MARCH 23, 2015 BY MELINDA EMERSON
If you’re in the early planning of starting your first business, do you know where you’ll set up your company? You may be using a home office or kitchen table for your company activities now, but if you plan to expand, hire staff, or meet with clients, at some point you’ll want to consider renting office space or establishing a storefront. If you’re getting close to the point of needing to secure space, here are five tips to consider before you sign the lease.
- Look for inexpensive space. When you’re starting a business, you should always strive to keep costs as low as possible. Office or retail space can be quite expensive. If you don’t need a storefront but will be meeting with clients frequently, consider a co-working space or join a business incubator. Check out the National Business Incubation Association for possible venues. You may also consider looking for business owners with excess space to sublet or share a few days a week.
- Seek out the help of a tenant broker. We’ve all heard horror stories about business owners rushing to sign a lease and then finding something terrible about the space they just committed to for years. Enlist the help of a tenant broker to find your space. These individuals know the good landlords, what spaces are available that aren’t listed online, and market comps for things like electricity costs and other “hidden” costs that are sometimes included in a commercial lease.
- Find out who pays for ADA accommodations. If your business is open to the public or employs more than 15 people, your office space must be accessible to disabled people in order to comply with the Americans with Disabilities Act. Before you sign a lease, ask the landlord if he pays for those modifications or if you are expected to do so. These can vary from widening a hallway to installing an elevator. If the responsibility falls on you, make sure you have the budget to make the modifications, or find a new space to lease.
- Don’t sign a multi-year lease. Many landlords will try to lock you into a contract as long as they can. But remember that you are in control and can always walk away. This is critical because your business may not take off in the way you expect, thus requiring you to downsize. Or you can face the opposite problem: your company booms and you need a larger space. Either way, you want to have an option in the lease for you to change your plans if needed.
- Consider leasing equipment and furniture to ease the costs. Keep in mind the total cost of renting a space is not just the monthly rent payment. It also includes utilities, furnishings and equipment. You may consider leasing office equipment instead of buying it. There are several advantages to this strategy, the main one being it’s often easier to obtain financing to lease then purchase. Leasing also means you won’t be stuck with equipment when it becomes obsolete. This is a big factor to consider given how quickly technology changes these days. If you decide to go this route, always look for an option-to-buy clause in your contract.
Setting up your business in an office or retail space is an exciting time for any small business owner. Make sure you review your budget, company goals, and take the necessary steps to protect your company as you move forward in this venture.