Keep an Eye on the Terms of the Lease

Have you noticed that it can be a real challenge trying to keep an eye on "the fine print" while still moving ahead with the "BIG" picture?

As challenging as it may be, it's something that every successful entrepreneur needs to master!

"Recognize your areas of Strengths, and access appropriate expertise in critical areas that require attention."

When it comes to negotiating or renegotiating your Commercial Lease, the valuable insights provided by Dale Willerton and Jeff Grandfield at The Lease Coach are certain to be most helpful.

Negotiating the Business Terms of the Lease Deal

By: Jeff Grandfield and Dale Willerton – The Lease Coach

Dale Willerton and Jeff Grandfield

Although it would be nice, it’s highly unlikely that a commercial landlord will hand you a proposed lease with correctly-worded and perfect terms and conditions. 

As we explain in our new book, Negotiating Commercial Leases & Renewals FOR DUMMIES, it is likely that you will have to negotiate many of the primary business terms critical to your business success. Here are a few things that commercial tenants should not ignore:

Choosing between an Offer to Lease or Letter of Intent: Commercial tenants, landlords, and agents often use these phrases interchangeably, but these initial lease documents are different. A Letter of Intent (or LOI) is often shorter and is non-binding to either party. An Offer to Lease is, typically, more in-depth and is binding – subject to conditions by the landlord and tenant. Given a choice, The Lease Coach recommends using an Offer to Lease rather than an LOI. An agent may try to sway you otherwise with the argument, “It’s non-binding … what have you got to lose?”. The truth is that you can have a lot to lose if you send in a hurriedly composed and/or poorly thought out LOI or sign an LOI that is unfair to you.

Determining the Parties to the Lease Agreement: The landlord’s corporate identity is usually well-established; however, yours may not be. The Lease Coach recommends that you not list your personal name on the agreement (as you will become personally responsible for any future losses). Instead, form a corporation or LLC for your business. Establish your corporate identity ahead of the negotiation process and have it ready to use on all correspondence because this name that you use on the Offer to Lease will carry over into the formal lease agreement, unless noted that it will change.

The lease term (or length): The majority of commercial lease deals are five-year lease terms; however, exceptions have become more commonplace. The Lease Coach frequently negotiates three-, seven-, or 10-year lease terms. A lease term can be stated in either months or years. It’s important to factor in the start and expiration dates of the lease term relative to what’s best for your business. Franchised commercial tenants should make sure that their lease term matches their franchise term to avoid issues with the lease term. This happens when the start date of the franchise agreement is prior to the start date of the lease agreement – which may be several months later, when the franchised business actually opens.

Listing the Base (or Minimum) Rent: Base rent is the portion of the rent payable to the landlord, excluding operating costs, and is the most negotiable portion the rent you pay. Calculating your total base rent is easy – take the number of square feet and multiply it by the annual rent per square foot to equal your annual base rent. By dividing the annual base rent by 12 (months), this will equal your monthly base rent for your tenancy.

There are, of course, many other business terms in a commercial lease. Don’t overlook any of the following:

·      The amount of tenant allowance and/or free rent

·      The amount of operating costs (Common Area Maintenance / CAM charges)

·      A list of the landlord’s and the tenant’s work to be done

·      The amount of the lease deposit

·      Conditions (business permits, including zoning; construction estimates; financing; inspection of the property / premises; partner / franchisor approval; and satisfaction with the formal lease agreement)

·      Assignment Rights

·      Days and hours of operation

·      Expansion right

·      Parking

·      Signage

·      Personal Guarantees

·      Termination rights

For a copy of our free CD, Leasing Do’s & Don’ts for Commercial Tenants, please e-mail your request to JeffGrandfield@TheLeaseCoach.com. 
 
Dale Willerton and Jeff Grandfield - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com.

What's been your experience? 

Feel free to add your comments and thank you in advance

for sharing this post with those in your circle of contacts!

