To a small business, cash is king. Like all vendors, the landlord wants their share of the pie. We work with many start-up and growing companies looking to boot-strap their growth which may come in spurts. We have taken the position that the landlord is like any other investor in your company, loaning their facility to help you succeed. Therefore, all leases should be looked at as a win-win relationship or they will go south quickly.

The number one mistake most companies make is that they over estimate their space needs. They live in the “what if” world and need to think about “what is.” By doing so, they will accomplish two goals; manage their cash flow conservatively and demonstrate their viability to the landlord.

The recent downturn has left a lot of empty space on the market. Companies are doing more with less and have shed millions of square feet of un-productive space. So you would think that the landlords are willing to bend over backwards to get a tenant in. This is not the case. It costs more money to get a bankrupt tenant out that to leave the building empty. And a majority of landlords either don't have the cash to invest in tenant improvements or their bank won't lend it to them.

So how do undercapitalized, growing businesses find space to meet their operational needs?

The first thing we advise our clients is to develop realistic financial projections that prove you can pay the rent. Your landlord is like your banker. They need to buy into your business plan.

The next step is to develop a strategy to manage the growth. If you think you will be in 15,000 square feet in two years but need/can afford 5,000 square feet now there are several ways to structure the lease. Negotiate an option to expand or a right of first refusal on adjacent space in the building. This will give you control of any spaces around you at pre-negotiated rates. If the landlord demands a 3-5 year, get a right to terminate your lease if they cannot provide you the necessary expansion space.

What are the top concerns of the landlords you negotiate with?

One of the biggest issues with landlords today is funding tenant improvements. We always look for space that has the right amount of offices, the necessary power and any special improvement like floor drains or air-conditioned warehouse. Someone else has already paid for these improvements. You may have to pay a little more rent but it will significantly reduce the amount of security you have to put up.

If you cannot find the “right” facility and need the landlord to put improvements in the space, stagger the amount they have to invest. Only build out the office space you need right now with the option to have them build out more once you are established.

And, finally, all landlords are not created equal. Some landlords are very tight with their financial parameters but willing to spend lots of money for the right tenant. Others are more hands on and willing to work with you. And everything in between.

But, above all else, don't get discouraged. We typically go through several properties and negotiations until we find the right deal. It's just around the corner.