Business Location Lease – Final Checklist

Final points to check before signing the business location lease.

You should run through the following points before you sign the business lease agreement.

  1. Is there sufficient electrical power? Are there enough electrical outlets?
  2. Is there enough parking space for customers and employees?
  3. Is there sufficient lighting, heating and air-conditioning?
  4. What Signage can you put?
  5. Is your business in compliance with the city’s building and zoning department?
  6. Will the landlord permit alterations that you deem necessary?
  7. Do you have to return the building to its original condition when you move?
  8. Is there any indication of roof leaks?
  9. Is the occurrence of burglary insurance high in the area? [This varies tremendously.]
  10. Can you secure the building at a low cost against the threat of burglary?
  11. Will the health department approve of your business at this location?
  12. Will the fire department approve of your business at this location?
  13. Have you included a written description of the property in the lease agreement?
  14. Have you attached drawings of the property to the lease document?
  15. Do you have written guidelines for renewal terms?
  16. Do you know when your lease payment begins?
  17. Have you bargained for one to 3 months of the rent?
  18. Do you know your date when you take possession?
  19. Have you listed the owners responsibility for improvements?
  20. Do you pay the property taxes?
  21. Do you pay the insurance?
  22. Do you pay the maintenance fees?
  23. Do you pay the utilities?
  24. Do you pay the sewage fees?
  25. Have you asked your landlord for 5% off on your rent lease?
  26. Have you included penalty clause in case the project is late and you are denied occupancy?
  27. Have you retained the right to obtain your own bids for signage?
  28. Can you leave if the business center is never more than 70% leased?
  29. Has a real estate attorney review the contract?

Since everything is negotiable in a business, the business lease is also subject to negotiations regarding financial terms rent increases, the tenants rights and responsibilities, options for renewal, tenant leasehold improvements and other terms and conditions.

  • While your agent can help you initiate and negotiate the biggest bumps on the lease, it should always be reviewed by an attorney who specializes in real estate.

You should only sign the business is after it has been reviewed and approved by your attorney. Typically, the 1st draft will be drafted by the landlord and or his attorney which you will then get reviewed by your own attorney before you sign it.

  • At the end of the day, it is important to remember that it is your own personal judgment that is going to matter when choosing the ideal business location.

Statistic data and technological elements of the site one thing but you are the one who probably needs to get a balanced picture of the requirements of your business and just the location on its merits. Real estate brokers and economic development agencies can give you plenty of numbers since that is what they do.

  • To get the accurate picture of the business location you should take time to visit the site yourself, talk to people who own or are working in nearby businesses and verify the facts and what they really mean to the potential success of your business.

Negotiate the Business Location Lease

  • The 1st draft of the lease contract is only the beginning. This will almost certainly be written in the best interest of the landlord.

In almost all cases, they will be certain clauses on the lease contract that you will not be agreeable with and certain other clauses that you might want to get included. In a nutshell, the 1st draft of the lease agreement that you are presented with for business location will probably require you to negotiate.

  • You should understand that like everything else in the business, even the lease negotiation for the business space is negotiable with the property landlord.

In fact, you will be surprised as to how much you can get in the concession and extra is simply by asking. When you ask for certain demands you should make sure that they are stable and in keeping with acceptable business practices and current market conditions.

  • A good commercial real estate agent specially one who represents you and not the business landlord can be invaluable during this time.

Not only can help you understand the commercial property business lease but also give you information about the kind of agreement that you should go for based on information he might have about other similar businesses and similar renting agreements. Avoid issuing any ultimatums because they almost always close the doors and if you fail to follow through your next ultimatum will not mean much.

  • In order to save time in negotiation you can consider starting the process of negotiation with something that is very close to your best and final offer.

That way if you cannot mutually agree on the terms, both you and the landlord are free to move on quickly without wasting time. Usually, the longer the negotiations take the more potential there is for things to go wrong.

5 Kinds Of Common Business Commercial Leases

Common kind of commercial leases.

