Many small businesses are facing challenges because of increased costs, the ongoing impacts of COVID-19 and other economic factors.
You might be one of many business owners who negotiated rent relief to manage the impact of the pandemic, now facing the prospect of paying back your deferred rent on top of meeting your ongoing rent and other business costs.
Here are five tips to help you manage your rent payments, whether you’re paying back deferred rent, experiencing a downturn in revenue or managing other impacts on your bottom line.
Find ways to manage your stress
Having trouble paying your rent can be extremely stressful. While you might think you need to immediately terminate your lease or start packing up your premises, this is probably not the case.
Rather than worry about worst-case scenarios, start by getting advice. Terminating your lease early could actually cost you more and not be the best solution. Your situation will depend on the length of your lease term, your end-of-lease obligations and even the likelihood of your landlord finding a new tenant to replace your business tenancy.
You could have more options available to you than you know, so speak with your landlord or contact our SBDC business advisory service to discuss your situation.
You might also like to read more about managing stress and anxiety as a business owner.
Communicate sooner rather than later
If you’re struggling to make your commercial rent payments because of financial hardship, you might like to start with a discussion with your landlord. Be honest about your financial position and consider sharing any relevant financial records, such as your activity statements, which may show your financial situation.
Your relationship with your landlord can have an impact on your business – so it’s worth building a good relationship with them and contacting them as soon as possible. Try to keep your communications professional and polite, appealing for their help rather than making demands. If you need help to communicate with your landlord, contact our SBDC business advisory service for guidance.
Be clear on expectations
Sometime disputes can occur when landlords and commercial tenants don’t have a formal agreement in place. If you are unclear about what is expected in terms of your rent payments, contact your landlord to discuss the situation. You need to know how much is owed and the period of time you have to pay, including any deferred amounts.
Ask for everything in writing. Once you have a clear idea of how much you owe and when you need to pay, you can plan ahead to manage your repayments or seek help if you need.
Create a plan
As much as you might hope your rent situation will resolve itself, it’s best not to ignore any issues. Act early and create a plan for your business to move through this difficult period.
Every business is different, but in general terms you could look at your spending and see if there are any costs you could reduce. You could take a look at your cashflow projections, follow up on any payments you might be owed from your customers and look for ways you might be able to bring in more revenue.
To help take control of your finances, try our range of free financial management tools.
Remember that help is available
Running a business can involve a handling challenges you’ve never faced – and it’s worth getting guidance from small business experts when you need it. If you need support, find out about the range of financial counselling and other services which could help.
If you would like to talk about an issue with rent repayments, or any other challenge you’re facing in business, try our free small business advisory service. You can work with a commercial tenancy advisor to get guidance on rent repayments or other business challenges.
You might also like to learn more about our dispute resolution service and types of disputes we can help with. This could be useful if you’re having trouble communicating with your landlord, or can’t agree on fair terms for your rent repayments.
This article is republished from the Small Business Development Corporation (SBDC) website. The SBDC is a WA State Government agency that supports small business. Please read the disclaimer before relying on this information, which has been developed primarily with Western Australian businesses in mind.