Business-Minded Legal Solutions

Avoid these 4 mistakes when negotiating a small business lease

Running a business is often an effective way to achieve the American dream. With a lot of hard work and some luck, your organization is apt to grow. As it does, you may need to find a larger, more permanent or better suited location for your business. If you are not yet ready to buy commercial property, you must negotiate a commercial lease.

Everyone negotiates a bit differently. Regardless of your approach, though, you can likely learn from the errors of others. Here are four mistakes you should try to avoid when negotiating a commercial lease to house your small business:

  1. Rushing 

To negotiate effectively, you want as much time as possible. Therefore, you should try not to put your organization in a place where you need to find a new location immediately. Instead, plan proactively, allowing several months to a year to locate and secure commercial property. If you have less time, do not alert potential landlords to your predicament.

  1. Missing concessions 

Experts generally advise newer businesses to execute relatively short commercial leases. More established businesses can lock in rates over a longer time. If your landlord wants you to sign a lease with a term that is workable but not ideal, consider asking for concessions. For example, you may ask your landlord to upgrade or repair the property.

  1. Forgetting an exit strategy 

While your business may be booming currently, it could struggle in the future. Without an exit strategy, you may be on the hook for rent your business cannot pay. Therefore, consider negotiating an out clause into the lease agreement. This may include the option to sublease or sell your business to a new tenant.

  1. Not checking licensing and zoning regulations 

You want to be certain you have the legal ability to operate your type of business in the space. Put simply, you should not rely on your landlord for licensing verification, zoning or other regulations. Instead, you should do your own research to be certain there are no legal obstacles.

No two commercial leases are exactly the same. Still, when negotiating one for your business, you want to receive as many benefits as possible. By avoiding some common mistakes, you can likely put your company on a path toward future success.