Flat Lease

This is the simplest and the oldest and a lease agreement. It sets a fixed price for a fixed period of time. This simple agreement between the landlord and the business tenant is getting more and mow elusive to find.

Avoid the flat lease if it is for a very short period of time has a series of flat cases can cost you more in the long run than a long-term lease with escalation clauses.

Step Lease

Step lease attempts to cover the landlord’s expected increase in expenses by increasing the rent on an annual basis over the life of the lease agreement. The one problem with the step lease agreements is that they are based on estimates rather than actual cost. There is no way for either party to know in advance that the proposed increases are fair or equitable.

Net Lease

Like a step please agreement, the net lease increases the rent to cover the increase in landlord’s costs but do so at the time when the increase occurs rather than on an estimate. This kind of lease agreement is more equitable than a step lease but it is also less predictable.

Cost of Living Lease

Rather than tying the rent increase to a specific expense, this kind of lease agreement increases the rent of the basis of the rises in the cost of living. Your rent will go up with general inflation. By since your business product and services also likely to increase their price with inflation, it should effectively cover the increases in rent. For this reason the scanned for lease agreement can be very appealing and attractive.

Percentage Lease

This lease agreement allows the landlord to benefit from the success of your business. The rent is based on either a minimum amount or a base amount or percentage of businesses across revenue whichever is higher. Percentage amounts usually range from 3 to 12%. You will be required to furnish the periodic proof of your gross sales which means that you may have to allow the landlord to examine your financial books or sales tax records or provide a copy of the appropriate section of your income tax return. Person leases are common for renting retail space.

Using a Real Estate Agent to Find Commercial Real Estate

Unless you are experienced at finding business locations and dealing with commercial properties, it may be a good idea to use the service of a qualified real estate agent.

Whether you are buying or leasing a commercial property the real estate agent can help you prescreen properties but saves you time and also negotiate on your behalf which can save you money. A commercial real estate agent will help you understand the nuances of renting a commercial property better. When looking to lease a commercial property or to buy one, find a real estate broker who specializes in dealing with commercial properties.

Typically the seller or the landlord pays the agent’s commission which may put questions in the mind regarding the loyalty of the agent.

However, the agent does not get paid unless the deed satisfies both the parties. So that is something that works in your favor.

You may however always choose to get an agent of your own to find you a suitable commercial business location. This is known as tenant or by representation.

It may even be a good idea to hire an attorney to go over the business contract concerning the commercial lease as well as to negotiate with the landlord about certain clauses that you might included in the business lease as well as removing others.

For more information on tenant representation and for help finding someone to assist you with finding commercial business location, contact the Society of Industrial and Office realtors in Washington DC at 202-449-8200 or visit their website at www.SIOR.com.

When choosing a real estate agent to find your commercial property, use the same principles as you would when choosing an accountant or an attorney for business.

  • Ask for reference from your friends and family as well as other business professionals that you might be involved in. Ensure that the agent has knowledge of commercial business properties and even specializes in them.
  • Check out the track record of the agent, professional history and reputation and clarify how the agent will be compensated and by whom.
  • Draw up an agreement with the agent that specifies the job that he is going to perform for you and any other mutual expectations.

Commercial Business Leases

What is a Commercial Business Lease

When looking at a commercial business lease for the 1st time, it is easy to get intimidated. A commercial business lease can be complicated, lengthy, full of complicated language and always written in favor of the landlord.

However, the main point to note is that like most everything else in the business, even the commercial business lease is negotiable.

In order to be able to negotiate the terms on a business lease to your maximum advantage, you must 1st be keenly aware of your own business requirement and what you want out of agreement. You should know how much your business can afford as well as the current services and requirements that you want from the location.

There are 2 main clauses that the commercial business lease should always contain, a bail-out clause and a co-tenancy clause.

The bail-out clause allows you to get out of the lease before the term expires in case your businesses succeed and the sales to not meet the expected figures. This clause allows you the freedom to close your business if it is not successful instead of having to pay money for the entire lease term and cause yourself further financial injury.

