05 Nov Due diligence matters when leasing a business premises
In my previous blog post, I touched on why due diligence matters when leasing a business premises. It is such an important step, it warrants covering separately. Here is my view on due diligence and why you must take it seriously!
In plain English, due diligence is looking beyond a written agreement to find out if what you are paying for, or think you are paying for is, in fact, exactly the same as what you are getting. Detailed due diligence will remove nasty surprises. And while due diligence is a complex process, I have explained two aspects which I believe are important and often overlooked.
From the outset, you want to find out if the premises will suit your business needs, now and in the future. Check government authority records, including the local council’s, to determine future plans for the area and if they may have an impact on your business.
As for council requirements, unless the premises are already perfect for your business, you’ll need to be very clear about your rights to alter the premises or how they are used. Among other things, changes may require building and/or permitted use consent from the local council. It is absolutely essential to find out this information before you begin operating, because if the premises are not fit for your intended purpose, then the local council has the authority to shut it down.
Now, this shutdown may be temporary or … it may be permanent! In fact, one business owner I worked with experienced this first hand, which you can read about here.
Why would you risk it? Perhaps to save a few hundred dollars, but what about the thousands of dollars of loss you may suffer while your business is shut down? Not to mention additional legal costs.