Check out the story in The Morning Bulletin in Rockhampton about the closure of two newsagencies. It’s a reminder of the importance of getting rent right from the outset and not agreeing to lease unless you are 100% happy.
I have recently walked away from two new lease opportunities because the terms were not what I wanted. A newsagency opportunity I walked away from three years ago because the terms were not good is, I’m told, about to close because the tenants are walking away from a ‘bad’ lease.
Get the lease right at the start. Changing it mid-term is challenging with most major landlords.
A side point about the story is the headline: news agents. Talk about focusing on the agent part. I bet agency business accounted for only a small portion of sales in this business.
There is a website called leaseinfo.com.au that one can contact to obtain information on what similar properties are being leased for so long as the lease is registered. The search will cost about $60 per lease search (just contact them for a quote in case its different from one state to the next). When one’s lease comes up for renewal it may be worth doing a handful of searches on similar shops (either in your centre or in a similar strip shop) so that you can have better information in your court on what similar properties are paying and negotiate on more equitable terms with the landlord. It may cost a little extra up-front but in the longer term might save.
From an election point of view it would be good if the federal minister for small business would help us out by providing this sort of service (or similar) for no outlay. This would help small business negotiate on the same terms as big business and level the playing field. Big business would do this as part of their procedure and the cost would be miniscule compared to their turnover. That’s also my election wish for the day.
The last paragraph of this story is the biggest part of the problem.
Just on your point Clive, it makes no difference to these Landlords what info you have at hand. In most cases its “Pay it or Leave it”.
Al
Clive, is your surname Palmer? I’m going
to vote for you (except I’m in SA).
Just a word of warning on leases. We had a relocation clause in our lease and last Xmas we were told we had to relocate and we’ve been given premises half the size because the lease document did not say OF SIMILAR SIZE. It might not be a
bad thing in the long run but it has cost us dearly to move and we are both not
young anymore.
Those of us in centres have to approach the lease as if we have to make all our money within the lease period and expect nothing we can sell at the end of the lease.
That’s good to know June about the relocation clause. Also in a centre and up for new lease, went in to last one without any knowledge or advice.
Mark, I strongly disagree – if I have invested my capital in a business I expect to get a ROI on my investment when I sell.
It is both superannuation and profit to most SME’S and it is the reason we go into business in the first place.
Otherwise we might as well just get a “job” with someone and be paid.
I don’t understand if a business is that good you make all your money in a lease period say 5 years why is it then worth $0 when it comes time to sell .
I think you are assuming that you will have a new lease offered that will be as good as what you have now.
But what if they increase the new lease offered to a point where you cant not trade at the same profit level?
What if they dont even offer you a new lease?
anything is possible.
June it all comes down to the lease. With these being five or seven years, you have nothing to sell if you do not have a lease.