The co-tenancy clause states that you can close your business in case of major anchor store closes. In case the business location needs a lot of construction work or development, you can ask the landlord for the construction allowance which is generally $10-$25 per square foot to offset the cost.

You should clearly understand the difference between rentable and usable space as well. Rentable space is what you are paying for and usable space is what you can use which does not usually include hallways, rest rooms, lobbies, elevator shafts, stables and so forth.

You may be expected to pay a portion of maintenance for common areas such as the lobby and washrooms. This is not uncommon but make sure that the charges are fair and the landlord is not making a profit on them.

Also check for clauses that allow the landlord to remodel at the expense of the the tenant without your approval. Insist on having language and clauses in the contract that limit your financial liability.

What Are Leasehold Improvements

Leasehold improvements are non-removable installations either original or the result of the modeling that you make to the facility to accommodate your needs.

Such improvements are typically more substantial when you are taking up new space which may consist of only walls and flooring. Often existing space will include some furniture and fixtures. Get estimates on the improvements you need to make before signing the lease so you know the total move-in cost and can make a fair construction allowance request.

Business Location Worksheet

Use this worksheet to evaluate weakness and strengths of your business.

Try and answer the following questions about the business location as it concerns your particular business and see whether each question is the strength or weakness.

The following worksheet will help you compare the different business locations that you see and help you determine which one is better for your business.

  1. Is the business facility large enough for a business?
  2. Does it meet your layout requirements well?
  3. Does the building need any repairs?
  4. Do you have to make any leasehold improvement?
  5. Do the existing utilities meet your needs all you have to do re-wiring or plumbing work? Is the ventilation adequate?
  6. If the facility easily accessible to your potential clients and customers?
  7. Can you find a number of qualified employees in the area in which the facility is located?
  8. Is the business facility consistent with the image you would like to portray about your business?
  9. Is the facility located in a safe neighborhood with a low crime rate?
  10. Are neighborhood businesses likely to attract customers who will also patronize your business? This is usually called ‘spill-over’ customers.
  11. Are there any competitors located close to the facility?
  12. Can you compete with these competitors successfully?
  13. Can suppliers make deliveries conveniently to your business location?
  14. Can the business location accommodate future business growth?
  15. Are the lease terms and rent acceptable?
  16. Is the facility located in an area zoned for your type of business?

Starting A Business In a Business Incubator

Business Incubators – What they are and how they can help you start a business

Business incubators are organizations that encourage business startups and young companies to start their operation by providing well organized business assistance program.

Business incubators are usually created by both public and private investors. Business incubators provide, access to business financing, shared office services management assistance, access to business equipment, flexible leases, expand the space and many other services required by a young business to start and grow.

The time and duration that the business can spend in an incubator is usually limited. This is so that a young company and the business startup can get the support required to start and grow during its initial stages in a business incubator and then move on when it is ready to set itself up on its own 2 feet without the assistance provided by a business incubator. This gives the chance for another new businesses to find the support and services that require.

The time that a business can spend in a business incubator is usually about 2 years but this can differ. These agreements can also be flexible.

Business Incubators usually fall into the following categories: technology, industrial, mixed-use, economy empowerment and industry-specific.

For more information about incubators and assistance in finding one for your business, you can contact the National Business Incubation Association [NBIA] at 740-593-4331. You can also send a self-addressed and stamped envelope to NBIA at 20 E Cir. DR, #37198, Athens, OH 45701-3751 or visit their website at www.NBIA.org to get the list of incubators in your state.

Using Economic Development Agencies to Find A Business Location

Economy Development Agencies – What are they and how they help business startups.

One of the best sources of information and assistance for business startup as well as expanding the business is the state, regional and local government agencies. There are nearly 20,000 economy development groups worldwide who have the single objective of promoting economic growth and development in the areas that they operate in. They encourage new businesses to locate in the area and help them by giving them all the gathered statistics and information that business needs in order to make a decision.

