There are times when businesses tend to seek space – either when they first start out if operating out of the owner’s house just won’t work (think retail, restaurants, and even professionals such attorneys, CPAs, and doctors) or when their current space doesn’t meet their needs (think that home office just doesn’t fit the owner and her new employee, the company’s clients have moved, or the company is downsizing and it just doesn’t fit it current situation). Here are five thing to consider when your business seeks new space:
- Do you really need new space? This may seem like a silly question, but sometimes people get into what their business “should” look like rather than what it “does” look like. Although it would be great to be in the newest, best space, unless you will have the income to justify it, new space may be a luxury you cannot afford.
- Are you going to have to break one lease to get a new one? If you are currently in a lease, it may be expensive to break that lease in order to get new space. Are there ways that you can use the space you have until your lease is up? Can employees telecommute? Can you open up a second location giving you enough space between the two?
- What section of town do you want to be in? Some businesses can be successful anywhere. However, many businesses need to be a specific location to be successful. For example, putting a surf shop in a ski resort may result in very few sales. Knowing where your clients are will help you decide where you need to be. Even if you are a service industry that goes to clients’ locations, you should still consider where they are as mileage can be a huge expense!
- Are there any tax breaks available if you move to certain places? Once you have narrowed down the places that your clients are in, you want to research if there are tax breaks for moving into one section of town verses another. Many times a tenant representative or your accountant can help you figure out where locations with tax breaks are.
- Are you going to be taxed more in different cities or subject to more regulations in one verses another? In many cases, tax rates are not going to be a deciding factor in where you move your business. However, depending on your business type, it may be easier to get licensed in one place rather than another (a reason why you see more “sin” businesses in unincorporated counties rather than cities around the metro area) or tax rates may be less (a reason that Furniture Row asks if you would like to pick up from them rather than have furniture delivered). If you sell big ticket items (such as furniture or electronics), having a lower sales tax rate can be a selling point.
As always, if you have any questions about renting space, please contact me, your Denver business attorney at 720-258-6647.