Before You Sign That Lease: What Every Business Owner Needs to Know About Choosing the Right Location

1. 

Location Isn’t Just About the Address—It’s About Strategy

We’ve all heard the saying, “Location, location, location.” But what does that actually mean for your business? It’s not just about being on Main Street or in a trendy shopping center. A great location is one that aligns with your target market, supports your brand identity, and makes operational sense.

Start by thinking about your ideal customer:

• Where do they live, work, or shop?
• Are they more likely to walk in off the street, or are they searching for you online and willing to travel?
• Do you need high foot traffic, or would being close to other businesses or highways be more beneficial?

Also, look beyond just your unit. Assess parking availability, neighboring businesses, safety, noise levels, and local foot traffic at different times of day. And be honest with yourself: Does this space fit who your business is and who you want to attract?

2. 

Understand the Lease Terms Like Your Bottom Line Depends On It—Because It Does

Commercial leases are very different from residential ones. They’re often longer-term, more complex, and filled with clauses that can cost you a lot of money down the road if you’re not careful. This is where you need to slow down and read everything—or better yet, bring in a real estate attorney or commercial broker to walk through it with you.

Key terms to look at include:

• Lease length: How many years are you committing to? Is there flexibility to grow or exit?
• Rent structure: Is it a flat rate, or are there annual increases? Are you paying a triple net lease (NNN), where you also cover property taxes, insurance, and maintenance?
• Tenant improvements (TIs): Will the landlord help cover the cost of customizing the space? If so, how much?
• Maintenance and repair responsibilities: Who handles what, and how much notice do you get for rent increases or property changes?
• Personal guarantees: Are you personally liable if the business can’t pay?

These are just a few of the big ones. One mistake many entrepreneurs make is signing a lease that sounds great on paper but ends up locking them into a situation that limits flexibility, drains profits, or becomes impossible to get out of if the business model shifts. You always want to plan for the best, but protect yourself against the unexpected.

3. 

Plan for Growth, But Don’t Overstretch Too Soon

It’s easy to fall in love with a bigger, shinier space, especially if your current location feels cramped or chaotic. But here’s the reality—more square footage means more rent, more utilities, more furnishings, and more financial pressure. Before you stretch your budget, make sure the numbers make sense.

Ask yourself:

• Can your current revenue support this move and still leave a cushion?
• Have you accounted for slower months, seasonal dips, or potential economic changes?
• If the new location takes time to ramp up, do you have the cash flow to cover expenses until it’s profitable?

At the same time, you don’t want to limit your business by staying too small. There’s a balance between playing it safe and planning for what’s next. That’s why it’s smart to build flexibility into your lease when possible. Can you negotiate a shorter term with renewal options? Or choose a space that has additional units nearby you could expand into later?

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Transcript

Before You Sign That Lease: What Every Business Owner Needs to Know About Choosing the Right Location

Introduction

Welcome back to another episode of Startup Business 101. I’m your host, John Reyes, and today we’re talking about something that can make or break your next phase of growth: leasing a physical space for your business. Whether this is your first time stepping into brick-and-mortar territory or you’re planning to open a second location, this step is a major milestone. It’s exciting. It’s a sign of progress. But it’s also one of the biggest financial and operational commitments you’ll make as a business owner.

Now, let’s be real—when you’re on the hunt for that perfect space, it’s easy to get swept up in the emotion of it all. You picture your customers walking through the door. You imagine the sign on the front. You can already see the layout, the vibe, the flow. And that vision is important—it keeps you inspired. But the leasing process requires more than just excitement. It demands strategy, clarity, and a willingness to dig into the details before you put pen to paper.

Here’s why this episode matters: so many business owners rush into signing a lease without fully understanding what they’re getting into. And that’s not because they’re reckless—it’s because they’re eager, motivated, and ready to grow. But in that rush, key questions get overlooked. Lease terms are skimmed. Locations are chosen based on emotion instead of data. And unfortunately, I’ve seen far too many passionate entrepreneurs end up locked into agreements that strangle their cash flow, limit their flexibility, or put them at odds with their landlords.