These economic development agencies will help a business regardless of its size in 4 primary ways:

Market demographics. Real estate costs and availability; zoning and regulatory issues. Workforce demographics. Referral to similar businesses and other resources.

You can start with your local state agency who can then guide you to regional and local groups for more detailed information.

Carte Blanche Business Locations – Carts and Kiosks

Carte Blanche, Kiosks and Carts as Business Locations

Carts and kiosks are a familiar sight mostly in public places such as shopping malls and airports and bus stations. Carts and kiosks have also given a boost to a new kind of business which is known as pop-up business. These businesses are temporally businesses that operate on a seasonal basis.

For example, cakes and candy business might operate for just a few days around New Year’s and Christmas and then disappear for the rest of the year. Renting a space for a cart or kiosk in a shopping mall makes it possible for a business to rent out space for just a few days and not have to take up permanent space.

The biggest advantage of a cart or kiosk is that it is a much more affordable business space in a prime business location than a prominent store.

Carte blanche setup is also very useful in testing a particular product. Before you launch the product in a proper prominent store, you can judge the response of particular location are shopping on my opening up cart or a kiosk store in that place.

As already mentioned, many businesses can find success with a cart and a kiosk in locations other than a busy shopping malls such as airports, stadiums, events grounds etc. The options for a location for a kiosk will depend upon the place that you stay in as well. If there are places which have a heavy foot traffic and attract a lot of people for whatever reason, the location for kiosk is only limited by your imagination and creativity. Popular and busy consumer places will probably already have a long line up of applications. In order to take advantage of one such location you will have to negotiate for space with the property manager.

Days when kiosks and carts in a shopping area used to be as simple as just regular stand are gone. Today the design and the structure of the kiosk can be elaborate an extensive. People said the range of products from the shopping cart and a kiosk. It can simply be candy kiosk do something much more sophisticated like the kiosk for expensive jewelry. Whatever your product is, try to ensure that the design, layout and the functionality for your kiosk suits the product that you are trying to sell.

Setting up a Business at Home

As already mentioned, starting a business from home has become a fashionable trend. It is a good way to keep the cost of the business start up low. You can consider setting up your business at home because it comes with several advantages.

Choosing your home as a location to start a business makes sense because you will automatically save money on business leases, utility bills, commuting costs and even your wardrobe expense. You may be able to get a tax deduction equal to the percentage of your home that is used for business. However, the 1st thing to take note of is whether or not the kind of business you intend to start is allowed according to the zoning regulations of your locality. The 2nd thing 2 consider is whether you can actually run normal business operation from home. For example, will you be able to pull off a professional image and creating a favorable impression on your clients by meeting them at home. Apart from that there are distractions to think about. Being at home, might mean that you are constantly distracted by presence of children, dropping in of friends and family etc.

However, these setbacks can easily be taken care of by a little bit of discipline, organization and planning. 1st of all, try and set up your business at home in a separate part of the house which would be a separate room or a separate wing.

Furnish your office professionally so that you feel like it is your business space and is geared for doing business activities. Install separate phone connections and use proper office furniture that makes it more conducive for performing business functions such as printing, faxing and making business calls. Maintain regular business hours and make sure that your friends, family and everybody concerned is aware of the fact that this is your work time are not to be disturbed casually. As far as your clients are concerned, you can arrange to meet them outside if you feel that your home office isn’t suitable for the purpose and does not reflect a professional enough image.

At the end of the day, organize and plan the running of a business even if you’re doing it from home.

Once again, most importantly, make sure that your municipality doesn’t have any zoning ordinances that prohibit your kind of business to operate from home. Many localities and communities do not allow certain type of businesses to operate specially those that generate a lot of traffic or have employees working on-site. Make sure you get up-to-date with these rules and regulations before you open the office at home. You might even need to get commercial utility connections such as electricity and water if you are running a sizable business from your home location with other employees working as well.