Finding a suitable location for your business can sometimes be difficult. If you have found a location that suits the business' needs, you may have to sign a lease for the location. It is vital that you fully understand the terms of the lease before you sign anything. There are a few points you should consider as you try to decide if you should sign a lease or not.
Signing a commercial lease doesn't follow the same process as signing a residential lease. When you sign a commercial lease, you first sign an offer to lease and then you negotiate the terms of the lease. Only when that is done do you sign the final lease.
As you are negotiating the terms of the lease, you must consider all the terms carefully. This includes the amount of time you will use the property, the rent terms, any business restrictions, service offerings, subletting, insurance, utilities and taxes. All of these aspects can greatly affect your business.
Rental payments are one big consideration. Some rental locations will require you to pay a percentage of the income that your business makes plus a base rent. Others might require you to pay a flat rate of rent and certain expenses, while the landlord pays the remaining expenses. Some rentals might require you to pay rent, utilities, operating costs, maintenance costs, insurance, and taxes -- some of which might need to be paid to the landlord.
When you are going over a lease agreement, you should make sure that it is written exactly as it is discussed. If you are unsure of anything in the agreement, seek out help so you can make sure you understand everything before you sign the agreement.
Source: Canada Business Network, "Signing a commercial lease," accessed June 15, 2015
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