Was your business's rent increased? Here's how to handle it
Your lease is up, and you’re upset to find that your landlord has significantly increased your small business’s rent. If you’re satisfied with your business’s location, chances are you are nervous about the possibility of moving to a new space.
Moving can mean losing customers who are not as close to your new location, or even worse, forget about your business. It can also mean having to find another location that will provide visibility, and enough space to accommodate your customer base. In this post, we’ll help you weigh your options when you’re faced with a rent increase, so that you can resolve the situation and get back to growing your small business.
Negotiate with your landlord
If you’re persistent about staying at your current location, brush up on your negotiating skills! See if you and your landlord can reach an agreement about your rent price. It is possible that they won’t want to lose you as a tenant, and might lower their commercial rent increase. If they are able to lessen the increase amount, it is possible that your business could stay at its existing location!
Cut back on other costs
Could you potentially afford the rent increase if you cut back on some other expenses? Are these costs completely necessary, or could your budget use an overhaul? These are questions you should consider if you’re serious about staying at your current location. If the commercial rent increase is not too extreme, and you could afford it if you cut back on a few amenities or services, then try and make this happen.
Pay the increased rent
You don’t want to uproot your business from its home, so you’re ready to accept your fate and pay the higher rent bill. Even if your business is successfully generating enough sales to afford the rent increase, it’s likely frustrating that so much of your money is going to be spent on rent. Ultimately, if you’re adamant about remaining at your existing location, paying the increased rent could be worth it if it means staying in the place that your customers know and love. On the other side, don’t over-extend your business’s finances just to avoid moving. As disappointing as it may be, you don’t want to jeopardize the future of your business because you can’t make rent.
Move to a new location
You’re not able to afford your new rent cost, or you’re unwilling to pay it. Now, you’re forced to move to a new location. Unfortunately, even that decision will cost you additional funds. First, you’ll probably need a broker to help you assess your real estate options. Then, once you’ve found your new location, you’ll have to pay for packing and moving supplies, and will need to make interior and exterior changes, in order to reflect your business’s branding and overall ambiance. Ultimately, you should strive to make your new location reflect your former space, incorporate everything that customers love about your business!
Before making the plunge to move, try and estimate how much money you’ll be spending throughout the process. If it is comparable to the amount of your rent increase, it might make sense to stay at your current location.
Apply for working capital
The four options above will all be easier with the help of additional working capital. If you plan to negotiate the rent, it is likely that you’ll still be paying more than your former rent price; you still may need extra cash flow. Did you decide to cut back on costs? Alleviate the pressure to do so by applying for working capital instead. If you’re determined to stay at your existing location, additional working capital will allow you to pay for your rent increase, while moving will also provide its own set of added costs. Having additional financing for your small business can help you afford your new rent price, and stay in your existing location. But if you need to move; it will help make the transition easier, too.
Has your business faced this predicament? If so, what did you decide, and would the situation have been easier if you had additional working capital available to you? Let us know in the comment section below.