                                                                                           

QUESTION: When was the last time you took a look at your BUSINESS PLAN?

 IF it wasn't within the last 6 months ... let's take a look at it together! 

Be ready for when the next business opportunity 'knocks at your door' ... don't delay!
Let's make sure that you're ready to move forward!

If you're looking for feedback and suggestions to improve your business plan, and valuable input regarding how you present your opportunity to others, you'll want to use our “Business Plan Review” service. Let's explore this in more detail!

For more information see:

"Option 5 – “PVS – Business Plan Review”

It's listed on our Website Registration page:

CLICK HERE

Business Needing More Space?

When your business is growing one of the first things that is likely to come to mind is the need to acquire more space.

Whenever you look at increasing the size of your business footprint it's important to carefully evaluate your true requirements, carefully plan your next move, and understand the potential ramifications.

As we've worked with entrepreneurs we've frequently seen that business location details have been all to quickly glossed over - thinking that everything will simply fall into place. As has often been said: "A failure to plan is planning to fail." Failure is not something that any business owner intends, but unfortunately it happens all too frequently. Having the input of business professionals can save you a tremendous amount of potential grief, disappointment and oh yes ... potential loss of profit for your bottom line! 

With some helpful advice, here once again are a couple of "FREE" tips from our friends, Dale Willerton and Jeff Grandfield with The Lease Coach.

Thank you Dale and Jeff.

Negotiating Commercial Leases & Renewals FOR DUMMIES

Commercial Leasing Tips for Commercial Tenants

By: Jeff Grandfield – The Lease Coach

For many business-owners, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While an entrepreneur focuses on marketing and managing, savvy real estate agents and brokers are specialized sales people. Their job is to sell tenants on leasing their location at the highest possible rental rate.

As explained in our new book, Negotiating Commercial Leases & Renewals FOR DUMMIES (co-written with my colleague, Dale Willerton), tenants may go through the leasing process only two or three times in their entire lifetime – yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for an entrepreneur as the amount of rent he pays will directly affect the business’ financial bottom line.

Whether you are leasing a new location for the first time or negotiating a lease renewal for your business, these are some money-saving tips for tenants:

Apply Deposit to Future Rent: Frequently you will be told that the deposit you pay is your first and last month’s rent. The Lease Coach can often negotiate for it to be the first and second month’s rent or to even have it applied to month 24 of the lease agreement. There is simply no reason for you not to have your deposit reduced or eliminated as the so-called risk factor decreases. Landlords do not hold the deposit money in a separate trust account or pay interest so negotiate hard on this condition.

Read the Demolition Clause: Almost every lease agreement requires the tenant to restore the leased premises back to the original condition when the tenant moves out. This demolition could cost you thousands of dollars. Wording in these clauses is usually pretty tricky so be aware of the danger. There is also a demolition clause whereby a landlord can tear down the building and construct a new building on the same site. This is dangerous – especially with respect to older buildings.

For a copy of our free CD, Leasing Do’s & Don’ts for Commercial Tenants, please e-mail your request to JeffGrandfield@TheLeaseCoach.com.

Jeff Grandfield and Dale Willerton - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Jeff and Dale are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com  or JeffGrandfield@TheLeaseCoach.com or visit www.TheLeaseCoach.com.

                                                

What's been your experience?

Feel free to add your comments and we'd very much appreciate

if you would share this post with those in your circle of contacts.

QUESTION: When was the last time you took a look at your BUSINESS PLAN?

IF it wasn't within the last 9 months ... let's take a look at it together!

Be ready for the next business opportunity to 'knock' at your door.

Let's make sure that you're ready to move forward!

If you feel it would be helpful to receive some feedback and suggestions to improve your business plan, or improve how it's presented to others, ask us about our “Business Plan Review” service. Let's talk about how this can help you going forward!

