Selecting premises for your business can have a significant impact on the outcomes that your company experiences, so it is certainly worth doing your research and making sure that everything is just right before committing to a location.
That’s why today, we’re exploring whether it’s better to lease or own the location from which you operate. To do so, we’ll outline three advantages and three disadvantages of owning your business premises.
Advantage: Your Location Is Secure
The main benefit that comes from owning your business premises is that your location is secure. When leasing, you’re at the whim of a landlord who may choose to raise rent, redevelop the location, or simply replace you at the end of your lease purely because they preferred someone else.
When you own, however, no one but yourself can say that it’s time to leave. If this is of major importance to you, do some research on commercial real estate for sale in your desired areas, and see whether purchasing is viable for your budget.
Advantage: You Can Do Whatever You Please
The second biggest advantage of owning the building you work out of is that you can do whatever you please with the space. As long as your desired setup doesn’t impact the integrity of the building, your fit-out can be entirely customized and changed up whenever you please (as long as you’re willing to close up shop for the renovations).
This is a major benefit for those who often have promotions or activities running that require things to be rearranged within the store. You won’t be constantly wasting time going back and forth with your real estate agency or landlord negotiating permission.
Advantage: Capital Growth Potential
When you outgrow a rented space, you simply pack up, walk away, and move on to the next location. When you outgrow premises you own, however, you have the potential to either rent it out to another business or sell it. Both of these options provide additional income potential that you would not have had access to had you simply been leasing.
Disadvantage: You Have to Be on Top of All Aspects
The main disadvantage, however, to owning your business premises is that you have to be on top of all aspects of managing the building. This means rates, utility connections (and the associated bills), waste pick up, any specialty services that are required, and more.
You could, of course, employ someone to do this, but as their wage (and many of the above-noted costs) are charges that you wouldn’t necessarily have if you were leasing, it is important to weigh up the financial pros and cons of ownership.
Disadvantage: Maintenance Is Your Responsibility
Another disadvantage of owning is that maintenance of the building is your responsibility. While leasing, you are only responsible for maintenance requirements that arise as a result of your activities within the premises. In such instances, you are generally only liable for the cost of repairs with the real estate or landlord organizing required services.
If you own the place, by contrast, any issues that arise, be they from acts of nature or as a byproduct of your occupation of the building, are entirely your responsibility.
Disadvantage: Costs Are Significant
Finally, the cost of owning your business premises is significant. If you don’t need too much space or your profitability isn’t yet stable, it could be worth looking into options such as serviced offices rather than jumping in the deep end.
Now that you’ve identified the ups and downs)of owning your business premises, it should be easier to make a decision. Happy location hunting!