The Lease Coach: 6 Leasing tips for bakery tenants
Easy ways to negotiate to win
Landlords want to charge the highest possible rent; here are some tips to negotiate a better lease. Photo: Getty Images
Readers of our book, Negotiating Commercial Leases & Renewals FOR DUMMIES will learn, in-part, that there is much more to commercial leasing than meets the eye! Before you even think of searching for commercial property to lease for your first bakery or another location to expand your operations, consider the following tips to help you get a better lease deal:
Negotiate to Win: Negotiating to win must be the tenant’s goal. Why? Because the landlord is not necessarily looking for a “win-win” leasing deal. Remember, a typical landlord charges the tenants as much rent as possible and who would expect anything less? Consider these points when negotiating to win: lowest possible rental rate, largest tenant allowance, lowest deposit, and most signage and best parking.
Negotiate all Lease Terms at Once: Don’t look at your lease as a list of individual points that must be negotiated separately. All those business terms are connected and must be negotiated collectively. For example, don’t agree to the rental rate until you’ve agreed to the length of the lease term.
Don’t Telegraph Your Intentions or Give Buying Signals: A good football quarterback can take the snap from centre, fake the handoff to his running back, and then pass the ball to an open receiver – all without telegraphing his called play. As a tenant moving in or looking for another bakery location, try not to speak in terms such as, “When I move in …” or “I would like the carpet replaced …”. These are called buying signals and they always serve to weaken your bargaining position. Don’t let what you say and the words you choose work against you.
Assume Nothing and Get It In Writing: Tenants make all kinds of assumptions regarding their leases – sometimes blindly or because of poor negotiations with the landlord or their real estate agent. Unless a point appears in writing on the accepted lease, don’t assume it’s part of the deal.
Protect Yourself by Incorporating: Regrettably, bakery businesses can – and do – fail. Incorporating can protect you. Remember that if you allow the landlord to put your personal name on the lease as the tenant (or even the letter of intent or offer to lease), then you will become personally responsible for rent payments and all other terms of the lease agreement. If you make the tenant a corporation, then generally the tenant corporation is on the hook and not you, personally.
Change the Day Your Rent is Due: For many small business owners, the end of the month is not a pleasant time. Staff payroll and rent are due and loan payments may need to be made. Sometimes having even a few days’ grace to make the monthly rent payment can make a world of difference if your business has decent cash flow. By negotiating to change the day your rent is due (perhaps the fifth or tenth day of the month) with your landlord, you can breathe a little easier at month’s end. Approaching your landlord or property manager and explaining this are your first steps. Many landlords will understand your predicament and may grant your request – even if you’re in the middle of a lease term. If the landlord agrees, make sure your get a proper one-page lease-amending agreement, which will state this agreement – or an email acceptance, at the very minimum.
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