Finding The Perfect Space to Meet Your Business Needs
Preparing to Lease Commercial Real Estate
A commercial lease agreement is likely to be one of the biggest expenses that your business will incur every month. In order to give you the best chance at securing the location you’re looking for and to get you the best terms possible during the negotiation process, it’s important to follow these steps prior to beginning your property search.
The vast majority of commercial leases will require a business to have a personal guarantor (also commonly referred to as an indemnifier or covenantor) attached to a lease agreement. If the business ever fails with time remaining on the lease, or if the tenant is not up to date on rent payments, the landlord can use the personal guarantee as a back-up option to mitigate their losses. Attaching a personal guarantee to a lease typically entails the landlord performing anything from a personal credit check, up to a complete review of a personal statement of assets, prior to formally agreeing to lease a space to a tenant. Be prepared for a landlord to ask you for this information in order to approve you as a tenant.
Prepare a Business Plan
Regardless of what type of commercial property you are looking to lease, it’s important to have a proper business plan in place prior to starting your search. A business plan will give you a set of requirements to follow when looking for space. Having a solid and presentable plan can also give you a significant advantage in lease negotiations. If you can present a business plan (or at least a summary of one) with your offer to lease you will stand out when compared to your competition. Put yourself in the best position possible before going into any lease negotiation.
Business Name and Registration
Once you have your business plan, or during the process of creating one, you will want to establish your business name and include this in any offers you present to give your offer more legitimacy. You will need to decide whether to proceed as a sole proprietor using an operating name, or if you want to limit your liability and incorporate a limited company. Check out gov.bc.ca and search “Incorporating a Limited Company” to learn more about the benefits of being incorporated and what the process involves.
Your List of Wants and Needs
Now that you are prepared with a business plan and name, you will want to set a specific set of criteria for your property search. Your list of wants and needs can include a number of items such as:
- Your desired location
- Size and type of property you need
- Equipment and power requirements
- Parking requirements
- Budget & timeline