3 Expensive Mistakes Entrepreneurs Make When Leasing Office Space


How expensive can a bad lease be? It’s hard to give you an exact number, but we can tell you that leasing mistakes have actually closed the doors to too many promising businesses to count, and also left their owners personally on the hook for thousands of dollars.

How can you avoid a bad lease? The first step is avoiding the most common mistakes that small business owners and entrepreneurs make every single day when signing a lease.

Protect yourself and your business by avoiding these 3 (far too) common mistakes.

1. Negotiating Alone

When you’re in your first year of business, everything seems to happen at breakneck speed and has to be done a on shoestring budget. So, you may feel like you can’t afford the time or money it would take to bring in a real estate lawyer.

That’s fair. However, believe us when we tell you that you cannot afford to negotiate alone. There are simply far too many traps that you can accidentally walk into.

If you can’t afford a real estate lawyer, that’s OK. There are commercial lease experts you can hire to look over your lease and flag any potential issues. That’s what we do. If you would like to learn more about us, you can check out our blog, which is packed with knowledge on commercial leasing for business owners like you.

2. The Triple Net or NNN Lease

Like so many financial mistakes, people may sign on for the triple net lease with high hopes for big savings.

Their would-be landlord has promised them a considerable discount on monthly rent if they agree to pay the other building expenses, which includes taxes, utilities, maintenance, and a host of other things. All of these things can very likely obliterate any sort of savings you see on a month-to-month basis, and really hurt you over the long term.

Some have said it is all of the expense and responsibility of owning the building, with none of the equity or benefits.

3. Signing a Personal Guarantee

New business owners may feel pressure to sign this. They may feel like they’re not really in a position to negotiate because they’re unproven and don’t have a good business credit score.

However, no matter how much a landlord may insist that they need to protect themselves, there is no reason why you shouldn’t be able to negotiate around this. Yes, they have a right to protect themselves. But, you have a right not to be personally liable and exposed for the duration of this lease. If you sign it, one of about 10,000 things that are out of your control could happen and cause you to default on the lease. Now, you are personally responsible for tens of thousands of dollars in owed rent.

These are only 3 of the common mistakes that new entrepreneurs make when signing a commercial lease. Sometimes they happen because the business leasee feels rushed, or like they’re at a disadvantage in the negotiations. Other times, they’re taking on too much in good faith.

In either case, always work with someone who has navigated these waters before and can help you spot trouble on the horizon.