Businesses looking for ways to keep their overhead costs down, may want to consider subletting a part of their rental property to another business. Doing so can help to maximize any unused space and ultimately shave off a significant amount of a business’ monthly rental expenses. But for a subletting arrangement to truly work, it has to be done properly. Here are five tips to consider:
1. Be sure to check with your lease agreement and get your landlord’s consent. Your first step before you even consider subletting is to comb through your lease agreement to make sure you are allowed to sublet the property to another business and under what conditions. It is also a good idea to check in with your landlord to see if there are any additional considerations and if he or she would like a say in who eventually gets brought in.
2. Consider how practical the unused space is. Can the space realistically handle another business? Keep in mind that the other tenant may also be sharing common areas, such as the restrooms, breakroom, and parking lot. You should also consider the more intangible factors of sharing a space, like increased noise levels, privacy issues, and aesthetics.
3. Who will be moving in? I’ve seen some pretty wacky arrangements, like a dry cleaning service inside of a plastic goods store. While subletting may allow you to save some money, make sure that sure that the two the businesses fit together, or else it may end up cheapening your business’ image. Moreover, don’t forget to do a background check on any potential tenants to make sure that they are running reputable and viable operations.
4. Put together a clear subletting agreement. The due diligence and effort you lend towards creating a clear and comprehensive subletting agreement is to a certain extent greater than the original lease agreement. Why? Because you will likely be taking responsibility for any damage done to the property by the subletting tenant or the failure of the tenant to pay rent. It is highly recommended that you involve a qualified legal professional to help you draw up the subletting contract.
5. What may be the future needs of your business? If there is a chance that your business will grow in the near future, then you need to consider this when setting up the length of the subletting arrangement. Saving money is great, but not if it will stifle profit-generating growth.
In short, if you want to make the most out of a subletting arrangement, be sure to put in an adequate amount of effort and due diligence.