Options for Flexibility in Your Commercial Lease

BEFORE taking possession of your new office space, here are a few things that you'll want to have negotiated with your landlord. 

In this POST, we'll talk about some of the 'conditions and options' you may be able to build in to your commercial lease.   

With the following Commercial Leasing Tips for Tenants from our friends at The Lease Coach, you'll have some great ideas on options that can put you in a stronger position! This type of flexibility can be most advantageous as it allows you to quickly adjust to changing circumstances around you. We think this is a 'smarter' way to negotiate your lease! And while the business owner always has the final decision on matters related to their business, we've come to appreciate the value of engaging experienced professionals in order to benefit from their many years of experience!

Thank you once again Dale Willerton and Jeff Grandfield for sharing these helpful insights with our "Business Success" audience!  We trust that you'll enjoy these great commercial leasing tips from our friends at The Lease Coach!

Dale Willerton

Jeff Grandfield

 
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:

Make All Offers Conditional: When negotiating a new lease, make your Offer conditional upon certain things such as financing, partner approval, satisfaction with the formal lease agreement, zoning, construction estimate costs, etc. This will let you legally and ethically rescind your Offer to Lease if outside circumstances hold you back. If you need more time, simply request an extension in writing so you can potentially remove your conditions at a later date.

Month-to-Month Leases: Month-to-month leases have both pros and cons. The pro side is flexibility (as a tenant, you are not obligated to stay longer than you wish) – the con side is lack of security (the landlord could increase your rent or replace you with a more permanent tenant). Frequently, you can lease premises month-to-month on a cheaper basis, especially if the space is already built out to suit you and the property has a few vacancies. I recommend tenants negotiate for a one-year lease term that permits them to terminate with 30 to 60 days notice. This way, the tenant remains in total control.

Negotiate for Free Perks: If your business will require temporary or permanent storage, you can often negotiate to receive it from the landlord for free. Securing extra parking stalls, being allowed more space on the property’s pylon sign, and/or having the caretaker change your lightbulbs or make minor repairs are small perks or privileges that can often be had for the asking. Some property managers will even clean your windows or your carpets for a token charge (or even free …). If you need small favours, ask the caretaker directly and give him a generous gratitude gift when the job gets done.

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

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Building Business Value in Your Organization

Your business may be worth more if you can develop it to the point where you aren't needed there every day!

We've heard it said many times that we should be "Working ON the business, rather than working IN the business!" Building effective systems into your business can help you achieve that objective.

That's one of the key things we try to cultivate as we work with entrepreneurs and business owners. And in this post, our friends from Sunbelt Business Brokers some great insights that we'd encourage our readers to carefully consider.

Building Value In Your Business: Top Organizational Factors

Can a potential buyer of your business see himself in your business or are you blocking the way? When preparing to sell or build value in a business, you need to step back and become dispensable so your business works without you. A good business coach can provide an objective view of your business organization and help you get on track to improve your business’ future value.

Many businesses are dependent on the contribution of the owner for success. If you want to add value, be sure you have systems running the business and a great team running those systems. A business that lacks systems and relies on you has less value.

Working ON the business, not IN the business can be especially hard for those whose business has been their means of self-employment. The greater value comes when the business is making money without the owner’s day-to-day involvement, giving the owner the option of "retiring on the job" with income and flexibility.

Make yourself dispensable

An owner’s role is to focus on the future—expanding operations, improving revenues and profits—while bringing in the money today. If you’re still working IN the business, make yourself unnecessary. Pay for the help you need. Hire someone else for administrative duties. Learn to delegate and empower your employees. Challenge them to improve their skills.

Set goals and expectations then let them follow through. Hold them accountable for their actions and specific jobs. Ensure you have an organizational chart with defined positions, reporting lines and duties and the right people for the right positions (financial, management, sales). Groom a competent management team. If people are in the wrong jobs, move them now—a buyer won’t know your people like you do. Settle them in their new jobs before the buyer takes over. Document duties, responsibilities and expectations.

Ensure you have:

• a current business plan with reasonable future projections
• an honest analysis of your business’s strengths, weaknesses, opportunities and threats (SWOT).

Show prospective buyers the earning capacity of your business. Keep up your business plan as a living guide. Base it on your existing records, market and technology and document the steps that will take you there. Invite staff to contribute and keep it current.

Lack of full disclosure destroys trust. People must trust you to do business with you. Never try to hide deficiencies. Buyers need to understand what they can do with the business. Profits are being generated with weaknesses present; fixing them will increase the profits.

Retain key employees

Buyers count on taking over a business with experienced and knowledgeable staff. Losing key employees can affect the sale and value of your business. Find ways of retaining your key personnel such as an incentive program with bonuses paid after the seller leaves or a special payment giving "consideration" for signing a non-compete agreement that extends two or three years beyond the planned sale. Some businesses are more prone to staff turnover than others. There is always a concern that key employees will leave to set up their own business in direct competition. 

Sellers are advised to secure non-compete agreements well in advance and structure them so that if there is a change in control, the agreement stays in place. How long a term is reasonable? An agreement that specifies five years is unlikely to be supported by the court. The scope of expertise and defined geographic area in question are factors. What it comes down to is you can’t prevent someone from earning a living. Even with an agreement that’s "enforceable", you’ll want to weigh the cost and impact of litigation to keep your position in the marketplace. You may find it better to "give to get". Negotiated solutions can benefit all. The terms and conditions can be anything that is agreeable to both parties.

In our next installment “Building Value In your Business: Top Operational Factors ” we take a step back to address the operational factors that improve the value of a business for owners looking to sell their business.

Sunbelt Business Brokers Edmonton

Sunbelt’s team of brokers, operating at local and regional levels, have experience selling small to medium sized businesses. 

Michael McCulloch

Dale Alton

 

Sunbelt is the world’s 

largest business brokerage firm with approximately 300 licensed offices located throughout the world, 

and 33 offices across 

Canada alone.

More than 1,400 Sunbelt brokers annually coordinate an estimated 4,000 Main Street and Middle Market business transactions.

A variety of strategies are required to sell businesses from different industries, of different sizes, and in different economic climates. Many Sunbelt brokers have specific industry experience and cooperate with their counterparts to identify the buyer and create the right framework for the sale.

Your Local Sunbelt Business brokers sell a diverse mix of main street businesses valued under $3 Million. Mergers and Acquisitions of larger and more complex business transactions of up to $30 Million are managed out of the Ottawa Head Office. We would like to help you plan and look forward to retirement, expansion or an exciting new business opportunity. 

 

Have you ever thought about selling your Business?

 

Sunbelt represents clients who may be interested in buying a business like yours. If you are thinking of selling a business now or in the next 3 years, discover what your next steps should be. Feel free to contact our Sunbelt Business Brokers Edmonton office if you have any questions or would like a free confidential consultation. Give me a call. Dale Alton – 780-878-8787

Sunbelt - The Place to Buy or Sell a Business.

* Thank you Michael and Dale at Sunbelt for providing us with this helpful article!

Having a business plan can help ensure that you're heading in the right direction with your business, and that you have the necessary resources to get you safely to your intended destination!

In closing, we invite you to consider Pro-Vision Solutions Inc. as a part of your TEAM of business professionals. We're pleased to assist you with your business planning, through start-up, growth and expansion. Let us know if you would like to have a conversation!  

NOTE: For more information on the services provided by Pro-Vision Solutions Inc. and how we can assist ... please visit our Website: www.pvs4u.ca