Hey Newsies,
Today we’re looking at an article from AP News reporting on the rising costs of commercial rent for small businesses. I’d love to hear your thoughts and experiences on this!
AP News: Rent Inflation Remains a Pressure Point for Small Businesses
The article explains that inflation is affecting rent for small businesses, which has been putting brick and mortar business owners in a very difficult position. It pulls data from the Bank of America Institute showing that rents have been increasing in higher percentages than before, at a disproportionate rate to other increasing expenses.
Rising rates of an integral fixed expense like rent is a very difficult thing to overcome, with a lot of business owners feeling stuck and not having a choice in the matter. Moving to a new location can potentially mean the end of a business, and the alternatives aren’t ideal. Owners need to deal with these higher costs by simply making less profit, raising prices, cutting other expenses such as employee labor, or considering moving or closing up shop entirely. Either way, it puts immense pressure and stress on owners just trying to make it through.
In my shop, we had our share of rent increases. This tended to happen around the times that we were renewing our store’s lease. We locked in the terms of increases into our lease so we knew the increase schedule and there were no last minute surprises. Luckily we were given some notice so we were able to plan ahead to raise our prices and try to cut expenses. However, towards the end, the landlord gave us shorter and shorter leases, which became a challenge and left room for more increases.
What’s your perspective:
- Have you been feeling bigger rent increases in the last few years?
- What have you done to offset some of those higher costs?
Can’t wait to hear your thoughts!
Pesso
This article is for informational purposes and does not constitute legal advice. For guidance or advice specific to your business, you should consult with a qualified legal professional.
@Pesso We design our own clothing and we contract sewing through 3 factories in China. They have their own approved CPSC testing facility, so when it comes through customs and there is a question about, (for instance what is a metal button made of, what flame retarded is on pajamas) they have all the documents and testing results available.
The only drawback is the time difference, most of our messaging and video calls happen at night, late at night. We have become close to our reps, one got married recently and she sent us photos of her wedding, they send us vacation photos and we send them ours. They ask about our culture and we ask about theirs. One likes to send us photos of what she eats and wants to see photos of "American food".
You know China as a whole gets a bad rap, but deep down the people of China are just like us. They work to provide for their family.
@Pesso Oh yes, the costs savings is huge, for instance if you went to an apparel market in Atlanta or Dallas. We pay about 60-70% less than someone who attends and purchase clothing there. When we are home we ship by container, when we are on the road we buy cargo space on planes. Shipping by container is a lot cheaper, but can take weeks to arrive, air freight takes about 3 days. Our rep keeps up with the air freight pricing and trends.
We also have them to print and attach our hangtags, we use to have Vistaprint print all our hang tags and we would attach them. Vistaprint is not the cheapest, but they were reliable. When we showed our reps they said we can do that, so they print all our hang tags and attach them to the clothing for 1 penny an item. We have saved a lot money and time on that because we were buying 40-50 thousand hang tags a year from Vistaprint.
Back in 2021 when covid was still causing delays at the ports, our rep contacted us in May and said Walmart and Target were starting to buy all the air freight space for the upcoming Christmas Holiday. So she started blocking out and buying space for us for every month up to November. While others were having inventory problems we never did.
