Taking on a new commercial space for your business is an exciting time for any business owner. It marks a new beginning and bigger opportunities for business growth or expansion.
However, going through the entire rental process can be overwhelming. Aside from finding the perfect space for your business, you have to review and understand every clause stated in your rental agreement between you and the landlord.
Renting a commercial space is often a large expense, especially for small businesses. But it can cost you a lot more money if you don’t take time to read and understand the conditions buried in your rental agreement.
Whether you are expanding or starting a new business, this guide will give you a rundown of the essential key points for small businesses before renting a commercial space. Read along and take note of these pointers before you sign that contract.
1. Take It Slow
Starting on the wrong foot can put you at a great disadvantage when starting a business. Instead of using the time to manage the business operations, solving an unexpected dilemma will take too much of your time.
If you are looking for an ideal space to open your business, make sure to allot plenty of time. You don’t want to end up buying the wrong space for your business just because you run out of time and options.
Other concerns of finding a rental space are the repairs and maintenance. No one wants to rent a space in bad condition. Make sure that the foundation, roof, and flooring structure are in excellent condition. You can also check for seamless gutter installation, especially if it often rains in the area.
Give yourself three to six months to look for available commercial spaces. Checking out nearby cities can give you plenty of options. If you give yourself adequate time to find the perfect space, it won’t be challenging to coordinate the moving details.
2. Tour Around the Area
Before setting up a business, make sure to conduct market research around the area. This way, you will have a good grasp of the demographics of your potential client base. A great way to start is to visit and walk around the neighborhood. Talk to the people and make observations around the area. Make sure to take note of the income levels of the neighborhood and their interests.
The result of your observation can help you decide if your business will thrive. As much as possible, look for neighborhoods with a high demand for the product or service you will offer.
3. Focus on the Future
As your business grows, you will likely encounter challenges that will hinder your opportunity to expand. If you plan to expand your business space, you need to find out if the landlord will allow you to build out the space or if a zoning law will affect your expansion. Giving yourself a head start can help you make better decisions to grow your business in the future.
4. Understand the Clauses
If things go wrong and your business is not doing well, chances are, you will likely consider leaving the space even if the contract still exists. Once this happens, you need to identify the possible consequences of breaking the contract.
No renter likes the idea of getting into conflict with their landlord and vice versa. As the renter, it is your job to review the opt-out clause. Failure to do so will mean losing your security deposit, or worse, you get sued for terminating the contract early.
Keep in mind that your lease is a binding contract. Renters often get into trouble if they decide on their commercial space that is not present in the fine print. Some properties come with several limitations: restricting signage creativity, different contractors, and other limiting clauses.
You should also remember to never agree on a lease that came from your landlord’s word of mouth. The agreement between you and the landlord should always be in writing.
5. Negotiate with the Landlord
Like any other agreement, making negotiations can make a huge difference. If there is a certain clause that concerns you, discuss it with the owner. You need to make sure that the renting conditions are manageable for you. You can also address rent increases, maintenance expenses, and hidden fees.
6. Consult an Attorney
If you want to have a better grasp of your rental agreement, you can hire a legal counsel like an attorney to help you understand the clauses and the entire leasing process.
Searching for a commercial space is one of the most exciting turning points for any business. However, you need to make sure that your new business space allows you to grow and thrive. When you’re ready to rent your commercial space, make sure to follow these tips for a smooth rental process.
