A Note To Entrepreneurs
By Alvin Mason
This is a quick note to all aspiring entrepreneurs. Whenever you need a location for your business, here are a few things you should understand. One thing you should understand is the lease agreement. Before you sign it make sure you understand the terms of the lease. This is one aspect of starting a business where hiring an attorney to explain what the lease agreement says is prudent.
There are escalating clauses and other terms that a lease might have that could be detrimental to your business. You also want to know under what circumstances the landlord can terminate the lease. It is important because you are about to invest a significant portion of your savings in a business.
You also need to ask and if possible ask in writing, if the property you are about to lease is for sale or has been for sale. You want to ask has there been any discussion concerning the sale of the property. There have been many instances where an entrepreneur leased a property and spent their life savings or borrowed as much as possible to start a business to include huge amounts spent on leasehold improvements, only to have the property sold and be told to vacate by a certain date. In such circumstances, most of the time the entrepreneur suffered a dream crushing loss.
When possible inquire as to why the previous tenant left.
Another thing entrepreneurs want to know or need to understand is their breakeven point. I am aware of several instances where consultants encouraged a business person to borrow huge amounts based on the success of the business's short starting period, only to have undertaken more than the potential growth could yield. With any additional debt the entrepreneur should understand what revenue increase is necessary to breakeven.
These are two quick but necessary thoughts to entrepreneurs of young businesses and aspiring entrepreneurs.