5 Key Points for Small Businesses to Keep in Mind While Searching for Space to Rent
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As a start-up it is just the right thing to operate from your home or from kitchen table for that matter. However, everyone dreams to grow from a start-up to a full-fledged business and to do that they need to plan their expansion strategy. Before hiring staff, meeting with clients, and growing business, they’ll have to consider renting office space.
Here are five tips to consider for those toying with the idea of renting a space for their new and small businesses-
1. Good Things Come In Small Packages
“Today there is no dearth of opportunities for small businesses,” says Pinaki Ghosh, Managing Director, Power Publisher. “Landlords who hadn’t considered taking in tenants with relatively smaller capacity are now keen to broaden their horizons. They are now more than willing to take small tenants and are dividing the hitherto large office spaces into smaller compartments,” he shared.
2. Pre-decide your lease period
It is important to pre-plan the period of lease you want – be it an one-year lease or a 10-year one.
According to Ghosh, if you’re a startup, it is better to go for as short a lease as possible. “Since it is one cannot be sure how long he/she will be going to be around, a short term lease will come handy if need for winding up crops up. Alternatively, thriving businesses should consider negotiating the rent for a long-term lease,” he explained.
3. Ask for concessions
“It’s naïve to take the amount of the lease at face value,” says Anshul Gupta - founder of Razr Media, a division of Razr Corp based out of Mumbai. “With realty facing an all time low Indian landlords are ambitious to make revenue from their properties. Be strategic and persuasive to lock in a lower rent than is initially claimed. As a tenant, one should put a cap on annual increases as well,” he advised.
“It is also sensible to keep the option of expanding your space if you need more in future. You can also negotiate to get the landlord pay for maintenance fees and the payment for the caretaker. Also negotiate for parking spots and garbage removal before you sign the lease,” he insisted.
4. Be Ready to Pay Security Deposit
“With realty in a languishing state, landlords are alarmed about taking risks of tenants failing to pay rents. “Those thinking of taking new spaces for their business, be ready to pay about 10 percent of the lease as an advance deposit. Landlords will typically require a letter of credit, and small businesses may be required to make a personal guarantee,” shared Varun Biyani, Co-Founder and CTO, TruckHall.
The alternative to this is subleases. Big businesses that are redundant with space often take in tenants or other firms and do not normally ask for more than one or two months’ rent as a security deposit.
5. Do Proper Homework About Your Landlord
“The credibility of a landlord or a building owner is very imperative,” Akshay Sasikumar, Vice President, Paperflite, pointed out. “Do some research and find out if they streamlining any loan they can’t repay or are in some kind of financial hitch. Earlier the credibility of the tenant was considered important, but today, one needs to take a look at both sides of the table. In case of larger deals, a credit check on the owner is also now mandatory,” he elaborated.
The Bottom Line
This is the right time for looking for a rent space. At a time when the real-estate market is in transition, landlords are normally jumpy and nervous, hence a good time to act. A lot of them are unaware of the real values for their spaces. So it’s the precise time for tenants to strike attractive lease deals.