5 questions to ask yourself before signing your next lease
So, you’ve located the location, the location and the location of your next retail premises and
you’re about to sign on the proverbial line. Exciting times. And if you ask yourself a few pertinent
questions before you proceed, long may they continue…
1. Are you sure you’re sure?
A lease is a contract that’s not easy to get out of. Usually three to five years long, you can end up paying tens of thousands of dollars over its term. And, in signing, you’re agreeing to pay for all of it – whether your business is a success or not. But don’t let this stop you – you can’t set up shop on your front lawn! Instead, let it give you pause to consider a few things. Are these premises big enough to grow into? And are there any plans for the area over the next few years that will hinder (or help) your business? Look at this for what it is: a retail outlet you will open tomorrow, but will hopefully still be opening on the next 1800 tomorrows.
2. Can you sub-let?
Often, yes. Even when a contract prohibits sub-leasing, your landlord is likely to be reasonable about it if you’ve been a good tenant and your circumstances have changed. But don’t leave it to chance. Try to negotiate getting the right to assign the lease written into your contract, should you need to close your business or move it. The peace of mind this will give you about making such a long-term commitment will be another nice addendum.
3. Can you use the premises for other things in the future?
Your lease, your right to do what you want with it… right? No, not unless you have this expressly written into your contract. Leases often limit the type of trading that can be undertaken on the premises. If you think you may expand your offerings in the future – or assign the lease to someone who sells something else – make sure your lease allows for this. Try to get general terms such as “for retail use” written in, rather than “for the sale of footwear” when you may one day want to sell hats too.
4. Who is responsible for the fit-out?
You will usually have to bear most, if not all, of the costs of installing your shop’s fixtures and fittings. But you can counter some of these expenses by negotiating a rent-free period with your landlord while your shop’s under construction and not yet trading. If you plan to sell your business or close it down at the end of your tenancy, it’s a good idea to write in a clause stating that the fixtures can stay when you leave. Why would you want to do that? Because removing them usually costs more than they’re worth.
5. Is it the right kind of space?
When poring over retail listings, you’ll find yourself discounting spaces based on their size. But not all square meterage is created equal. Where do those inequalities lurk? In the floorplan – so study that instead. Layout is everything in a shop. If several of the metres you need turn out to be corridors to nowhere, you may be better off with a smaller, rectangular space – especially if one whole end of it is an attractive shop window.