There comes a time in the lifespan of every small business when it transforms from idea to reality, concept to execution, and from digital to physical. This last transformation occurs when you secure physical office space for your business – its “home,” if you will. This is a big step, as it establishes your company in the offline world. “I have arrived,” it tells your customers, “and I am here to stay!”
However, before you can take that step, there is one key decision which you must make:
Should you rent a space for your business, or should you buy one outright?
While both options have their pros and cons, ultimately, buying business space is the superior choice. It is a long-term, stable investment that lacks the uncertainties which come with renting or leasing. In addition, you are in control of your own property without having to concern yourself with the ever-changing whims of a landlord.
Here are the five biggest advantages to purchasing your own office space instead of leasing:
It’s an unfortunate truth: people are fickle and ever-changing. When renting a space, you may initially think you’ve secured the deal of the century only to find rent prices rising yearly or even monthly. Rent changes, and those changes will almost certainly not be in your favor.
However, if you purchase your own property, costs such as mortgage and property tax will remain stable and allow you to create a long-term budget plan. You can structure your mortgage in a way which ensures you will always know exactly how much you have to pay and when it is due. Building maintenance and improvement can be scheduled for times when you have the money to afford it. You’ll never find yourself short on cash when you desperately need it due to another person’s unpredictable whims.
Control Over Space
This leads to the second advantage of buying office space: control. Renting comes with rules; landlords often limit what you are allowed to change about the space. You might find yourself stuck with peeling wallpaper, ugly carpeting, or a horribly clashing color scheme. Even worse, you are beholden to the landlord’s chosen maintenance schedule. A flickering light or squeaky door might take months to get repaired, or a strange smell in the bathrooms might linger for a year.
Owning your own space grants you control over decoration, organization, and layout. You will feel more secure investing in attractive, long-lasting, high-quality furniture, larger pieces of technology such as desktop computers and printers, or other purchases which can improve your customers’ experience when visiting your office. You can create a safe, comfortable office space which employees will genuinely enjoy working in and customers will love visiting.
Able to Make Permanent Improvements
In addition, the improvements you make to your own space can go far beyond merely purchasing furniture. You can upgrade the building in permanent ways which can make it safer, more comfortable, and more environmentally friendly. As a bonus, these improvements will cause the value of the building and property to appreciate if you choose to sell it in the future.
Examples of this include installing energy-efficient light bulbs or an HVAC system to keep the entire office building clean. You can also hire cleaning staff and perform needed maintenance who work according to your schedule. As long as you follow local zoning laws, you could even engage in bigger projects such as expanding the available parking space or adding a comfortable new lobby area.
Alternate Income Opportunities
When buying business space, it is possible that you may be unable to find the perfectly sized building for your small business. There might be a few empty rooms which you simply don’t have a use for. However, this too can be turned into an advantage. First and foremost, you’ll have more space for your company to “grow into” if you decide to expand in the future.
For the time being, though, it’s the perfect opportunity to earn some extra money by becoming a landlord yourself! Try renting out unused office space to other small businesses and putting the money towards future building improvements or company expansions. One option is to rent to businesses which can directly benefit yours, such as an advertising firm you could hire to create new branded material. Alternately, you could improve workplace culture by renting to a restaurant or coffee shop which could provide your employees with delicious meals or snacks during the workday!
Improving Your Financial Profile
Lastly, purchasing office space represents a solid long-term investment for yourself and your business. Initially, this may not seem to be the case as you lack the ability to make immediate tax deductions as you can with rent payments. However, tax-deductible payments will occur over time, including but not limited to mortgage interest and property tax. In the long term, you will actually save more money purchasing a building than you would leasing space from a landlord.
Additionally, your property ownership will help you develop a positive financial profile and a reputation as a savvy investor. You will gain equity over time which in turn can be used as collateral towards loans or help you attract investment partners when it comes time to expand your business. Plus, property values often appreciate over time, and a piece of owned property is an asset which you will eventually be able to sell should your business outgrow it entirely – or, if the space remains perfectly sized, perhaps when you retire!
Choosing to purchase office space for your company is a big decision. It can be especially difficult in the short term, as renting may seem like an attractive method of saving a few dollars. However, when you take a long term view, the advantages of buying over renting quickly become apparent. An owned building is a valuable resource which can benefit yourself, your employees and your customers in so many ways.
Michael Deane is a marketing manager at ThorDuct. When not blogging (or working), he can usually be spotted on the track, doing his laps, or with his nose deep in the latest John Grisham.