
Starting a business in a new area is an exciting prospect – new place, new people, and new opportunities. When shopping for a new shop, ensure you understand the lease you’re entering into.
Entering into a lease is a major financial commitment and usually, a necessary overhead expense to run a successful business. But whether or not your business is successful, once you enter into a lease, you have agreed to pay rent for the entire term of the contract. So before considering a shop for your small business make sure you have secure financial backing and viable business plan for ongoing success.
1. Local Council
Before committing to a lease it is important to ensure with the local council that the shop’s development use is consistent with the type of business you are planning to run. It may not be possible to open a night club or bar for a shop approved only for restaurants.
2. They aren’t just there for the start
You might think from the job title that a start-up lawyer is only there for your enterprise’s earliest days, but a wisely chosen lawyer may be with you for decades to come. Having a start-up lawyer by your side to guide you through your business decisions is essential if you want to be legally protected and to avoid any impending mistakes. Famously, Amazon’s very first litigation lawyer, David Zapolsky, is still advising them as their general counsel 21 years and many, many billions of dollars down the line, having developed and grown with the business as it transformed itself from David into Goliath.
In fact, there are huge benefits in finding a start-up lawyer with the right skills and mindset to immerse themselves in your business from the conception stage right through to the day you really hit your stride or even sell up for billions. Working with the same advisers from the start can save you a lot of time and money, while the trust that is developed over time is priceless.
3. Rent Increases and Bond
During the term of the lease, it is likely that the rent will increase every 12 months. It may be calculated by a certain percentage or cost adjusted to inflation. We can assist you with negotiating any rent increases with the landlord before you sign your lease. Bonds or bank guarantees may also be requested by landlords. Understand that a bond is not an alternative to paying rent on time. Even with a bond, a landlord may still lockout a tenant keep the bond or guarantee and sue for damages.
4. Retail Leases
Certain commercial leases like those in shopping centres are governed under the Retail Leases Act 1994 (NSW). Leases governed by this Act have certain specific requirements such as retail leases which require being at least 5 years. There are disclosure obligations that apply which we are able to assist you with.
5. The End of the Lease
Proper business planning is vital to forecast whether or not the start of the business will allow you to make a profit during the first term of the lease. This is an important thing to take note of because landlords are not required to give a new lease at the end of the first term. Because of this, it will be almost impossible to sell a business without a lease. It’s therefore a smart move to negotiate an option for a new lease.
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Caroline Van
Caroline, is a force to be reckoned with. She is the pocket rocket lawyer that gets things done…at ridiculous speed. When others cower and fear the word ‘urgent’ or ‘deadline’, Caroline is unfazed. She does not blink, she does not sleep, and she is the unstoppable force that keeps going until it’s done.