Negotiating a lease?
For many small business owners, the single most important document for their business is the lease. Unfortunately, a lease is typically a lengthy and complex document. Because of its complexity, many small business owners either accept what they receive or do the bare minimum.
Here are some suggestions for you
- If your lease is coming up for renewal and you wish to continue operating your business, you have a choice. Stay in your current location or move. If you are seriously considering a move, analyze the costs and the time it will take to complete the move. Landlords are very motivated to find new tenants, so it’s the right time to review your options.
- If you plan to move, consider getting a qualified Commercial Real Estate Agent who specializes in negotiating leases to help you. I am a member of the Association of Commercial Real Estate Agents, or ACRE, and they have experts in different market segments.
- As I just said, landlords are motivated at the moment. Even if you decide not to move and your lease is up, consider negotiating not only your current price but also the terms and conditions of your lease. For example, if you plan to run the business for another two or so years and then sell, consider negotiating with the landlord to have them assign the lease. This way, you will no longer be liable if the buyer defaults and fails to continue paying the lease.
- Similarly to the point above, if your lease has a clause stating that the seller must pay a fee to the landlord for review and approval of the buyer, have this clause removed. I’ve seen instances where a seller has introduced three buyers to the landlord when trying to sell their business, and each time, the lease requires the seller to pay a $1,000 fee. The total cost to the seller was, therefore, $3,000. See negotiating a lease when buying a business.
- Consider having a qualified attorney who does business law review your lease. There is a cost to you, but if they can save you time, money, or a situation you were unaware of, that can be a worthwhile investment. Some attorneys may even negotiate on your behalf with the landlord.
With the economy still soft, now is the time to negotiate with your landlord. See negotiating a lease when selling a business.