What You Should Know When Considering Leasing Vs. Buying Your Office Space
Leasing Vs. Buying
One major cost for a business is that
of the office space, especially for many small businesses that have limited
financial capital. Whether you should go for leasing or buying an office space
depends on various factors related to your business and resources.
We have listed the major advantages
and disadvantages of leasing and buying to help you make a decision
conveniently.
Leasing: Pros and Cons
Leasing is a very common option to
get an office space, especially for the small business owner who has limited
resources and are unable to go for the down payment for purchasing their office
space.
One of the major advantages of
leasing is that it does not involve upfront huge expenditure like a down payment.
The capital saved like this could be spent on promoting your business whether
through advertising and marketing or by getting more employees for your
business.
Another major benefit of leasing is
that it does not restrict your relocation over the years, which become quite difficult
with purchased office space. If you have not yet found the desired location for
your office, then you can settle temporarily and move afterward when you get
the ideal space.
Leasing also enables you to get an
office space in an upscale area that might be rather expansive for purchasing.
On a leased property, you are not
responsible for repairs and maintenance, rather the landlord pays for all that.
This also helps you to save quite a lot of money, especially if the [property
requires some major repairing.
The major disadvantage of getting
office space on lease is that you are unable to build up any equity in your
office space property. Moreover, with every lease renewal, there is an
unspecified increase in the leasing amount that can disturb your expense
budgeting.
Buying: Pros and Cons
The primary advantage of having your
own office space is that you can build equity in your office property and use
it as the collateral to finance your business expenses. Major expenses like
mortgage payment remains stable, unlike rent.
This makes budgeting easier by projecting future expenses. You can also rent out any part of the office space
if you have more space than required.
This will also bring some extra income
that would be spent on your business. Property owning means it can be
deprecated and so, reduces the tax liability.
The major disadvantage of buying a
property is the upfront expense of down payment. Then, in the future, if you
decide to relocate your business, you will have to face a lot of inconveniences and hassle to sell out this property, especially if the real estate market is
down.
Conclusion
By taking small but significant steps
you can make your office space expenses minimum and thus balancing a
cost-effective expenditure. Like if you are a retail store owner, try expanding
your business online. You won’t need any extra space for that.
Maybe using telecommuters can obviate
the need for a big office space for your small business.. You can also share office
space with some other small businessman that may need a similar type of office
space like yours. This will help you in cost savings and give your bottom line
a push.
Wonderful strategies. One of my friend working for a reputed business brokerage firm in US. May be California business brokers https://www.exitstrategiesgroup.com/ could some help. Business brokers can easily guide for buying and selling business.
ReplyDeleteNice article, Which you have shared here about the office space selling. Your article is very informative and useful to know more about the difference between Office Space Leasing and Buying. Thanks for sharing this article here. Buy or Sell a business in Southern California
ReplyDelete