Trading Spaces
 
You’ve outgrown your digs or perhaps have finally
found that perfect spot. Now comes the tricky
part: Negotiating the best lease for your company—
one that is cost-effective and provides
some flexibility for the ebb and flow of business.
While most landlords will present what
they call a “standard” lease agreement,
small-business owners need to be fully prepared
to negotiate the best terms. A lease
agreement is one of the most substantial
financial commitments a small business will
make—and any ability to work in some savings
can mean the difference in bringing on a new
employee or purchasing some much-needed
equipment.
“Most small businesses think that they
can’t negotiate and they’re afraid to negotiate,”
says Dale Willerton of The Lease Coach
(www.theleasecoach.com), a certified lease
consultant specializing in small businesses
and franchises. “They make the mistake of asking
for what they want instead of asking for
something that can be negotiated down.”
Some points to consider during the negotiation
process include:
- Terms of the lease. Short-term leases offer
more flexibility in the event the needs of your
business change (say you want more or less
space or you find a more desirable area) or if your
business is not location sensitive. Retail shops, in
contrast, may want to consider longer-term leases
if they find a spot that’s better suited for business.
Most landlords are willing to make concessions
for longer-term leases. A compromise
might be to negotiate a short-term lease with an
option to renew at rates that are amenable to
both parties.
- Tenant improvements. Many businesses
will want to “build out” improvements that
put their stamp on the premises or maybe the
location simply needs work. Negotiate your
lease with an eye toward having the landlord
cover much of that cost by committing to a
longer lease term. You should also consider a
clause that allows you to make such improvements
with the landlord’s consent.
- Subleases and assignments. It helps to have an option
written into your lease that allows for subletting or assigning
your space to another party. If you need to move out for any
reason, you then have the ability to bring another company
in to cover your rent for the rest of your contract. Or if you’ve
taken on more space with an eye toward growth, this
arrangement gives the option to sublet unused portions to
cover your payment. BA
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