Negotiating a lease
Negotiating a lease? For many small business owners, the single most important document for their business is the lease. Unfortunately a lease is generally a long and fairly complicated 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 thinking about moving, do an analysis to weigh up the costs and lost time to move. Landlords are very motivated to find new tenants so it’s definitely the right time to review your options.
- If you plan to move, consider getting a qualified Commercial Real Estate Agent that 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 want to run the business for another two or so years and then sell, negotiate with the landlord that they will assign the lease and you will no longer be liable if the buyer defaults and does not continue paying the lease.
- Similarly to the last point above, if your lease has a clause that says the seller must pay a fee to the landlord to review and approve 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 fee of $1,000. The total cost to the seller was therefore $3,000.
- Consider having a qualified attorney that does business law review your lease. There is a cost to you but if they can save you time, money or a situation you did not know about that can be a good investment. Some attorneys may even negotiate with the landlord for you.
With the economy still soft, now is the time to negotiate with your landlord.