This episode is your guide to making sure that doesn’t happen to you.

We’re going to unpack three essential areas you need to fully understand before leasing your first—or next—business space. These are the kinds of things that don’t always show up in a glossy brochure or a quick property tour. They’re the behind-the-scenes considerations that make the difference between a location that helps your business thrive and one that quietly bleeds it dry.

First, we’ll talk about the power of location—not just in terms of zip code, but in terms of strategic alignment with your customer base, your operations, and your brand. Because being in the right place isn’t about impressing people—it’s about making sure you’re in front of the right people.

Second, we’ll dive deep into commercial lease terms. And yes, I know—leases aren’t the most thrilling topic in the world. But understanding the fine print could save you thousands of dollars and spare you major headaches down the road. You don’t need to be a lawyer to grasp the essentials—you just need to know what to look for, what to ask, and what to avoid.

And third, we’re going to talk about planning for growth without overextending yourself. One of the most common traps business owners fall into is biting off more space than they can financially chew, thinking they’ll “grow into it.” But smart growth means knowing your numbers, testing your assumptions, and preparing for both the best and worst-case scenarios.

Throughout this episode, I’m going to share real-world tips, practical questions to ask, and lessons I’ve learned from watching other entrepreneurs go through this process—some successfully, and some not so much. My goal is to give you the confidence, clarity, and perspective you need to walk into a leasing conversation like a leader—not a beginner guessing their way through.

So whether you’re eyeing your first commercial space or scouting your next location, grab a notepad, buckle in, and let’s break this all down together. Because when it comes to growing your business, where you plant your roots matters more than you think.

Location Isn’t Just About the Address—It’s About Strategy

When we talk about finding the perfect location for your business, it’s a lot like picking the right spot for your lemonade stand. Imagine you’re all excited to set up your stand, and you choose a quiet little alley where nobody walks by. You’ve got the best lemonade in town, but if no one sees you, no one’s going to stop and buy it. Now imagine moving that same stand to the end of a busy park trail or right outside a sports field—suddenly, people are seeing you, stopping, and buying. That’s what we mean when we say “location isn’t just about the address—it’s about strategy.”

In business, just like with that lemonade stand, success isn’t just about having a product or service—it’s about putting it where people will see it, want it, and be able to access it. And it’s not just about being where the most people are—it’s about being where the right people are. You want to place your business where your ideal customers naturally spend their time.

Let’s break this down.

Say you’re opening a trendy coffee shop that caters to young professionals who work remotely. You’d probably want to look near co-working spaces, apartment complexes, or places where that crowd hangs out—maybe even near a college campus. Being in the middle of an industrial district where most people commute in for factory jobs might not be the best fit, even if the space is cheaper. That’s because the people passing by aren’t necessarily looking for what you offer. You could be shouting into the wind.

Or maybe you run a dog grooming salon. Your customers? Dog owners. So you might look for a location near residential neighborhoods, pet supply stores, or parks where people walk their dogs. The goal is to be in a spot where your customer base already exists, not somewhere where they have to go out of their way to find you.

Now, location isn’t just about your customers—it’s also about your operations. If you’re going to be receiving shipments of inventory, is the location easy for delivery trucks to access? If you need parking for customers, is there enough? If your space is hard to find, located behind a confusing maze of other businesses, or sits in a spot where people don’t feel safe after dark—that’s going to hurt you in the long run.

Also, think about what’s around you. Are you next to complementary businesses that can bring you traffic—like a hair salon next to a nail spa? Or are you buried between empty storefronts and a loud mechanic’s garage that might drive away your clientele? It’s not just your address that matters—it’s your surroundings, the flow of traffic, the feeling people get when they arrive, and even what time of day your area is busiest.

