Why You Shouldn't Negotiate Your First Commercial Lease By Yourself

Posted: 8th November 2019 09:22

Don’t let one of your first big business decisions be one of your biggest mistakes. Don’t try to negotiate yourself.
It doesn’t matter how trustworthy your landlord seems or how rushed you are to get this deal closed. Entering an unfair lease can cost you thousands of dollars, or even your business itself.
If you’re tempted for one second to enter negotiations without help, please consider the following.

This is Their Domain, Not Yours

Unless you’re opening a real estate law firm, commercial leases are probably not your area of expertise.
You spend your day thinking about your business and your domain, they spend their day thinking about this. This can put you at an immediate disadvantage. You can read blogs to learn about tenant improvement build out costs and things like that, but they have daily firsthand knowledge of it.
You want to work with someone who can represent you and your best interests.

You’re Likely Not Negotiating From a Place of Strength

If you’re entering your first commercial lease, your would-be landlord may try to take advantage of your inexperience in some subtle ways or some more egregious ways.
For example, a landlord may try to convince you that you need to sign a personal guarantee because you’re new and they need to protect themselves.
That doesn’t sound too unreasonable, you may think. This is the first step towards proving yourself and you want to start this relationship off on the right foot, right?
Wrong. Even if the landlord is steadfast that this is a must, you can still negotiate around it. There is no need to put yourself personally at risk in the case of a default. There are other ways to sweeten the deal and protect the landlord.

Let Some Else Be the Bad Guy

Again, if this is your very first commercial space, you may want to build a good relationship right from the start. You may be tempted to be a bit too affable in the negotiations to avoid a contentious relationship right from the start.
This is why it’s good to work with someone who can be the “heavy” in this situation and help you push back on any items in the lease that may come back to haunt you. They can be the ones who fight for more tenant improvement allowance, so you don’t have to pay out of your own pocket to improve the space.

You Can’t Afford Not to

The most common reason for doing nearly anything yourself in the world of small business is that you’re trying to save money.
Believe us when we say that negotiating your own lease can be considerably more expensive over the long run. If you get trapped in a bad lease, it can be far more costly than paying a little bit too much for rent every month. You could find yourself taking on too much financial responsibility, or even find yourself personally responsible for thousands of dollars, in the case of a personal guarantee that we mentioned above.
If you can’t afford a real estate lawyer, you’re not alone. You can also work with a commercial real estate expert who specializes in these areas, at a much lower cost compared to a lawyer. They can red-line any potential issues and make sure you’re getting a fair deal.
Don’t delay! Protect your business’ future today!