This is one topic that is always current. Looking for premises and signing a lease is a nerve racking time for current and soon to be business owners.
I see many business owners making mistakes of moving into a premise too early or not doing the appropriate checks.
It’s important to ask questions and even more important to know what questions to ask. It’s a personal decision first and one that can’t be taken lightly. What location and how much space do you need? How much rent can you afford keeping in mind usual annual increases? How long do you need to be there until you recover your costs and make a profit? How long do you need the lease to be? The longer the lease, the higher the security, but less flexibility you have to expand or move premises.
If you justify the move, there are some things you need to check before signing a lease. You should also have a detailed discussion from business associations, your solicitor and accountant. The idea is to obtain a draft lease and check:
– 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?
– If you sell the business, do you have the right to transfer the lease to the new owner?
– Does the lease contain an arbitration clause?
– Does the lease allow for the type of business you want to conduct?
– Can you sub-let all or part of the premises? If so, under what conditions?
– Who is responsible for council rates, water costs, legal fees, stamp duty, security, cleaning etc under the lease?
Advice provided is of a general nature and individual circumstances may vary. It is recommended you seek advice to ascertain your correct course of action.
Michael is a business advisor that gives real and modern business advice that encourages thinking different and using strategies that are unique. To date, he has given over 4000+ hours of advisory with business owners.
He was awarded the Best Business Enterprise Centre Mentor/Advisor Australia 2014 and also the youngest person to ever receive the award.
He is a regular contributor to many publications including the national 'Inside Small Business Magazine', Business columnist for 'The Western weekender', 'The Village Voice' and more.