Should You Purchase Or Rent Space For Your Small Business

purchase vs rent space small business office lease workspace

Small business owners have a lot of things to sort out when they are getting their businesses started. One of the big areas that they must pay attention to is the office space. At some point small business owners must make a decision to rent or buy office space. 

Increasing Rent 

One of the first things that you should realize when you are planning to get into a rental space is that your rent can increase once your lease is up. As a small business owner this may not be something that you can handle. When your business is still in the infancy stages it may be hard for you to take on a space with a higher lease. This is difficult when you have not reached a return on your investment point yet. This is something that must be considered. The alternative of purchasing space for your business seems more practical, but this comes with areas of concern as well. 

The Ability To A Get Loan 

You definitely do yourself the favor of eliminating stress of a rent increase if you purchase space for your business. The problem that people may face with this is that they may not be able to obtain a loan. That is going to have a lot to do with credit history. 

A large majority of people do not have the ability to purchase buildings on their own. They are typically going to need some financial backing so that is something that is worth considering when it comes to purchasing space for your small business. 

The Business That Relocates 

What you initially choose as to spot for your business may become an area that is not generating the traffic that you assumed it would. This may call for relocation to another commercial real estate in Cincinnati Ohio property. If this happens it is easier to sell the property and move on to another one than it would be to break a lease agreement. 

It is important to consider this because breaking a lease agreement results in higher costs for moving the business from one location to another. On the other hand, waiting until the lease is up and moving may be easier than trying to sell property in an area where business is not booming. It really all just depends on how long you can afford to stay at one location that is not generating the traffic that you assumed it would. If you develop a desire to move quickly, breaking a lease may be the only option you have. If you purchase the building and all of your money is tied into that building you may not be able to move until you have sold the current building. Something like this can hinder business operations altogether. From this perspective leasing is the more costly concept, but it is also the concept that allows you to continue business operations. If you have property that you own it may halt operations for longer periods of time than you may desire. 

The Chances Of Acquiring A Business Loan 

What you will ultimately find is that acquiring a business loan is going to be very difficult when you are trying to get a building for your company. It may be possible to acquire a loan to cover some of the costs of starting up a business, but getting the amount that is needed to buy an entire building is going to be difficult. That is why buying commercial real estate in Cincinnati tends to work better if you have money saved for a building. 

Shared Office Space 

One of the great alternatives that business owners will bear witness to is the concept of shared office space. Leasing an entire building can be very costly. Buying a building can also be a costly endeavor. With shared office space business owners may be able to negotiate better prices when it comes to what they are paying on the rent. They may also be able to get business rental spaces in a shared space that allows them to negotiate shorter terms for a lease. 

This type of concept is good for a business that is going to eventually expand. A business owner never knows how well the business will do in the start-up stage. Business owners that get shared office space can possibly build their return on their investments and look forward to buying a building once they have made the money to do so. 

The Great Real Estate Deal 

It will not be something that you see every day, but there are some great real estate deals that you cannot refuse to pass up. Sometimes buildings are sold at such great prices that entrepreneurs will buy property for a business that has not even been created yet. If you find the business property that you can invest in this can lead you to greater success with business operations. 

If you are renting space you are always going to count leasing as part of your operating costs. If you can find a great real estate deal for a small business property that you can fix up you will have this building purchase operating expense in the first year only. You will, however, eliminate your cost of leasing a building from your cost of operations. 

Your Long Term Business Planning 

When you are trying to figure out if leasing or buying a building is the best option you need to look at your long-term plans. You need to know if you're planning to stay in the city or state that you are currently operating your business in. It also helps to know if you plan to add more employees as the business grows. These are the types of things that play a part in helping you determine if you need to buy space. If you are buying space it helps you determine how much space you need to buy. What you will inevitably need to do is determine your future plans. You need to know if you are up for the challenge of continuously buying bigger buildings as your small business expands. 

When you are leasing these are not things that you will have to give as much concern to. You can wait out the terms of your lease and simply move to another building if you change locations or expand your business. Leasing tends to be the comfort zone for a lot of people that are uncertain of the direction that their business is going in. 

Connect With Real Estate Agents 

The best step to handling this decision comes with connecting with a real estate agent. You may discover that your best option is going to be based on what is available at the time. It is easy to get anxious about the decision of leasing or buying a building. What you may discover in your area is that the properties that are available are going to essentially make the decision for you. 

If you are trying to get your business in a prime location where there is a lot of traffic there may not be buildings for sale. All of the space in the areas that you are looking for may not be for sale. Leasing could be your only option. This cuts down on the decision-making process. Location tends to be the most important thing for the business. If prime real estate is available you should buy, but leasing if worth considering if this is your only alternative.

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