When you are building a successful company, you’ll have many difficult choices to make. One of the first things you’ll need to decide is where to locate your business. Choosing the right location can make a huge impact on the future growth of your company.
But along with choosing the location itself, you’ll also need to decide whether to buy or lease your commercial space. Here are some things to consider before you make your decision.
Leasing a Property for Your Business
There are pros and cons of leasing your commercial space.
One of the most important benefits of leasing a property for your business is that it is simply easier to qualify for a lease than it is to buy a property.
If you are a new business then you may have limited capital, cash flow and creditworthiness, making it difficult to qualify for a mortgage. Most new small businesses lease their property for the first few years or more.
Another benefit of leasing is that you are not locked into that property long term. If the location ends up being a problem, you’re only locked in for the term of your lease and can move to a better spot later.
Drawbacks of leasing are that the owner can raise rent every time you go to renew your lease. They can also choose not to renew your lease, leaving your business without a home base.
Buying a Property for your Business
As with leasing, there are also pros and cons of buying a commercial space for your business.
The major benefit of owning is that you have complete freedom over that property. If you want to knock out a wall and expand, do it. If you want to repaint inside and out, do it. If you only need half the property now and want to rent out the other half, do it.
You can also borrow against your equity in the property to improve cash flow or expand your business, if needed.
And if you outgrow the property completely, you can sell – hopefully at a profit – and have plenty of cash to invest back into a new property or into another aspect of your company.
Disadvantages of buying are that it ties up a lot of your capital in equity, and you also are locked into a long-term mortgage. You’ll need strong cash flow and stability to make this option work to your advantage.
Also, if you purchase in an economically depressed area, selling can be difficult. You could even have to take a loss, just to unlock your equity for other purposes.
If you’re looking for a location for your business – either as a startup or as an expanding company – contact Bold Growth Solutions today and explore financing options to help you secure the best location for your business.