Disclaimer – we are not Realtors… but we’ve been asked this question a lot recently, it seems. Andy even did an interview for the Dow Jones News Service for an online story on the buy versus rent debate for small businesses in this economy.
Nina Kaufman at womenentrepreneur.com wrote a great checklist if you’re considering the renewal or beginning of a commercial lease for your small business:
Look Before You Lease – WomenEntrepreneur.com.
For us, this hits close to home since we leased our own office space in downtown Main Street district back in the early fall of 2008. Since then, I’ve been very thankful for the wise negotiations Andy made which followed many of Nina’s rules in the aforementioned article… Here’s how it played out in our world:
1. We negotiated to lock our lease rate for three years in 12-month renewable periods. We are only married to this space for one year – but we also know that we can budget the exact same rental amount per month for up to three years.
2. We negotiated to get discounted rent for a few months while we completed needed renovations to the building – a win/win for both our small business and our building owner. He got some needed renovations – we renovated to meet our needs – and the reduced rental costs per month helped ease our cash flow during this transition period.
3. We did a close inspection of the building prior to starting negotiations. We made a list AND photos of every problem we found. We itemized those problems that had to be fixed and those we could live with. But having the list gave us negotiating points throughout the process.
4. We seek to keep a great relationship with our landlord. We are landlords ourselves – owning property and having to make similar negotiations from the owner side of things in other communities. A well-negotiated contract is good. What’s even better is when it’s combined with an open, clear and frequent ongoing relationship between renter and landlord – lessor and lessee.
Thanks so much for the plug, Marianna! Because the feature article often changes on the WomenEntrepreneur home page, here’s the link to the article on the site: http://www.womenentrepreneur.com/2009/02/look-before-you-lease.html
Also keep in mind that a potential tenant seeking new space (or renegotiating a lease), might want to work with a broker to find the right sapce. Brokers will have their pulse on a lot of the data small businesses need to make a smart decision and gain negotiating leverage.