Your Most Important Negotiation – Choosing Your Martial Arts School

No single element has to be more right than your rent. Getting locked into an expensive lease straps a school’s cash flow every 30 days.

Rent is presented either monthly or annually. In Florida, a 3,000-square-foot space at $10 per square foot annually may rent for $2,500 per month; 3,000 x $10 = $30,000 + 12 months = $2,500. A similar space in California may be presented at.83 per month per square foot.;.83 x 3,000 square foot = $2,499.99. As my dad always said, “It’s the same thing, only different.”

Rent is very much like a hotel room or a 30-second TV spot. Every day that goes by and the space is not rented is money that can’t be recovered. That makes rent very negotiable. Make sure you are ready when you negotiate your rent. This section is designed to do just that.

First, an important note: You will never be paid more in your life than when you negotiate. For instance, you are buying a widget. Instead of paying the sticker price of $100, you say, “Will you take $80?” He says, please “I’ll take $90.” In the few seconds it took to do this, you made $10. Let’s say it was a 15-second exchange; $10 for 15 seconds is the equivalent of $2,400 an hour. So let me repeat, you will never be paid as much as when you negotiate a price down.

How do you negotiate rent? After the initial walk-through, get an offer sheet from the landlord with his offer to you. Keep the entire negotiation process in writing. If, in phone conversation, you agree to a new point, confirm it in writing immediately to the landlord. It doesn’t exist if it’s not in writing. Don’t assume anything; get it in writing.

The most important two words in business are “just ask”. You will never earn more money in a shorter period of time than when you just ask. In the leasing business, everything is negotiable, but only if you just ask. The answer is always no until you just ask.

The Flinch

Learn to physically react to any price. It takes some acting and some practice, but it’s actually kind of fun and boy, does it pay well. Ask someone what the widget costs. Whatever they say, your response is, “What? You’re kidding me! That’s twice as much as I expected.” Often, that’s all it takes. The guy will drop his price or throw in something extra. At the worst, he knows you are “sensitive” to price. Warning: Tell your spouse what is going to happen. Once I flinched at a price, and my girlfriend at the time said, “I got so nervous when you did that. I could never do that.” I had to explain it was all an act. Practice your flinch.

Walk-Away Power

This is the most important aspect of negotiation. You must convey to the salesperson that you are perfectly willing not to purchase, and you will walk out unless you get a good deal. Without this, any decent negotiator will hold his position, because it’s clear you are going to buy anyway. In the car business, if the frustrated buyer storms out of the sales office to get in his car and go home, the salesman will chase him down. I even had one salesman step between my car and me to keep me from opening the door. I had to either laugh or choke him out. Either way, the deal always gets better at that point. If they let you go, the deal was as good as it was going to get that day. Either way, never get emotionally attached to a potential purchase. Even if you do, don’t show it.

Higher Authority

This charade has been done to death in the car business. You make an offer to the salesman, and he says, “OK. I’ll take it to my manager.” The manager is the higher authority. It’s the good cop, bad cop scenario. The salesman role is the good cop. He wants to find out what you like and see how emotionally attached you or your spouse are to the car. He will take that information back to the manager, the bad cop. You can be sure the salesman is not saying, “They are a nice couple, and this is a fair price offer.” What he and the manager are doing is figuring how to get the highest price possible. The salesman comes back with a smile and a counter offer.

When you are negotiating a lease, be the good cop. Tell the seller you have to run everything by your people or your association. This gives you time to figure out your next move and keeps any emotional attachment out of the game. It also works to remind the salesperson that you are not the final decision maker and that the deal could get shot down at any moment by the association or your business partners.

Be Negative

It’s never a good idea to walk into a space and say out loud, “This is perfect! We can put the changing rooms here, the pro shop here. This is ideal for my office….” By doing so, you expose your emotional attachment to the property. I am a very positive person, so let me say this: I am positive you want to be negative, or at least neutral, when negotiating a lease or even viewing a space.

Simply walk around, take some notes, do a rough floor plan of the shape, and tell the salesperson, “Gee, I don’t know. This could be a lot of work.” A good salesperson will start asking you questions then. Be sure to convey a very neutral position. “I guess I could make it work, but it’s not going to be easy.”

I said don’t show emotion while looking at a space. Actually, you can do a little play-acting and show some negative emotion. It’s an extended flinch. Communicate to the salesperson that if she wants you to go ahead with this, it’s going to take some work on her part, starting with price and terms. Don’t make it easy for her and hard for yourself; you’re the one who has to make the monthly rent payments.

The martial arts industry is haunted with the ghosts of good schools that had everything going for them but ended up posting a “For Lease” sign in their window and closing their doors. One of the most common failures is a poorly negotiated lease that straps the owner with an exorbitant rent. A bad lease deal is not just high rent, either. Your start-up costs and your ability to expand can be drastically affected when you have a bad lease.

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