A company’s investment in the building or space where its activities will occur is substantial. This is still the case even if you run a business providing professional services and require an office.
You have two choices: buy a commercial property or lease an office space. Renting versus buying can be a significant decision that affects numerous aspects of your business going forward. Take a look at a few things to consider as you determine whether buying or leasing an office space is the best plan for your operation.
How is your business anticipated to grow in the future?
The anticipated growth is essential when deciding whether to buy or lease office space.
Leasing a small space may be fine if you operate a small business. However, leasing may be even more feasible if you expect to add more employees and need more room eventually. It is often more financially logical to lease in the beginning and consider buying once growth has stabilized and you are more confident about what kind of space you will need.
How likely is it that a specific location will be an ideal permanent setting?
One of the biggest reasons businesses relocate is to access customers. Therefore, consider your current customer base and how or if that could change shortly. Relocating your business after you have purchased the office you are using can be more time-consuming and challenging than simply allowing a lease to expire and finding a new place in a new location. If you are sure the area will be an excellent permanent base for your operation, buying may be a more feasible option.
Does your business have the funds to handle property maintenance?
One major perk of leasing office space for businesses with limited cash flow is that property maintenance is often not the tenant’s responsibility. For example, if you lease an office building, the property owner will likely be financially responsible for repairs. However, if you buy that building, those costs will be your responsibility. If your business has a steady cash flow and room in the budget to maintain the property, purchasing an office space could be a viable option.
Can you obtain financing for the investment?
Obtaining financing to purchase real estate that will be used for business purposes comes with its own challenges. Lenders often want to see the following:
- Stable business finances
- Healthy personal finances
- Sustainable business plans
- Property that can hold its value as collateral for the loan
Many small businesses start out leasing a property because obtaining commercial financing can be challenging. Therefore, if you are just getting started, leasing a property until the company is more financially stable may be the only option unless you have private funds.
Get Expert Help with Your Business Relocation Plans
Moving a company requires extensive preparation and the coordination of many moving parts. Therefore, enlisting the aid of an experienced business relocation company can be a critical step in providing support.
Are you looking to discuss your upcoming relocation plans? Then, contact our team to get started.