How to Avoid Common Commercial Leasing Mistakes in Barbados
Starting your business and finding the right space can be messy sometimes. The key to finding the right space is a combination of knowing your business & what your customers want when they are doing business with you. Reaching out to a commercial broker/agent often gives you a hassle free experience.
I’m assuming you already have Cash or Capital funding or loan(s) in place as discussed in my last blog post. You should have at minimum a 6 month cushion in your budget set aside for rent, Some say 1 year.
Also you must note that standard commercial rentals require you to pay 3 months rent upfront to start your lease. This covers the security deposit, first and last month’s rents. In most cases the landlord will give new tenants the first 3-4 weeks free for you to customize and get your space ready for business.
If your finances are in place, you are ready to find a suitable space for your business.
Here are some pointers below to get you started:
1. Know your Budget
I’ve received many calls from persons interested in leasing or viewing spaces for their business but do not have a clue what their budget is for rent. Your expense budget for rent is critical for businesses especially startups! It tells me that you have not analyzed the fundamentals of your business and setting up yourself for failure.
Some people are just interested in spaces that look new or shiny and committing to a high rental rate for a upscale space can make you yes… or ultimately break you. Customers will use your business because of great products or service, not just the glitz and glamour.
Action: Research & Know your budget
2. Location Location
Make sure the location suits your business and customers. While some businesses require high foot traffic busy areas, others do not. Location and price go hand in hand with real estate and this may alter your budget significantly.
ACTION: Know your customers and your business and choose location wisely.
3.Think Size and Function
When leasing your space, be sure to envision the space throughout timeframe of the lease. Be sure to plan for how many people will be sharing the space over time. Depending on the business, you may also need to think Desk/tables, showroom Displays, storage space, etc. Ask your self, how many square feet of space do you actually need for your business to function?
Be sure to also identify and communicate what utilities you will need upfront. Eg. Hairdresses, nail techs, cooks will need water or gas lines in the space. A technology company may need a special broadband line.
ACTION: Be sure to have your size and needs outlined upfront
4. It’s ok to Negotiate
In most cases, a lease agreement happens when a client feels that they are getting good value for their money. If clients don’t see the that value, the space stays on the market longer. The landlord may or may not negotiate depending on the level of interest they are receiving or time frame they want to get it rented by.
5. Get help from a Commercial Broker
A commercial real estate broker/agent can give you great advice and insights on business spaces from your criteria given. Often enough a commercial broker can place a variety of options for you to choose from rather than the first one you see and set your heart on.
Real Estate Brokers understand market conditions based on the type of business space and location of it. We can assist clients and Landlords in negotiating the lease price within reason to a point where both parties are happy and can move forward to agreement.
ACTION: Contact us when looking for business spaces in Barbados
6. Opt for a Shorter Lease
We recommend to Startups/new locations to opt for a shorter lease (12-24 months) with a first option to renew. It may be wise select your infrastructure carefully in the beginning. Removable floors, shelves, equipment, counters are best as you are ultimately testing the waters in your new location during this initial period. If your business is well established and you have the backing and expertise, feel free to sign longer leases and negotiate best pricing.
7. Read the Fine Print
When you receive the lease from the landlord, be sure to read through the lease in full. Ask for the lease in advance of the closing meeting so you have time to read it through properly. It’s wise to have your lawyer review the lease as well. It’s always ok to ask the landlord provide clarity on any sections that you do not understand. You or your lawyer can advise changes or additions to be included in the lease. Once both parties are happy, it’s time to sign off and close the deal.
Action: Know what what’s in your lease before you sign!
8. Where to Find Business Spaces For Rent
Now that you know more about leasing commercial spaces.
ACTION: Please find our list of commercial business spaces for rent in Barbados.
I hope my blog post helps you and good luck on your new business ventures!