapter. It's like a business partner but you have many business partners all advising you from their vast wealth of experience. Do it!

Monday, January 10, 2011

Happy New Year in Necklace Town

It's a New Year and hope yours has been Happy! It's still buzzing in Necklace Town. More than half the orders have been shipped. A huge shipment of stones, finally just arrived. Now we can get a big portion of that part of the order going in the next two weeks. There's a lot more to go, but the pace has picked up, everyone knows these pieces quite well now. We're hoping to be finished by the end of the month, fingers crossed!

It's real close to how we've kept to the original amount of chain that was ordered for this. Not too bad, when trying to determine how much chain is needed for four different types of pieces that total to be about 14,000, give or take. Oh to be the one multiplying and multiplying by inches and feet and dividing all that to determine amounts for each one. Oy! And the shipping department! They are packing, labeling and taping hundreds in flat rate boxes twice a week. The biggest load I have taken to ship in my Volvo station wagon so far, is 1,100 pieces.

Out of all that has been shipped, just a small handful have been returned for damage, or the wrong thing was ordered and needed an exchange. Not bad considering all of these 14,777 necklaces were made by hand, here in the United States of America. In the Hudson Valley, New York City, Stamford, Lagrangeville, Pleasant Valley, Poughkeepsie, Fishkill, Montrose, Brookfield, Ossining, Scarsdale, Croton-on-Hudson, Pleasantville, Carmel, White Plains, North Salem, Brewster, Amawalk, Putnam Lake, Hopewell Junction, Cortlandt Manor, Poughquag, Mahopac, Mount Kisco, Shenorock, Mount Vernon, Yorktown Heights, North Yonkers.

Jewelry Assembly Chicks are also administrators, teachers, opera singers, college students back for Christmas break, bass players, full time homemakers, brand new moms, painters, financial administrators, retirees, some unemployed, some working full time. All them working over the holidays, in their homes, at their peak times. Some people like to work late at night, some early in the morning. All of them thrilled to make this jewelry by hand in Necklace Town. There have been many other customers too, to have the ability to over see their production here in Necklace Town, USA, no matter how big or small their needs are. it's been great to help them achieve that. To keep their production here and not in China, Bangladesh or Taiwan.

Everyone has been so wonderful. There were some hiccups. Back ordered supplies. Snowstorms causing a mess of trouble. Some people would get sick but other people stepped in to pick up what someone couldn't do. Or they would come in, stand at the doorway to pickup supplies, lest they contaminate us with a sneeze or cough! Someone had their wisdom teeth pulled but called to find out when they could come in and grab supplies. I did insist she stay home and rest after oral surgery. The team work has been amazing. Everyone has been so cooperative, so helpful.

Sometimes it would be so overwhelming to me, feeling like, such a mountain of STUFF to conquer, so much chain, bubble bags, stones. Boxes crowding out my Christmas tree in the living room. UPS delivering several 50 pound boxes every day, bringing it up and down the basement stairs and up and down the front porch stairs, load the wagon to deliver the finished product. I lost 12 pounds since this order came in and dropped two pant sizes! But it's been the citizens of Necklace Town helping me that has made it possible to conquer this, to make this happen here in our community, keeping the momentum going. I can't thank them enough. Meeting so many nice people in the past two months has been a bonus to this venture. And it was all here in Necklace Town, USA.