A Good Lease Is Essential to the Health of Your Business

Is the lease on your building coming due in a month or two? Do you sometimes think you need more space? Can you always afford the monthly payment? “I know I cannot afford to lose this location.” “If I lose my lease, I lose my business.” Having the right lease terms is essential to the ongoing health of your small business. How are the terms of your lease? Do you know what you should do about all the issues concerning your lease? Let’s explore just some of the issues.

Recently, a car wash business had the building that they used to sell car washes and detailing services sold right out from underneath them. Guess what? They lost their business. There are numerous stories of great restaurants that just had to close their doors because they lost their lease. When a small business owner has success at a particular location, it makes the value of the property go higher. This may help the landlord to rethink his/her position on the property. Many landlords get tired of managing tenants and all of the headaches that come with property management. Sometimes they want to take the money and run. They cash out and the business owner is left in the street. Sometimes the business can survive at a new location but it takes time, money and much effort to relocate a business.

Any business that is in for the long haul must know the terms of its lease and it has to keep on top of it at all times. Every business owner should assess and reassess the terms of the leases on their business locations at least semi-annually. In all planning sessions this should be one of the items on the agenda. It may not take very long at any one planning session, but the business owner needs to know the terms of the leases that are in place and work to keep them current and in favor of their business. The lease should not be too short or too long. You may want to have an option to renew the lease but not the obligation to renew. If you renew, will the monthly payment go up? If you have signed a triple net lease (if you do not know what a tripe net lease is you really need to spend some time and find out more about this and other real estate terms)and the property is getting older, then you may be liable for some upcoming expensive repairs. Have taxes gone up? Will you be on the hook for the increase when they do go up? There are many other things you should ask yourself.

You may want to get a professional involved. Go to the web and search for commercial real estate brokers in your area who specialize in commercial leases. Most of these folks are ready to help. You may want to have a professional on your board of advisors or on a retainer. The matter of your lease is imperative to the health of your business. Remember, no location, no business. Good luck.