Small Business Considerations When Deciding on Location and Space

//Small Business Considerations When Deciding on Location and Space

Small Business Considerations When Deciding on Location and Space

Starting a new business is exciting! One of the most exciting pieces is deciding on location. I can not stress enough that you need a lease or a license. It might seem like a wonderful opportunity to rent a small space inside another business without a lease—after all, you have no obligation, so if the business doesn’t do well, you can just walk away. You, however, are not protected, and just like you have no obligation to your new landlord, they have no obligation to you. You could be asked to leave if they decide they need the space or someone else is willing to pay more. This can leave you in a precarious position.

Building Classes

When considering space in an office building, you should be aware that there are different classes of buildings. A, B, C, and “Trophy” buildings have different costs and different amenities. So-called Trophy buildings, such as the Empire State Building in New York City, are not usually something a new business owner is considering but rather something to aspire to. Class A buildings, while perhaps not completely out of reach, tend to be expensive. They do have advantages. Most have excellent HVAC and electrical systems—something to think about if your business is technology driven, which most are these days. They also tend to have nicer common spaces, restrooms and usually food establishments. Class B buildings, while not as fancy, tend to be a bit less expensive and might be a good place to look. Class C buildings can be a good choice if you feel that you want your business to be in a particular location or town and cannot afford to spend on a nicer building in that location.

Leases and Insurance

Other considerations are the terms of your lease and insurance for your premises. You might need malpractice or errors and omissions insurance for your business, and many people are also now getting cyber liability insurance. Most leases will require that you have a minimum of insurance and that you name the landlord as an additional insured.

Commercial Lease Clauses

Other typical clauses in a commercial lease are for holdover rent, if you do not vacate the premises at the end of your lease, as well as a “good guy” clause if you want to vacate early. A “good guy” clause usually makes one member of the business personally liable for the rent, but as long as they are a “good guy” (in other words, give the premises back in good condition and have paid all their rent on time up until the point they want to vacate), the landlord will let them out of the lease. This type of clause benefits the landlord in that if the tenant truly can’t afford to stay any longer they at least do not have to go through the legalities and cost of having them evicted, and they know their unit will not be damaged.

Shared Workspace

For new businesses just starting out, a popular option is shared workspace. There are many buildings, including class A and some “Trophy” buildings, that have this option. You should be aware however that many of them require a membership, not just space rental. The membership might include items such as telephone answering, internet connection, printer, fax, mail and package service. You should consider that when using this type of membership; the same people working for you are also working for others who may be your competition. If you have a business with ethics rules, as lawyers do, there are also confidentiality requirements that must be taken into consideration. The number one advantage to this type of workspace is cost. Please remember though that once the business can afford to move into its own dedicated space, you may lose some things along the way, such as your telephone number or a favorite receptionist, which depending on your agreement may remain with the shared workspace owner.

Retail Location vs. Office Space

Finally, some businesses are a better fit for retail locations rather than office space. Some considerations are who holds the responsibility for cleaning the sidewalks in the winter and whether there are complimentary businesses located nearby. For instance, would you want to be within walking distance of a school, a hospital, an office building?

When considering renting space for your business it is always a good idea to have an attorney review and possibly negotiate the terms of the lease prior to signing.

Deborah E. Kaminetzky

 

Deborah E. Kaminetzky, Esq.
Kaminetzky Law & Mediation, P.C.
132 Spruce Street
Cedarhurst, New York 11516
Phone: 516.374.0074

By | 2018-10-15T16:00:36+00:00 February 16th, 2017|Small Business|2 Comments

About the Author:

Deborah E. Kaminetzky is the founding member of Kaminetzky Law & Mediation, P.C. located in Cedarhurst and Garden City, New York. Prior to starting the firm Deborah worked at a Long Island firm where she learned the practice of Matrimonial and Family law and Estate Planning. Deborah has also worked at the New York City Department of Consumer Affairs where she was responsible for prosecuting unlicensed home improvement contractors and negotiating settlements for consumers. Prior to practicing law, Ms. Kaminetzky was the president of a commercial property management corporation in the New York Metro area. Ms. Kaminetzky is a member of the American Bar Association (General Practice, Solo and Small firm Division and Law Practice Management Sections), National Association of Divorce Professionals, New York State Council on Divorce Mediation, Family and Divorce Mediation Council of Greater New York, New York State Bar Association (Business Law, Estate, Family Law, ADR and General Practice Sections), Nassau County Bar Association (where she serves as Vice Chair of the General, Solo and Practice Management Committee, and is active in the Community Relations and Education Committee) and The Nassau County Women’s Bar Association. Ms. Kaminetzky was appointed to the Committee on Law Practice Management of the New York State Bar Association in 2015 and has been a frequent speaker and author of articles for their journal. Ms. Kaminetzky serves on the Board of Directors of the Yashar Attorney and Judges Chapter of Hadassah as a their Treasurer, and was their Woman of the Year 2012. Deborah graduated from New York Law School in 1991 and the University of Michigan, Ann Arbor in 1986. Ms. Kaminetzky was admitted to the First Department in 1991 and the United States Supreme Court Bar in February of 2015. Deborah is on the Matrimonial fee dispute arbitration panel for Nassau County. She expanded her alternative dispute resolution practice by completing a Mediation certificate program in December of 2013, an advanced Mediation certificate program in 2015 and most recently a Divorce Mediation certificate in early 2016 from The New York Peace Institute. Ms. Kaminetzky has spoken to various groups on topics including matrimonial law, technology and social media use, and disaster preparedness for business including cybersecurity.

2 Comments

  1. Eli Uncyk March 15, 2017 at 3:46 pm - Reply

    Deb- I read your advice for starting and locating a business and thought it would be very useful as an introduction which lawyers can give to all clients contemplating opening a new business. Thank you for your thoughtful presentation.–Kind regards., Eli.

    • Deborah Kaminetzky
      Deborah Kaminetzky March 16, 2017 at 12:39 am - Reply

      Eli, I’m glad you liked it!

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