And here’s a big one: rent is a factor, but don’t let cheap rent trick you into a bad location. Yes, saving money matters—but if you’re saving money on rent and losing customers every day because people can’t find you or don’t want to go there, that savings is actually costing you more. Think of rent as an investment in visibility and access. If you’re going to pay more to be in a high-traffic, high-visibility spot—but that spot drives in enough new business to cover the extra cost and more—that’s smart strategy.

Finally, look at the long game. Is the area growing? Are new developments happening nearby? Will the location still make sense for you two or five years down the road? You don’t want to move into a place that’s perfect today but gets torn up by construction tomorrow or where the demographics are changing in a way that won’t support your business long term.

So, when you’re choosing your business location, don’t just think, “Is the rent good?” or “Is the space nice?” Ask yourself, “Does this location support the future I want for my business?” That’s the question that will guide you to the right spot.

Because in the end, it’s not just about having a good product or service—it’s about putting yourself in the right place at the right time for the right people. And that’s how smart business owners win.

Alright, imagine this. You’ve been saving up your allowance, planning a big lemonade stand—this time not in your front yard, but inside a fancy new clubhouse someone said you could rent. It looks perfect. Big space. Shiny counters. Lots of foot traffic. You’re excited. You say, “Yes! I’ll take it!” without asking a single question. Then you find out the clubhouse rules say you have to pay extra if someone spills lemonade. You also have to clean the whole place every night, pay for the electricity, and if your little lemonade stand doesn’t make money, you still owe every dollar of rent for the next five years. Yikes, right?

That’s what happens when a business owner signs a commercial lease without understanding what’s inside it.

A commercial lease is basically the grown-up version of an agreement for your lemonade clubhouse—but it’s way more serious and way more expensive. And here’s the truth: the terms of that lease can make or break your business. This isn’t just about where you’re going to put your tables or what color you’re going to paint the walls. This is about money, risk, and flexibility. This is about your ability to grow, pivot, or survive if things don’t go according to plan.

Let’s break down a few of the biggest parts you need to understand, in a simple, clear way:

Lease Length

First, ask yourself: How long am I stuck here? Most commercial leases are three, five, or even ten years long. And while committing can seem fine at first, things change—business models evolve, customer behavior shifts, your business might explode with growth or need to downsize.

So the question becomes: Is there a way out? Some leases have “early termination clauses” or “options to sublease,” which are like safety nets. Others do not. If your lease doesn’t allow for flexibility and you need to move or close down, you could still owe all those monthly payments. That’s a big deal.

Rent Structure

Next, let’s talk about how much you’re actually paying. It’s not always just rent. Some leases are triple net leases—also known as “NNN.” That means you pay three extra things on top of your rent:

• Property taxes
• Building insurance
• Maintenance and upkeep

It’s kind of like if someone said, “Here’s your clubhouse for $1,000 a month,” but then added, “Oh, and you also need to mow the lawn, fix the roof, and pay for the clubhouse’s fire insurance.” Suddenly that $1,000 is now $1,800. So read the fine print. Some landlords will advertise a super low base rent, only to tack on all those extras later.

Also, check if rent increases each year. Sometimes leases have something called an “escalation clause,” where your rent automatically goes up by 2%, 3%, or more every year. That might not seem like much at first, but over a five-year lease, it can add up to thousands more than you planned.

Tenant Improvements (TIs)

This is where you get to ask: “Will the landlord help me set this place up?” Because let’s face it—most spaces aren’t move-in ready. Maybe you need to knock down a wall, install sinks, add new flooring, or rewire for your equipment. That stuff gets expensive fast.

Sometimes landlords offer what’s called a Tenant Improvement Allowance (TI)—money they’ll give you (or reimburse you for) to help cover those upgrades. But it’s not automatic. You have to ask. And the lease should say how much they’re offering, when you get the money, and what it can be used for. Get this in writing, every time.

Maintenance and Repairs

Imagine this: it’s the middle of winter, and your heater breaks. Who pays to fix it?

