Postings Advertise Resources Blog Discussions About Us Register Login BizBen Podcast   BizBen Podcast
500 New & Refreshed Posts, Postings Daily
Over 8,000 Postings & 2,500 Resources
Assisting Buyers & Sellers Over 25 Years!


Selling A Business With A Month-To-Month Lease

Depending on the type of business, a month-to-month situation can be severely detrimental to the value of the business. For example, if you are the owner of a mailbox store for sale, it is unlikely a Buyer would risk buying the store without a solid long term lease. The customers renting the mailboxes are tied to that specific address. If the store is forced to relocate, many customers and thus much revenue would potentially be lost.

On the other hand, if you are the owner of a wholesale distribution business and you have no walk-in traffic, it makes no difference where the business is located. The Buyer may desire to relocate the business in which case a month-to-month situation is highly desirable.

If your business is retail and your clients are local, you may be able to relocate the business within the same area and retain most if not all of your customers - as long as they know where to find you.

There is no "one size fits all' answer or solution in business transactions. That is part of the challenge. Every business is unique as is every Buyer and every Seller. A good business broker must be a creative problem solver and must focus on making sure the Buyer and the Seller both get what they need from the transaction.

Categories: BizBen Blog Contributor, Deal And Escrow Issues, How To Sell A Business, Selling A Business

Blog Comments

Posted By: Transactional Attorney

Peter makes a great point. The more "location dependent" a business, the more a business owner should want a long-term lease. Options to renew can be very effective at finding a balance. Generally, I advise business owners to gain flexibility and mitigate lease liability exposure by negotiating a lease that has a moderate term (such as 5 years) with as many options to renew as they can get. This way, the business owner is in control of whether they are in the location for the short haul or the long haul.

Posted By: Joe Ranieri, Business Broker: LA, Orange Counties

Great posting Peter. As a previous business owner, I can share my own experience on how changing a location can drastically affect a business. I owned a liquor store and the landlord approached me to move from the center of the shopping center to the end, because they wanted to make room for a major tenant. The landlord offered to pay for the move and all tenant improvements. I moved about 10 stores down, and many of my previous customers would park in front of the old location, see I wasn't there anymore and never came back, and this really hurt my business. My advice for a retail owner is that once a customer sees you are not there anymore then they are difficult to get back. A month to month lease may work for accountants during tax season who want a visible location for people doing their taxes from February to late April or someone opening up a Halloween store, etc.

Other Related Blog Posts, Articles, And Discussions You May Be Interested In

BizBen Thursday Evening Podcast Sessions Live Sessions Podcast: Upcoming Schedule, Topics, & Panelists

The Live Sessions Podcast is held on select Thursday evenings at 7PM. This 45 minute session is comprised of questions and topics that have been emailed and texted into the Host of this podcast Peter Siegel, MBA and informative panelists: ProAdvisors, ProIntermediaries, & Special Guests.
Coin Card Laundry Business Valuations What Top Key Factors Contribute To Coin & Card Laundry Business Valuations?

We are finding that many laundry buyers and investors are not being given true light to selected elements of value or there are inconsistencies in the interpretation of these elements of value. This common error needs to be addressed. In this BizBen Discussion we address many of those factors.
Giving Buyers Tax Returns Should Sellers Of Small Businesses Give Potential Buyers Their Tax Returns?

Should small business owners/sellers or brokers/agents give potential buyers direct access to past company tax returns and financials (profit & loss statements) either before or pre the due diligence process? Multiple ProIntermediaries and ProAdvisors discuss this topic on this BizBen Discussion.
Buying A Business Losing Money Should I Buy A Small Business That is Losing Money? Brokers & Agents Discuss

When considering buying a business that is losing money one has to be very careful. There are reasons that the business could be losing money that aren't fatal or extremely difficult to fix and there are other reasons that should send you running in the other direction. ProIntermediaries discuss.
6 Untruths Told To Business Buyers 6 Possible Untruths Told To Business Buyers When Buying A Small Businesss

Even without meaning to be dishonest, sellers or brokers talking to someone who wants to buy a small business often make statements that are not true. And sometimes what is said is known to be a lie. The buyer is smart to carefully evaluate what they hear - six untrue statements sometimes told.
Due Diligence Gas Station Purchases Buying A Gas Station Business: What To Look For When Doing Due Diligence

Doing due diligence when buying any type of business is extremely important. Regardless of what type of business you are buying there are certain things you will always look at such as, financials, equipment, legal issues etc. We take a look at several angles for optimal gas station due diligence.
Are Upfront Fees Worth It In Defense Of Upfront Broker Fees: Why Owners Should Pay Brokers Upfront

Are up front fees worth it? In this BizBen Blog post Brian Loring (Business Broker) discusses the pros and cons of owners of small businesses paying business brokers and agents an upfront fee for their services. There are many sides and opinions expressed on this topic by both sellers & brokers!
Curb Appeal Selling A Business Does Curb Appeal Really Help Sell Small Businesses? Brokers & Agents Discuss

This post is essential reading for any prospective business seller. Curb appeal is critically important, not just to the amount of the final sale price, but also to whether there will be a sale at all. Top ProIntermediaries and ProAdvisors discuss this valuable topic on this Discussion.
Sellers Discretionary Cash Add Backs Add Backs: Defining Sellers Discretionary Cash When Buying A Small Business

The use of add backs & sellers discretionary cash is common among sellers of businesses when showing their financial information & explaining that the buyer will actually enjoy more profit than is shown. But buyers are cautioned to review documents closely. Peter Siegel, MBA with BizBen explains.
3 Car Wash Types To Purchase Buying A Car Wash Business: 3 Successful Types Of Car Washes To Consider

One of the most popular business searches (and eventual business purchase) on BizBen is the self serve and full service car wash. Peter Siegel, MBA (ProBuy & ProSell Programs Director) with reflects on three types of car wash models and what buyers should look for in a car wash purchase.