Wednesday, November 26, 2014

Space lease or rent

     Free daily tips, information, advice, and ideas
     with examples drawn from small businesses. 

     Every small business needs space. Whether you offer products or services, you will need a place to do your thing. 

     Artists rent studios, therapists lease space, chiropractors need a place to meet clients, retailers need shops to display their products, accountants and attorneys need offices, and so on. Even if you are using a home office, you are renting from yourself.

     Leasing or renting space usually involves a document to be signed. It will spell out the terms and conditions of your responsibilities. So you need to pay attention. 

     Example: Ellen ran into trouble when her lease was up for renewal. She opened and operated a small ice cream shop under a 3-year lease. The shop was very successful. She used Facebook to promote and she hosted events at her place--birthday parties, open houses, fund raisers, and the like. In her third year, she approached the landlord about renewing the lease. He wanted another 3-year lease at a much higher rate. Ellen wanted at least a 5-year lease at the same rate. Negotiations got nowhere, so Ellen looked around town for another location. She had considered adding to the ice cream she offered--she had toyed with expanding into coffees including espresso, a smoothie bar, and fancy chocolates. She found a much bigger space at the same rate she had been paying and for a 5-year lease. It also had a patio that could be used. So, Ellen told the present landlord goodbye, moved, expanded, and never looked back. 

     Example: Roberto was a consulting therapist who needed space where he could meet clients. Two rooms would suffice--a private office with a reception room and restroom. He found an appropriate space in a building full of other professionals. Roberto knew that the landlord had trouble renting such a small space, so he negotiated a 5-year lease at a relatively low rent. As part of the negotiating, Roberto insisted that the landlord include heat and electric. The landlord readily agreed--the small space wouldn't use much heat or electric. But it reduced the costs for Roberto. 

     When you find the space you need, it is imperative that you read carefully the terms and conditions. Some leases have small print that can include all sorts of add-ons to the monthly cost. In addition to heat and electric, the lease might include your paying for such things as snow removal, garbage pick-up, signage, parking spaces, taking care of plants and yards, etc. 

     The landlord must furnish you a copy of the lease. Before signing, take a copy home and read it carefully. You might want to pass it through your attorney, adviser, or trusted business person before you commit. 

     Leases and rental agreements are legal documents. Once signed by you and the landlord, the terms and conditions apply. It's sort of like a point of no return. Yes, you can take a landlord to court or at least a mediator, but you have a business to run. Don't box yourself into a corner that will cost time and money to reverse.     

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