Congratulations! You’ve decided to start your own business and have just landed your first contract or raised capital to get your business moving. Just like Robert Redford said in the 1970’s film “The Candidate” upon winning his fictional election is the real question, “Now what do we do?”.
Small business owners have a unique and specific challenge of operating a business with limited resources and typically have to make every second count and get a nickel of value from every penny to succeed. While this is exciting to most entrepreneurs it can also be the pathway to hasty decisions on items that you think are simple or bound by “boilerplate” agreements such as leases. After all, once you get your business going, you’re going to need a place to operate from, to house employees, inventory, production or whatever is requisite for your business’ success.
Caution – Do Not Believe your landlord when they tell you you’re getting the “standard deal” or the lease is just a “boilerplate” document. This is just code for sign on the dotted line and you don’t need to read the document. But reading the document is a must and getting professional counsel, you should.
Consider:
- Negotiation, preparation, or review of your lease or rental agreement is essential. Your business’ facility, just like your house is likely to be one of your larger expenses and therefore prior to entering into an agreement, you need to be certain that you have rights and protections and completely understand the document.
- Protections include a myriad of issues. What if you need to expand in year two but have a three-year lease; should your landlord be able to limit your growth? Conversely, what if you find that your business is not growing as expected or has a down turn and you need to reduce expenses, wouldn’t you like to know your options pertaining to one of your largest expenses?
- Other factors such as options to renew, subleases, and assignments can be meaningful and while you are focused on the opportunity in front of you with your new company, you need someone in your corner asking the “what-if” questions that could make or break you when thing happen, good or bad that you can’t predict today.
Market rates, improvements to the facility, and lease cost escalations are just a few of the regular, non-boilerplate issues that can often be negotiated and by spending just a few cycles on the front end can create options and protections to you that can have a material impact on your business, even if you aren’t anticipating these issues today.
Call JD Haas and Associates today at (952) 345-1025. We have over 20 years serving clients in Minnesota and can be an asset to you in the effort of protecting your interests. Starting a new business, while exciting and potentially lucrative also has risks. Let us help you mitigate risks by making sure one of the most critical agreements you’ll enter in the early days of your new business, your lease, has your interests protected.
