Over the last few years, the improving economy has likely been a boon to millions of small businesses across the country, but something these conditions have also done is potentially make it harder for some to stay in their current locations. That’s because many property owners have taken advantage of the more robust markets in their areas by raising rents, which can obviously present problems for many established businesses.
In some parts of the country, rents for commercial spaces may have gone up as much as 100 percent or more, meaning that it’s now far more costly for the small businesses that may occupy them to pay those crucial bills each month, according to a report from Denver television station KDVR. That can pose many problems for small businesses, especially if they can’t afford to cover those increased costs. Given how thin the margins on which many such companies operate are – and have been – to begin with, doubling or tripling any sort of cost is likely to pose major problems.
What else is happening?
When these rents rise, small business owners are typically faced with two choices: They can either relocate to another part of town, or simply close up shop, the report said. And unfortunately, it seems that many are choosing the latter tack, simply because if rents are rising in one part of a given area, they’re likely doing so elsewhere as well. Further, the expense of moving an entire operation could likewise be prohibitive for these companies.
“Properties in Denver have been bought up by the pot initiative,” Wolf Thye, an entrepreneur whose hobby shop is doing better than it has in years but is still being forced to close, told the station. “It has caused the small businesses that were in Denver to move out of Denver metro into the suburbs to try to find affordable rental properties.”
Beyond that, even if owners do want to move their companies, the conditions that new landlords are now able to seek because of growing demand may be difficult for many companies to meet, the report said. That, then, may rule out this option for a large number of entrepreneurs.
Owners who want to save as much money as possible to deal with potentially rising prices may want to consider the benefits of finding more affordable small business insurance. Cutting costs for liability insurance, for instance, could free up thousands of dollars annually that can then be devoted to other expenses.