Some leases say the landlord handles repairs, others say you do. And in some cases, you’re responsible for everything inside the space, even the plumbing and the HVAC system. That’s thousands of dollars if something breaks. So ask: Who’s responsible for what? And are there caps on how much you might owe in a single year?

Personal Guarantees

Now, this one’s big. Sometimes a lease says, “If your business can’t pay, you personally have to.” That’s called a personal guarantee. Even if your business is an LLC or a corporation—which normally protects your personal assets—this part of the lease can pierce that protection. That means your car, your home, and your savings could be at risk if the business fails and you still owe rent.

Always, always, always understand this clause. Ask your attorney about it. Try to negotiate a limited guarantee or “burn-off” clause that ends after a certain amount of time, or ask if you can provide a larger deposit instead of putting your personal finances on the line.

Bottom Line

When you lease a space for your business, it’s easy to get caught up in the excitement. You picture the sign above the door, the customers coming in, the dream unfolding. But don’t rush. A lease is a contract. And once you sign, you’re legally bound to it—whether things go well or not.

So take your time. Read every line. Ask questions. Bring in a commercial real estate broker or attorney—people who look at leases for a living and know where the traps are hidden.

Because at the end of the day, this lease isn’t just about square footage. It’s about your freedom, your future, and your financial stability. Get it right, and your location becomes the foundation for years of growth. Get it wrong, and it can become a weight that drags down your entire operation.

Your bottom line depends on understanding the lease—because the lease is your bottom line.

Understand the Lease Terms Like Your Bottom Line Depends On It—Because It Does

Commercial leases are very different from residential ones. They’re often longer-term, more complex, and filled with clauses that can cost you a lot of money down the road if you’re not careful. This is where you need to slow down and read everything—or better yet, bring in a real estate attorney or commercial broker to walk through it with you.

Key terms to look at include:

• Lease length: How many years are you committing to? Is there flexibility to grow or exit?

• Rent structure: Is it a flat rate, or are there annual increases? Are you paying a triple net lease (NNN), where you also cover property taxes, insurance, and maintenance?

• Tenant improvements (TIs): Will the landlord help cover the cost of customizing the space? If so, how much?

• Maintenance and repair responsibilities: Who handles what, and how much notice do you get for rent increases or property changes?

• Personal guarantees: Are you personally liable if the business can’t pay?

These are just a few of the big ones. One mistake many entrepreneurs make is signing a lease that sounds great on paper but ends up locking them into a situation that limits flexibility, drains profits, or becomes impossible to get out of if the business model shifts. You always want to plan for the best, but protect yourself against the unexpected.

Plan for Growth, But Don’t Overstretch Too Soon

Alright, let’s pretend for a moment that your business is a little goldfish. And this goldfish has been living in a nice, comfortable bowl. It’s cozy, it’s familiar, and you know exactly how to feed your fish and keep the water clean. But one day, you look at your goldfish and think, “Wow, you’re growing! Maybe it’s time for a bigger tank.”

That’s what it feels like when your business starts to grow. Things start getting a little cramped. There’s more hustle, more customers, more buzz—and you start wondering if it’s time to move into a bigger space. Maybe open a second location. Maybe go from that small suite tucked behind the gas station to something with big windows on Main Street. The thought of that shiny, impressive space can be super exciting. But just like you wouldn’t throw your little goldfish into a huge aquarium full of sharks and expect it to thrive, you have to be careful not to move your business into a space that’s too big, too soon.

Let’s break this down like we’re sitting across the table with a coloring book and a juice box. Bigger isn’t always better—at least, not right away.

You see, bigger spaces come with bigger responsibilities. That cool new location might mean higher rent. And rent is just the beginning. You’ve got electricity, water, insurance, internet, more furniture, more equipment, maybe more employees. It’s not just a new place—it’s a whole new level of pressure.

So here’s what you’ve got to ask yourself: Can your business handle it?

