As children we’ve always been told, my house, my rules! But, then you turned 18 and before you knew it the taste of life and independence got sweeter and sweeter. However, the cost for freedom or independence can be high, which many pay dearly, especially for entrepreneurs and startups.
From 2010 onwards, entrepreneurship has been on a rise, with newer businesses, websites and now applications dominating the digital age. Every booming business needs a great office that allows for effective operations, ensures great customer footfall and creates the right impression with all concerned stakeholders, both internal and external.
This article is primarily directed towards 3 types of people.
- Type 1: You’re a new entrepreneur and you need to get educated about leasing office space for your business.
- Type 2: You are about to sign an office lease and you want the best deal out of it.
- Type 3: You’ve burnt your fingers, paid the price and finally resolved – No More!!
So, here are 8 office leasing mistakes to avoid in 2019 to ensure your business experience becomes an empowering one.
1. Smaller Office Space:
As an entrepreneur, your space needs for business is of utmost importance. The biggest mistake you could do is being short-sighted and underprepared by getting a smaller space that does not facilitate for unforeseen growth in business one might see especially in the next 12 – 36 months. Also, you need to remember that there is a difference between the term “Shell” & “Office Space”. A “Shell” is the overall size of the commercial space you’re leasing & “Office Space” is the space you’re utilizing as business space – they are priced separately. When you make a commitment with your landlord these prices can be negotiated before locking in your lease period commitment.
“Better prepared than sorry”
The old age wisdom one must always consider especially in business because your business is not just about today but tomorrow. Being ready at least by forecasting your business for 12 – 18 months in advance is the sign of a prepared entrepreneur who takes his business seriously.
2. Unfavorable Location:
Location, location, location!!!..can make or break your business. This point is all about asking the question “where??” Where do I want to set up my business? One of the most crucial variables for success, you need to consider the kind of traffic you want your business to experience. The community your business is in will reflect your business image and directly impact cash registers, as proximity to your target audience will ensure that you are most accessible for their product or service needs. For example, Rainbow Centre, located in the heart of Greater Sudbury has one the biggest office leasing space in Sudbury and it’s within a mall. This means your consumer comes to you and your right at the heart of all the action.
3. The Wrong Price:
This point is about affordability. The question you’re asking here is how much money have I set aside for leasing after I’m done excluding all other personal expenses? From point no 1 above we’ve learned the difference between a “Shell” & “Office Space” which are two main components of your overall leasing rent. Other components include insurance, utilities, maintenance etc. Spending more than you earn is one of the most common mistakes many make because they do not research the right price vis a vis their business needs. Remember to keep your payment schedule in mind, some pay on the 1st month and then the last month or some go for the 2nd and 8th month. Remember all things in real estate are negotiable and no two deals are the same. You can crack a better deal if you have clarity on your affordability.
4. Duration of Lease:
This point perfectly ties into the 1st, because here is where you decide the term of your lease and you won’t be able to arrive at a favorable term if you do not have a grasp on your business planning and market research. Leases are usually for 12, 24 or 36 months.
5. There’s No Parking!
The devil is the details! Ignoring requirements such as parking could become one primary reason why customers aren’t showing up at your doorstep. Ample parking space is favorable not just for customers but also for employees, ensuring more efficient operation of the business. Manufacturers can deliver stock faster if they do not have to worry about parking and necessary facility for loading and unloading. Elm Place in Sudbury boasts of 950+ parking spots for mall and office customers. Imagine that!
6. Bad Legal Representation:
How many times have you landed up with legal advice that has a vested interest with your leasing party? You need a 3rd party, someone completely unbiased and had no representation whatsoever with the party your leasing your commercial space from. Also, good legal advice ensures you are undergoing all the necessary checks and balances in terms of paperwork such as your business tax returns. The correct legal advice is going to help you in your overall preparedness and give you the upper hand on the negotiation table.
7. Evil Brokers:
Brokers help you make or break your deal, but caution must be exercised when appointing one because you can meet the sleaziest there are and hence establishing a brokers credit is paramount. Only hire brokers who are from reputed firms so that if your broker quits, you have a firm to get back to help you close your leasing deals. Also, check your broker’s real estate experience. Every broker has an area or zip code they specialize in if they say know it all, it’s probably a lie. So, the moral of the story is research and dig deeper on your broker credentials before you finalize them.
The occupancy rate of your building owner is going to determine the price of your lease. If a building is occupied 70 percent or lower, then you are in luck! , as negotiation will definitely be in your favor, but if they are 90 percent occupied then you are definitely going in for a premium. So, when it comes to getting the right price, the occupancy rate could play a huge role during negotiations.
As Benjamin Disraeli once said, “The secret of success in life is for a man to be ready for his opportunity when it comes.”
Hope the above points help you to get out there and get on with your entrepreneurial career on the right note.