It’s important to have certain tasks in place before signing the lease.
Once you sign a lease, the clock begins, so it will be in your best interest to have all research completed and a contractor on stand-by and ready to go. You should already know the work needed to be conducted to open your business and many time include updating items that are the property of the landlord, such as a restroom. The final language in the agreement can be deferring the monthly rent for a number of months. Know and understand most of the tasks ahead before signing the bottom line.
Facility improvements that may need to be negotiated into the lease.
- Is the heating and cooling system in working order
- Is water, electric and sewer up to code and adequate to operate your business immediately and as the business grows
- Can a sign be legally errected
- Does the roof look to be in working order
- Are the restrooms of legal size to accommodate the business, are there enough and are they up to code
- Is the space properly zoned to operate your business
- Is adequate off street parking available
- Can vehicles be left over night
- Can you install equipment on top of or next to the space
Business tasks that may take a numerous months to complete?.
- Have a “build out” budget and estimated completion time-line
- Know the products you will produce or offer from day one
- Meet the health inspector and understand the requirements
- Have a basic flow design of the space
- Know the equipment that is required to start the business and what is planned to include over the next year
- Have a general understanding of the design
- Reached out to a few contractors that may conduct the build out work and checked references
- ?Know what equipment can be purchased used or new
Some of the tasks can start as soon as the lease is signed, such as ordering equipment with long lead times. If utilities need to be upgraded or building repairs are necessary, then be aware that reimbursement can be achieved with the proper language in the lease.
As a rule don’t invest in things that you cannot take with you. and understand the term of the lease, especially if the space meets the business needs for a number of years. Being able to budget the annual lease amount is vital to the P&L. There should be zero in unforeseen monthly fee increases.
Items to have lined up before you sign a lease
- 1 – 5 year production forecast to better prepare the space for infrastructure needs.
- Utility requirements, know what the facility requires in power, water, sewer and natural gas.
- Square Footage requirements to accommodate sales growth.
- Know equipment requirements for the next 5 years
- Floor plan and flow design
- Contractors
- Understand all permit requirements and inspection agency
- Budget to modify space for the business needs
- Funding needed to open and operate
Questions to know when looking at a space
- Does the location already have sufficient utilities in place or are upgrades required
- Is off street parking and seating necessary
- Does the location require great visibility
- Does it meet the demographic or geographic requirement
- Is outdoor signage important and available
- Stand alone, inline or light industrial location for the business
- Sufficient space for the next 5 years
- Does it meet the maximum gross rent budget for 5 years
Contact Darryl, he will share the secrets with you.
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