At some stage in the business lifecycle, every business, large or small, needs to evaluate whether they “STAY” in their current business premises and negotiate a renewal or “GO” and negotiate a new lease in a new location. This process can be complicated and is not something most business owners look forward to doing.
So, where do you start?
There are a number of moving parts to this decision that include, how the economy is performing and if it’s a Tenant or Landlord’s market, the capital cost of closing one site down and opening a new one, and the potential growth in sales and profit.
In this blog, we will step though the most common elements to consider, with expert insight from AHC member Kelly Cunningham from Your Leasing Co, who has saved AHC members more than $1.5 million in lease negotiations and renewals.
Is your current space meeting the needs of your business? Is the current space fit for future business growth? Would a new location service clients and employees better? The first step is to assess your current space and what you like and don’t like about it.
What are the Landlords expectations in relation to a new Lease? Is there one on offer? What are the terms? You will need to chat to the Landlord to understand their plans for the property and see if a renewal of your Lease is part of their plan. If it is, you should seek to understand the terms that the Landlord will be seeking for a renewal of your Lease. What effect would these terms have on the cashflow of your business?
What do you need to do to the tenancy, when you leave? How much will that cost? You should seek to understand your responsibilities under the Lease for returning the premises to the Landlord. Your Lease will outline the Landlord's expectations in this regard, so it is important to review these and understand them, asking the Landlord for clarification if needed. Once you know the answers to this, seek an estimate to complete this work and likely timeframes.
Now is the time to find out what else is available in the market that might best suit the needs of your business, now and into the future, and in particular, the next 5 – 10 years. Have a look at what is available and understand the terms that these new possible locations are chasing. Identify a couple of options that could work, as an alternative to your current space. Will the new Landlords help pay for a new fitout? Will they offer rent free, while you are changing over our space? What is the rent, compared to what you pay now and what the Landlord is expecting at renewal?
How much is the new space going to cost to fit out? Spend some time working with a shopfitter and designer to understand what level of capital investment will be required to fit out a new premises, as well as understanding the possible timeframes.
Considering all of the information you have gathered, does it make more sense to stay where you are or relocate to a different space? Are the capital costs associated with moving worth it? What are the advantages and disadvantages of both?
At the end of this process, a clear pathway should present itself to you, so that you know you are doing the right thing, either way. You can now move forward with comfort and negotiate a new Lease, at either a new, exciting location or right where you already are!
At Your Leasing Co. the “Stay vs Go” analysis Saves Time, Saves Money and Adds Value for the business owner by providing a logical, step by step process of collecting market information and presenting a commercial business case that incorporates the key elements of renewing a lease in comparison to relocating to a new site.
If you have any questions about deciding your next move, call Your Leasing Co for a free, no obligation conversation on 1300 356 702.