Moving into your first premise or even to a completely new space, can be both exciting and overwhelming. There are always important decisions to be made with any type of relocation. One of the most important is the choice between buying and leasing. Buying is often more long term and therefore offers more stability, while on the other side, leasing is more flexible and can easily shift with your business growth.
Buying is often seen as a more stable option, however this doesn’t mean it’s necessarily the right option for every business. A business firstly needs to be comfortable and steady before any purchase is undergone. Often, purchasing a commercial property is most ideal for long running businesses, businesses with large capital and businesses that are confident about where they are heading. By fitting this rough criteria, it ensures that the business will most likely be comfortable in their new space for a long period, if not permanently.
The most common reason why buying would be the more suitable alternative to leasing is the desire to invest in property. Doing this brings with it many benefits such as gaining a valuable asset, avoiding rent increases, avoiding lease expiry and also no landlord issues or requirements.
As mentioned previously, there are pros and cons to both leasing and buying. On the positive side of leasing some of the benefits are financial, growth and/or stability focused.
If a business is new and still finding its feet, then it is the most sensible move to choose to lease a property. If there is likely to be rapid growth over the coming years, then this may be the right choice. An example of this would be, if a business purchases a property & then within 1-2 years has doubled its staff/ machinery, they will most likely be in the position where they are needing to relocate to a larger premise as soon as possible. Selling and purchasing a bigger property wouldn’t be the most efficient process and it would be much more ideal to lease and then be able to adapt their premises to their growth as often as needed.
Another positive to leasing is that there is less overall risk involved, especially from a financial perspective. A start-up or small business will most likely be unable to buy in the first place, but if they are lucky enough to be able to their funds may be severely limited after this. Without a large amount of capital to invest this is an extremely risky move to make. Unforeseen business expenses could arise leaving the new property owners in a tight spot, potentially having to sell. Ultimately for a small, new or high growth business, leasing is the ideal property solution.
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