Growing businesses will, at some stage, need to answer the question as to whether they are going to lease or buy their office space. There are pros and cons of both. The business owner will need to take everything into consideration and weigh up the pros and cons of leasing out their office space.
Here we look at the pros for leasing:
You can stay agile
When it comes to your business, it can be a good option to lease. Business owners cannot predict what their company growth is going to be in the next five to ten years. If your company goes through rapid growth, the flexibility of renting will mean that you can easily move to a bigger space to suit your needs. Retail leasing can give you more choice for desirable locations and property spaces for your company, especially if you are still establishing the image. Having shared office spaces can work out well for those who are starting out and trying to grow their business. If you are happy to work right next to like-minded people, of course!
Leasing an office space will provide the business with a chance to rent in places that have a high image. If you are dependent on an image like retail and restaurants, then going with a leasing option is going to be more affordable.
Free up the working capital
Seeing as your money is not tied up among real estate, you can respond to opportunities that may arise in the market. The ability to borrow money won’t be as limited as it is when buying an office space.
You get more time
Ownership of anything is kind of synonymous with headaches. If you go with a leasing option, then you are going to have more time that you can focus on running the business.
What are the cons of leasing your business space?
Less equity and control
One downside of leasing your business space is the variable costs and missing out on having any equity. Being a renter means you won’t have much control over the place, and you are subject to rent increases which are contributing to the landlord’s equity instead of your own assets. If the owner decides to sell the property, you may only have a short time to find something else and move your stuff.
Whether you are going to lease or buy it is important to understand completely what your business needs are and what the company can afford. If your business is rapidly growing then buying a company won’t be the best option. It may not be long until you need to resell and buy something bigger.
There is no straight answer for whether you should buy or lease. Your decision needs to be determined by affordability, space, personal issues and tax. As you go through the decision process, you need a financial planner and accountant that will guide you through the process and give you the right advice for the current situation.
Once you have found the selected office space, then you can consider creating a mobile office so you can work from anywhere that you want. You can still have a primary business space but having a mobile office too can be a great way for you to stay in the game even when you go on holidays.