Getting the right lease for your business

When taking out a commercial lease you first have to decide on what premises and lease will be right for your business. Many businesses think about their immediate need rather than take a long term view including growth. I am working with a client who within 12 months had outgrown their premises and now is having to find new premises and recreate the PR.

The lease should clearly state rent; outgoings; other obligations; permitted use and access; location and building design; insurance and signage. It is also important to know who is responsible for the different fees involved. Typically the leasee is responsible for a lease or legal deeds being drawn.

Leases can be negotiated. You can for example ask for a reduction in rent if you are taking the lease for a longer term. Or you may want to ask for an option to renew at the same rent. This gives the landlord certainty and allows you flexibility to assess if the premises still meets your needs at the end of the lease term.

Negotiating is all about having the courage to ask. In a worse case, you will get a no. In a best case, you will create a win-win. Recently I found myself having to negotiate new lease arrangements for our business. The rent and the terms and conditions of the new lease did not meet our business objectives. When the vendors and agent did not want to negotiate, I made the decision with the long term view in mind and decided to move our premises. Although there are short term costs involved, longer term, the benefits far outweighed the costs.

Tips before signing a Lease
  • What is the lease duration?
  • Does the lease have an option to renew?
  • What is the rental and how often does it have to be paid?
  • Does the lease allow for the type of business you want to conduct?
  • Can you sub-let all or part of the premises?
  • Who is responsible for council rates, water costs, legal fees, stamp duty, security, cleaning, under the lease?
  • Negotiate for win-win

Shivani Gupta is the author of Passion@Work which can be purchased from Dymocks online .
Visit www.shivani.com.au

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About this Blog

Many people running a small business get caught by leases. A lease essentially provides you with the legal right to occupy premises. It protects you and the landlord by setting out all the agreed terms of occupancy.

 
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