Connect with us

Strategy

The ‘Fleece’ Agreement

Don’t underestimate the impact a lease agreement can have on your business. It can ruin you if you’re not adequately protected.

Miles Khubeka

Published

on

Wolf-in-sheeps-clothing-lease-agreement

No matter what business you are in, soon enough you will be faced with signing a lease agreement. I call it the ‘fleece agreement’ because, well, that’s what it really is.

So, if you don’t like getting fleeced, I highly recommend that you stay as far as possible from signing your first lease agreement. Work out of coffee shops, your mom’s house or from your family’s garage before you take up a lease.

Don’t do it, man! I know the lure of a corner glass office or a big factory with your name on is enticing, but that’s fool’s gold. Go as long as you can before stepping into the trap. Once you are in, you are in for the long run. Lease agreements typically range from two years to ten years, and sometimes even longer.

On a side note, if ever there was an industry ripe for disruption, it is this space. Coffee shops and business hubs started making a dent by offering flexible working environments, but I think we need an Uber or an Airbnb of retail and commercial rentals. I would cherish the ability to have flexible or pay-per-use commercial space. Or at the very least, bi-annual lease agreements, depending on the commercial space or industry requirement.

Related: Understanding the Terms of Agreement

I would pay a premium to have this flexibility. So there, never say I didn’t give you any business ideas. Here is a legitimate business problem, and I have given you a solution. Go make this business happen now. Go now. Don’t even bother reading the rest of this article. I would do it myself, but my plate is a tad full at the moment.

Find an advantage

Okay, so to the person still reading this, I assume you have gotten to the point where you do have to sign a fleece agreement. Here is my advice as to how to get shafted as little as possible.

First, get a lawyer to review your contract. This is an expensive exercise, but trust me, it will save you much more in the long run. Once signed, landlords have made these bulletproof over the last number of years, so there will be no renegotiating or opting out. Basically, every time a tenant manages to worm out of a lease due to a loophole, the contracts going forward add a new sub-section clause that closes that particular gap.

It’s very rare to find a landlord willing to change a contract.

What you need your lawyer to do is add clauses that may protect your business. For example, if you’re opening a stationary shop in a mall, ask your lawyer to add an exclusivity clause making you the only stationary shop in that location.

Playing-it-smart-contract-signing

Play it smart

Do not sign surety, if you can, but I doubt that you will win that one. And, if you can, I suggest you sign as short a lease as possible. This allows you to get out sooner, should your business not work.

The downside is that, should your business actually work, the landlord will have the power when renewing the lease. However, you can get your lawyer to put a ‘first right to renew’ clause at the next-year escalation rate.

Another thing to be aware of is that most lease agreements want at least three months’ deposit to sit in a trust. This will obliterate your cash flow and have an impact on your shop fillings. I suggest trying to get your lawyer to push for a long ‘beneficial occupation’, which gives you time to shop fit your space without paying rent.

Then fit your shop as quickly as possible and open a month earlier, giving you one full month’s worth of trade without paying rent.

Related: What You Must Look Out For When Signing a Commercial Lease

Key Learnings

  • Avoid a lease agreement as long as you can.
  • Don’t sign long-term leases.
  • Don’t sign surety, if you can.
  • Demand exclusivity in your lease.
  • Watch out for that expensive three-month deposit.
  • Negotiate for ‘beneficial occupation’ and use it smartly.

Miles Kubheka is a trailblazing public speaker, Vuyopreneur and gastronomist. He is the founder, owner, and believer behind the renowned Vuyo’s brand.

Advertisement
Comments

Strategy

4 Ways To Find Your Own Business Style

The only way to develop a business style is step-by-step over time.

Timothy Sykes

Published

on

business-style

Finding a style in finance will define how you react to changes and how you approach new situations. It’s as important in business as it is in stock trading. Developing a business style and developing a stock trading system are extremely similar pursuits.

But I’m not going to pretend that it’s easy to do. It will take time and you do have to be willing to work at it.

Here are my four ways of finding your own business style.

1. Get rid of your expectations

You can’t force anything to work. It’s necessary for you to be flexible when it comes to finding a business style. Begin by letting go of any expectations you have before trying a new style.

Prior to attempting a new style, you have to be willing to go into it with no expectations. You never know what you’re going to find.

Related: 8 Steps to Building Your Business According to the Lifestyle You Want

2. Track your movements

Some things are going to work and some things aren’t going to work. I always tell my students in the Tim Sykes Millionaire Challenge that they should keep records of the things they’re doing. Keep these records as detailed as possible because attempting trial and error can quickly lead you in circles.

Don’t fall into the trap (as I did in the beginning) of trying the same thing multiple times because you never tracked the results.

I keep large spreadsheets with notes of the various styles and systems I’ve tried in business. Business mistakes can be costly, so you need to do everything you can to avoid making them.

3. Look at what others are doing

business-options

I refuse to believe that someone is doing something truly unique. The moment someone makes a breakthrough in business there are a hundred people replicating the same things. And that can be a powerful tool. Consider what others are doing and see whether you can learn something.

It’s why I also advocate finding a mentor to help you out. They’ll be able to help you out and you’ll benefit from their enhanced experiences in business.

Again, track what you’re taking from other people so you know whether something is working.

Related: I Started Saying ‘No’ To These 6 Things. My Life And My Business Got A Lot Better

4. Refine what you do

Rarely will anything in business work the first time. However, your first attempts will give you a good benchmark as to what you need to do next.