Think about your allowance. If you get ten dollars a week, and suddenly you decide to buy a toy that costs twelve dollars every week just to look cool—that’s a problem. It doesn’t matter how awesome the toy is if you don’t have enough left to buy lunch or save for that skateboard you really want. Same thing with your business. If the bigger space eats up all your cash, what happens when you hit a slow month? What happens if sales dip after the holidays or during the summer?

That’s why planning for growth means being both brave and smart. You want to believe in your business—yes! But you also need to leave yourself a cushion, just in case things don’t go exactly as planned. Ask yourself, “If I move into this space, can I still pay my bills? What if it takes a few months to get the same traffic I had at my old location? Do I have enough saved to ride that out?” These are big questions, and it’s okay to take your time answering them.

Now, let’s flip it around. Because staying in that tiny goldfish bowl forever? That’s not the goal either. You don’t want to stunt your growth just because you’re afraid. Playing it too safe can hold you back. Maybe your current space is so small you’re turning customers away. Maybe your staff doesn’t have enough room to work, or your environment doesn’t match the brand you’re building. In those cases, yes—it’s time to think bigger. But you do it with a plan.

One of the smartest things you can do is build flexibility into your lease. Can you start with a short-term lease with the option to renew? That way, you’re not locking yourself into a five-year commitment. Or maybe you find a location with extra units next door that you could expand into later, once you’ve proven that the new spot is working. Flexibility is like giving your goldfish just enough extra room to grow—without tossing it into the deep end right away.

And here’s something a lot of people forget: the space itself matters. Not just how many square feet, but how it feels. Does it inspire your team? Does it make customers feel excited to walk through the door? A well-thought-out space can improve productivity, boost your brand’s image, and make people want to come back. But again—there’s a balance. You don’t need marble floors and gold doorknobs on day one. Focus on clean, comfortable, and brand-consistent before you go full luxury.

So here’s the bottom line: Dream big, but scale smart. Don’t leap into a giant space just to look successful. Make sure your revenue, cash flow, and operations can support the move. Build flexibility into your lease. Think about the long game. And never forget that you’re building something special—something that should grow on purpose, not by accident.

Your business doesn’t need the fanciest space on day one. It needs the right space—at the right time. One that fits where you are now, and supports where you’re going next.

Conclusion

Imagine you’re building a Lego castle. You start with one brick, then another, then another. You carefully place each piece where it belongs, making sure it’s strong and steady. You don’t rush. You take your time, and before you know it, you’ve built something amazing—something you can be proud of.

That’s what growing a business is like, especially when it comes to choosing your next space. Whether you’re leasing your very first location or expanding to a second, every decision is like placing another brick in your castle. It matters. The location matters. The lease terms matter. The size, the timing, the financial pressure—every piece plays a role in the final picture.

And just like with Legos, you don’t want to build something too big too fast, or it could come tumbling down. You don’t want to grab every shiny piece without thinking it through. You want to build smart. You want to build strong. You want to build something that lasts.

So, here’s the truth: You don’t have to rush. You don’t have to follow what everyone else is doing. You don’t have to lease the biggest, fanciest space just to prove you’ve made it. You just have to make the right choice—the one that fits your business, your budget, your customers, and your vision.

Take the time to understand your market. Learn your lease inside and out. Ask questions. Negotiate. Plan not just for today, but for where you want to be a year from now. Five years from now. Build in flexibility. Think ahead. And most importantly, trust yourself.

Because you’re not just finding a space—you’re planting roots for something great.

Remember, you’re not just a business owner. You’re a builder. A dreamer. A leader. And the choices you make today will shape the future of your business.

So go out there and make smart, intentional decisions. Your next location should be a launchpad, not a liability. Choose a space that sets you up to grow with confidence, strength, and purpose.

This is Startup Business 101, and I’m John Reyes—reminding you that every move you make in your business should be bold, thoughtful, and relentlessly forward. Keep building your dream. One decision. One step. One brick at a time.

Let’s go build something great.