Rentals and agents' fees are never set in stone and should always be negotiated, says businesswoman MOST START-UP BUSINESSES are the culmination of many months of detailed planning and poring over sales budgets and financial projections. Others, like Love That Lifestyle, of which Rhonda Gretton is the founder and sole owner, come about purely by chance. 'I was divorced, with limited savings, and some of the jobs I applied for in Hong Kong weren't paying enough to cover rent and daily travel,' Ms Gretton said. 'However, I did have some pin money to get an enterprise going. So, I started writing a newsletter for the residents of Hong Lok Yuen.' The publication took off and was soon being distributed throughout the New Territories. 'I only closed it down a couple of years ago, after more than 20 years,' Ms Gretton said. In the meantime, she had supplemented that income with a number of other enterprises. They included buying and selling second-hand furniture and bagging garden topsoil for sale to local residents. That led to supplying swimming pools to order, which ultimately provided sufficient working capital to buy out a Sai Kung-based company. Business continued to grow to the point where it made sense to borrow funds to take over another company which sold outdoor furniture, garden sheds and barbecues. 'With my assistant, I went to Australia to meet suppliers and confirm that they were still willing to deal with us,' Ms Gretton said. 'We didn't know the business, so we bought one of this and one of that, but soon realised barbecues were the most popular items.' However, as the business developed, it became clear more staff - and space - were needed, up to then she had been working from home. She decided to take the plunge and rent premises. 'I had no idea what a business plan was and had done no market research,' she said. 'Everything was based on 'gut feelings', and it still is today.' At the time, Horizon Plaza in Aberdeen had recently opened. It was already attracting a variety of outlets and was proving especially popular with expat shoppers. 'Although it offered ideal prospects for growth, I thought it was too far from my comfortable location in Tai Po,' Ms Gretton said. 'The Western Harbour Tunnel hadn't been built yet, so I settled instead on a property in nearby Fanling.' Looking back, she now admits to overlooking the golden rule for choosing real estate: location is everything. People did visit, and there were always a couple of clubs which organised weekend bus tours to the New Territories. But, overall, the volume of foot traffic was disappointing. 'It proved to be too far away for many customers,' Ms Gretton said. 'I quickly realised the importance of location. It was more important to be convenient for customers than convenient for me.' Encouraged by a friend, she decided to give Horizon Plaza a second look, with the result that they jointly rented one unit of about 1,200 sqft. Half was used for storage and half as a showroom. As word spread, customers flooded in and, within a few months, more space was needed. 'There was a waiting list for space, so we ended up with five units on three floors at either end of the building,' she said. 'Horizon Plaza was so popular that, as soon as anything became available, you had to grab it.' The series of negotiations taught her that rental rates and agents' fees are never set in stone, despite what some people say. 'I believe that fees should be paid by the landlord, not the tenant,' she said. 'Also, you can easily delete or add something to the contract or lease you have negotiated.' Ms Gretton also suggested asking for a grace period until your business is up and running. 'When negotiating, always ask for a rent-free period to move in and decorate the place,' she said. Adding improvements to the property should also be taken into account during negotiations with the landlord. When looking at prices and space, it is important to compare like with like. First-time renters of business units should make sure to establish the net, or usable, area and remember that rents in Hong Kong are based on the gross area, which includes hallways, stairs and lift wells. Ms Gretton also advised checking several things very carefully: adequate loading areas, doorways high enough to accommodate deliveries, goods that can be handled easily in both good and bad weather, and a lift that is in good working order. Lifts in Hong Kong often stop only on odd or even floors, so a company with facilities on more than one floor must ensure these are mutually accessible. Should a legal issue come up, it is best to seek professional advice. 'It is your responsibility to understand your documents,' Ms Gretton said. 'Also, make sure your line of business complies with what is legally allowed for the building.' She also advised keeping up to date on things like labour laws, which may change. For the unwary, setting up costs can easily get out of hand. 'You will usually need to pay a deposit equivalent to two to three months' rent, and the same with management fees,' Ms Gretton said. 'You will also have to pay deposits for water, electricity and cleaning. Other expenses include insurance and stamp duty, so it all adds up quickly.'