You should never be satisfied with what you have, even if it’s working. Always work on improving your business style. I believe this is the most important thing because it also teaches you how to adapt to changing conditions over time.

Last Word – Constantly Growing

There’s no step-by-step guide for how to develop a business style. The only way to do it is to obey the fundamentals and then develop everything over time.

Even though the process is long, you’re guaranteed to learn a lot of lessons and gain from a huge number of experiences over time.

This article was originally posted here on Entrepreneur.com.

Continue Reading

Strategy

6 Questions You Should Be Asking When Coaching

Top athletes have coaches because they’re winners. Business leaders should be the same.

Nadine Todd

Published

on

Dr Marshall Goldsmith

Whether you’re a CEO looking for a mentor, coaching your management team, or structuring a coaching programme for your managers to implement, there are six questions that can help anyone get better at anything.

The expert

Dr Marshall Goldsmith is a best-selling author and world-renowned business educator and coach. He has coached top CEOs, including Alan Mulally, former President and CEO of Ford Motor Company.

The key to a successful coaching programme is simple dialogue and establishing responsibility. The person being coached must understand and agree that success lies in their hands. They must take responsibility for their actions.

Related: How Business Coaching Can Help You Achieve Your Goals

The method

Once every few months, have a direct coaching session. Ask (or answer for yourself) these six questions:

  1. Where are we going?
  2. Where are you going?
  3. What are you doing well?
  4. Do you have suggestions for my improvement?
  5. How can I help you?
  6. So you have suggestions for me?

Continue Reading

Strategy

4 Ways To Develop The Leaders You’ll Need In The Future

One of the most challenging aspects of leadership development is consistently and effectively identifying the next wave of leaders.

Published

on

leadership

One of the most challenging aspects of leadership development is consistently and effectively identifying the next wave of leaders.

It can be easy for those at the top to forget that eventually someone will have to take their place at the helm. And ignoring that fact has lead to issues with succession planning, unwanted turnover and other challenges in leadership development in many organisations.

2016 High Impact Leadership research from Bersin by Deloitte asked 2,422 HR and business leaders from around the world how well they believed they could discover new leadership talent. Just 35 percent of respondents said they were above average when it came to successfully identifying and developing leaders.

To understand why this is, consider the typical leadership development paradox. Traditionally, the first step is to choose who has leadership potential, then develop their skillset. Logically, however, this makes little sense.

How is it possible to identify effective leaders if employees have yet to receive any type of leadership development?

Here are four ways to properly identify better qualified candidates for leadership positions:

1Stop choosing potential leaders based on unrelated skills

Gallup’s 2015 State of the American Manager Report, which studied 2.5 million manager-led teams in 195 countries, found that the top two reasons employees are promoted to management positions are because they were successful in a non-managerial role or because of their tenure with the company. Neither of those criteria have any proven correlation with leadership skills or relevant experience.

Create a better means of measuring for true leadership potential. Look at the culture of the organisation and envision what it would look like for someone to lead by those values.

Also consider how successful leaders evolved over time in the organisation. Then use that information to make a list of recognisable traits to look for as signs of leadership potential.

2Broaden leadership development to more employees

People learn and grow at their own unique pace. Requiring that an employee reach a certain position or be with the company for a certain number of years before they’re offered leadership opportunities holds back those who might be ready for more responsibility now. Or even worse, it might push those who aren’t yet ready into leadership roles.

Instead, let leadership development be a company-wide initiative. This gives more people the chance to take the next step in their career. It also creates a larger pool of possible great leaders to draw from across the organisation.

3Track progress and growth

Track progress and growth

There’s no way of knowing who is ready to step up and lead unless development is monitored. Remember that this is a process. Employees need feedback from their mentors and coaches to know for certain what skills they’ve mastered as well as where there can still be improvements made.

Develop a way to assess progress for different leadership positions, and be clear with employees and coaches about what success would look like in different situations. For instance, explain what is expected of a first time project leader.

Get everyone on the same page about the developing leader’s responsibilities and how that should guide their team.

Then collect thorough feedback from all those involved. Ask the leadership candidate what challenges they faced as well as where they think they thrived. Pose the same questions to those they supervised and organisational mentors.

Over time, this will reveal patterns that make it easier to identify who is best suited for leadership in the long-term.

4Focus on continual leadership development

There is no such thing as too much experience. There is always more that can be learned. After leadership candidates have been identified, continue to nurture them. This keeps employees from feeling that they have plateaued, which is unfortunately common.

The 2014 Insigniam Middle Management Survey: Middle Management’s Critical Role In Saving Company Innovation looked at responses from 200 middle managers from around the world. It found that only 15 percent of managers believe they will ever be promoted to the next level of leadership at their company.

Whether intentionally or not, employees who have proven their leadership abilities are being told that their leadership journey is over – and this hurts both them and the organisation. Encourage a steady stream of highly trained and skilled leaders working their way up by demonstrating that there is no end to development.

In order to clearly see who the next wave of leaders is going to be, employees need to be given the chance to hone and exercise their skills.

That means redefining how leadership potential is identified and providing each employee with the chance to develop personally and professionally.

This article was originally posted here on Entrepreneur.com.

Continue Reading

Trending

FREE E-BOOK: How to Build an Entrepreneurial Mindset

Sign up now for Entrepreneur's Daily Newsletters to Download​​