As a prospective small business owner, you are probably well aware of the adage, “location, location, location.” It truly is everything and it is the secret to making your business a roaring success. Location scouting is usually the first step to starting a business, and once you find the spot that speaks to you and your goals, then it’s time to immediately lock it in.
One of the first things you may want to do is to negotiate a favorable retail lease so that you can secure the space for a good amount of time without paying exorbitant and unnecessary fees. As many experts point out, setting up the retail lease is one of the most important things you can do, and a terrible financial agreement can drain you of precious liquidity fast. The following tips will help you handle this important step and ensure that it moves forward without a hitch.
Set a Budget
The first thing you need to do is figure out what your budget is, exactly. Make a list of the features that are absolutely essential to the health of your business, and scope the properties that fit the aforementioned criteria. There are a few things you might need to do without, and that’s fine.
As the industry leaders at https://www.phillipsedison.com/ note, the most important thing is to find the property that most fits your vision at a relatively enticing price, and let go of the things that might seem nice but are not essential. Just make the right calculations, be careful as you do the research, and settle upon the property that suits your needs best.
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Negotiate the Rent
Oftentimes, a prospective landlord will upsell a property at a much higher price, thinking that a tenant may not negotiate. Bear in mind that landlords rarely expect their property to be leased at the set market rate, especially when it comes to retail leases, so you can comfortably counter offer a rate lower than the asking price. Negotiation is an art form, so do not feel shy about doing it. You will be surprised by how readily a landlord will be willing to work out a number that feels comfortable to you both.
Limit Your Negotiations
Speaking of the art of negotiation, one big no-no to keep in mind is to never negotiate more than one place at the same time. This is a bad move all around. For one, what if a property owner takes the bait while you are ready to close another deal that you neglectfully forgot you were ready to close? You would be creating a lot of bad vibes in the area in which you’d like to set up shop. Also, you need to negotiate from a position of strength. If you look at one property at a time, you can easily exclude one if it doesn’t work out, and take another one that is more likely to put you in a better position.
Hire a Lawyer
If the negotiations prove to be problematic or require a skill set that you just don’t possess, then it is totally fine to hire a lawyer. In fact, it is advisable to get one, regardless of your capacities to negotiate since they will be able to stick to your established budget, help you get the best rate for rent, and outline deals and clauses that will be favorable to your business.
Ask for a Better Lease Term
A well-known fact about the retail lease game is that you can get a better price on monthly rent by negotiating a longer lease. Work as much as possible to figure out what the landlord is willing to give in terms of benefits, in exchange for a long term tenancy.
However, this depends on the nature of your business, if you’re still new to the game, it might be better for you to negotiate a short-term lease and simply pay the higher rent till your sales pan out. The beginning of setting up a business is touch-and-go, so it may be more beneficial for you to not have to get stuck with a long term lease.
Ask for Lower Penalty
While we are on the subject of new businesses having an uphill battle, it would be wise to include a clause in your lease contract that lets you off the hook in case you need to terminate it early. Ask your landlord to consider lowering the penalty fee for early termination of the lease so that you can at least have a measure of peace.
As a new business owner, you are bound to face many, many challenges, but the terms of your retail lease should not be one of them. Do everything you can to negotiate a favorable lease, and take the time to choose the property that best suits your needs and budget. This is an essential building block for your business’ success.
