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Leases can kill your business

Date: 03/09/2006 | Category: Business | Author: John Vanhara

 I totally agree that a new starting business must be very careful about signing lease. It can really kill your business. Your business might go up or down and don’t expect landlord have any understanding. Some businesses really go out of business because they have a a lease they cannot get out. We had similar experience when we tried to get from our previous lease (office was too small) and landlord wanted over $16,000 in payments just to get us out (the monthly payment for $1,400) and we had only 1,5 years remaining. We offered $9,000 to landlord (6 months) and there was no way to make a deal.

 So be very careful. If you are starting new business and can do it from home than do it from home. Wait as long as possible to get office. Once you get office make sure you have sublease right. If something go wrong you will be able to sublease to someone else and negotiate very hard the best rent possible.

Learn from the mistakes done by others. Fred at VC Cliche of the Week says: “So forgive me if I flip out the next time I see a company bring a huge long term lease to the Board for approval.  It’s not a good thing to be in the bricks and mortar business.  Keep your rents low.  Sign short term leases and get clauses that let you out.  Don’t let your leases bring you down. It’s happened to many people, don’t let it happen to you.”

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