For more information see:

"Option 5 – “PVS – Business Plan Review”

It's listed on our Website Registration page:

CLICK HERE

"FREE is Good!" in Your Commercial Lease

We've been very pleased to provide our readers with valuable FREE business input that can help owners achieve their own measures of business success. 

You've likely noticed that FREE information abounds on the Internet.  Free can be good, however we've also found that having trusted professional advisors that bring their expertise and understand the challenges faced by business can be an invaluable resource!  We encourage you to build a circle of expertise around yourself and seek their input to help guide your business.  As you engage with them and use their products and services, many will be most willing to assist you with a free periodic professional perspective as a part of their working relationship!

Dale Willerton and Jeff Grandfield

From our circle of expertise, 

here once again are a couple of "FREE" tips from our friends, Dale Willerton and Jeff Grandfield with The Lease Coach. 

Thank you Dale and Jeff.

Negotiating Commercial Leases & Renewals FOR DUMMIES

Commercial Leasing Tips for Commercial Tenants

By: Jeff Grandfield – The Lease Coach

For many business-owners, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While an entrepreneur focuses on marketing and managing, savvy real estate agents and brokers are specialized sales people. Their job is to sell tenants on leasing their location at the highest possible rental rate.

As explained in our new book, Negotiating Commercial Leases & Renewals FOR DUMMIES (co-written with my colleague, Dale Willerton), tenants may go through the leasing process only two or three times in their entire lifetime – yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for an entrepreneur as the amount of rent he pays will directly affect the business’ financial bottom line.

Whether you are leasing a new location for the first time or negotiating a lease renewal for your business, these are some money-saving tips for tenants:

Free Rent and/or Operating Costs: When negotiating for free rent and/or operating costs, it is generally best to negotiate on a total value basis. Most landlords who could provide two months of gross free rent at $8,000 in value might be more willing to give you six months of base/minimum rent free valued at $10,000. The tenant paying the Operating Costs from the beginning or the commencement date of a lease term will lessen expenses for the landlord who is paying those Operating Costs now. 

Spreading Free Rent over Time: In order to achieve the maximum free rent period, you can negotiate to spread the free rent period over time. If you want the first six months free but the landlord will only give you the first three months free, take it, but insist on receiving months 13, 25, and 37 free as well. This lessens the landlord’s risk but you still receive the full financial benefit. Even the last three months free is better than no free rent at all. Be creative.

For a copy of our free CD, Leasing Do’s & Don’ts for Commercial Tenants, please e-mail your request to JeffGrandfield@TheLeaseCoach.com.

Jeff Grandfield and Dale Willerton - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Jeff and Dale are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com  or JeffGrandfield@TheLeaseCoach.com or visit www.TheLeaseCoach.com.

                                                

What's been your experience?

Feel free to add your comments and we'd very much appreciate

if you would share this post with those in your circle of contacts.

QUESTION: When was the last time you took a look at your BUSINESS PLAN?

IF it wasn't within the last 9 months ... let's take a look at it together!

Be ready for the next business opportunity to 'knock' at your door.

Let's make sure that you're ready to move forward!

If you feel it would be helpful to receive some feedback and suggestions to improve your business plan, or improve how it's presented to others, ask us about our “Business Plan Review” service. Let's talk about how this can help you going forward!

For more information see:

"Option 5 – “PVS – Business Plan Review”

It's listed on our Website Registration page:

CLICK HERE

Beyond Location - Commercial Lease Negotiation

EVERY Entrepreneur should research their potential market in order to best determine their Business Entry, Expansion, and Go-Forward Strategy.  

"SUCCESS is NOT a Given" 
... and wishful thinking about an over-abundance of customers and a scarcity of competition is almost guaranteed to be a dream - one that if left unchallenged will only turn into a nightmare. 

"PLANNING is critial to SUCCESS!"

When choosing your business location the insights provided by Dale Willerton and Jeff Grandfield at The Lease Coach will prove to be most helpful. We appreciate their having provided the following for your thoughtful consideration.

