Should You Sign a Contract or Go Month to Month?

As a business owner, there are many major decisions for you to consider. One such decision is what method of leasing is best for your business. There are a variety of options available, but to keep it simple you should weigh the implications of either a long-term contract or a month to month plan. Carefully consider your business and which type of lease would best benefit you.

Office Space

When determining the best method for renting an office space, there is a lot to consider. On the one hand, according to Rocket Lawyer, month-to-month leases can be very beneficial if you’re looking for flexibility. Since these types of leases often automatically renew each month you can stay as long as you need to. However, you should keep in mind that a landlord can ask you to leave with very short notice and this can throw off your plans. On the other hand, signing a lease contract for an extended period of time can have its own benefits. You have more stability and dependability because you know exactly how long your lease will last. You can also lock in your payment without the risk of your landlord raising it. However, a longer lease means a long-term commitment. You never know what could come up and change your plans. As you consider what type of lease to pursue, think about your business. Is it more flexible or more stable? Your business type can help indicate the best option for you.

Utilities

The cost of utilities can often be difficult to calculate as it depends on your usage. While you could go back and forth about what type of lease would make the most financial sense, there’s a clear option. You should keep your utilities consistent with how you lease your office space. For obvious reasons, you couldn’t do long-term leasing on utilities if you’re in a month to month lease for your office. On the flip side, you technically could do month to month utilities if in a long-term lease for your office, but does that make the most sense? Signing a contract for your utilities just makes sense. For example, with a month to month plan you run the risk of your rate being increased with little notice. According to Texas Electric Broker, one way to prevent future rate increases is to lock in a rate now. Sign a contract that will guarantee you an agreeable rate. As you are considering the best options for your utilities, you should also take the time to shop around for different prices before settling.

Equipment

Depending on your type of business, you may need equipment or machines for your operations. Equipment can be expensive both to own and maintain. Not to mention, many machines and other equipment are constantly being updated and your needs may change. Owning your own machines just doesn’t make much financial sense. According to Kabbage, choosing to lease equipment is a wiser option. Now, while other types of leases are dependent on many factors, opting for month to month leasing is probably a good option for equipment. Your needs for equipment may change as your business grows and, as mentioned, machines are updated frequently. Having a month to month lease allows you the flexibility to make changes whenever you need to.

As you can see, leasing options are largely dependent on your type of business. Do you expect to be in the same situation for an extended period of time or do you expect your business will change and grow over time? Understanding your own expectations can be very helpful as you determine whether or not you should sign a long-term contract or month to month.

Read this next: 3 Habits of a Successful Business Owner

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