If you've found the perfect location for a new business, it can be tempting to move fast to secure the spot and get things going.
But many business owners commit several mistakes before they even open their doors, and they’re all tied to their commercial lease. Here are a few major mistakes to avoid when signing a commercial lease:
Not having a long-term plan
Signing a commercial lease can be an intimidating process, especially if your business is just starting. Many business owners fixate so much on the location and price of a lease, they don't stop to consider how long they are signing up for.
While an established company can safely estimate what they need out of retail space, newer companies need to give themselves room to adapt. Negotiating a shorter lease in exchange for a slightly higher rent can save you over the long run.
It's important to have a five-year or even a ten-year plan in mind when looking for retail spaces.
Getting locked into one location
Sometimes, business owners fixate on one location and bend over backward to ensure they secure that rental. This not only puts you at a negotiating disadvantage but can actively hurt your business in the long term.
When looking at properties, always find a couple that will work for your needs. Do not get stuck on one location, no matter how perfect it seems. Keep your options open so that you may negotiate on even footing with the building owner.
Not knowing a landlord’s long-term plans
Understanding what the landlord plans for the building you are renting is important. If they intend to sell in the near future, you may have an easier time getting a shorter, more flexible lease. If there are construction projects or improvements scheduled, you need to know about them. A renovation can impact your business or drive away customers.
Discuss the long-term plans with the landlord and make sure they align with what you need out of the space.
Taking the smart approach
Finding the right rental property can feel exhausting, but it's worth it. A good fit will allow your company to expand as needed. It will also give you the ability to scale back, should you ever need to do so.
When you have a few rental locations picked out, review the lease agreements with a knowledgeable real estate attorney to address any potential issues.