Figuring Out Where Your Business will Thrive, Not Just Survive


By: Jeff Grandfield and Dale Willerton – The Lease Coach 

Dale Willerton and Jeff Grandfield

The location an entrepreneur leases is like the foundation upon every other brick is laid for the business. Commercial tenants understand this intellectually but often make poor site selection choices based on unit scarcity, bad timing, or other factors that positively or negatively influence them. 

Prospective first-time tenants need to adopt the mindset that if they don’t find the right location, at the right rental rate, at the right time – they’ll walk away and not lease the wrong location. This, however, rarely happens in real life.

When it comes to leasing commercial space, in general, you get what you pay for – and the more you pay, the better the location. But if that was an absolute truth, all a commercial tenant has to do is find the most expensive location for lease and set up shop. But it’s not an absolute truth. Commercial tenants frequently sign a long-term lease agreement agreeing to pay rental rates that could have been negotiated much lower.

When you’re looking for the right property, having a checklist of desirable criteria can help you stay on track. Here are just a few of the many factors to consider:

Demographics:  Consider the average age of people living in a particular area, the type of home people are living in (people living in apartments can’t physically accumulate consumer goods like a large homeowner can), the mean income and proportion of two-income households, and ethnicity (leasing space for an Italian coffee shop in an area populated by Asians who may be more inclined to favor tea over coffee could be a mistake).

Traffic flow and visibility: Study the number of pedestrians and motorists at various times throughout the day. Do motorists have to turn left across a busy intersection to enter your parking lot? Evaluate which side of the street is better for your business (e.g. liquor stores do much better on the side of the street where most people are driving home from work).  Lack of visibility for your store front can cause people to drive right by it, especially if the traffic is heavy. Trees in a parking lot can block signage. Some landlords overbuild their pad sites near the road, thereby blocking the visibility of the retail plaza behind. Is there a bare patch of ground between your desired site and the roadway? If so, you can safely assume that someday your landlord will lease that pad site or construct a building there that blocks visibility to your signage and store front.

Competition: If you don’t know who your competition is and where they’re located, you can’t hope to compete with them. Not only should you be acutely aware of your competitor’s services, products, and pricing, you should have someone “secret shop” their business, try their products and/or services, and report back to you about the experience. As a bonus, have the secret shopper ask your competitor about your business (if you’re already open) to discover what is being said about you. You also have to think about future competitors. This means anticipating where your competitor may lease space or set up shop in the years ahead.

Remember that there are two sides to the competition coin:

1)    Join them. Locating beside or near your competition to siphon off their customers is a legitimate site selection strategy for some businesses. In many cities, there are “restaurant row” and “fashion mall” areas that attract many shoppers because so many similar tenants are close to each other.

2)    Avoid them. Locating away from the competition often makes sense to personalized and/or healthcare businesses (e.g. fitness clubs, hair stylists, and/or tanning salons). Customers tend to be loyal to these businesses because they can only use one at a time.

For a copy of our free CD, Leasing Do’s & Don’ts for Commercial Tenants, please e-mail your request to JeffGrandfield@TheLeaseCoach.com. 
 
Dale Willerton and Jeff Grandfield - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com.

What's been your experience? 

Feel free to add your comments and thank you in advance

for sharing this post with those in your circle of contacts!

                                                                                           

QUESTION: When was the last time you took a look at your BUSINESS PLAN?

 IF it wasn't within the last 6 months ... let's take a look at it together! 

Be ready for when the next business opportunity 'knocks at your door' ... don't delay!
Let's make sure that you're ready to move forward!

If you're looking for feedback and suggestions to improve your business plan, and valuable input regarding how you present your opportunity to others, you'll want to use our “Business Plan Review” service. Let's explore this in more detail!

For more information see:

"Option 5 – “PVS – Business Plan Review”

It's listed on our Website Registration page:

CLICK HERE