So you’ve successfully started a business. Congrats! With that growth, you’ve probably found yourself needing some office space for employees. Do you lease or buy?
It’s a tough decision, right? Especially in the early stages of a company when you’re trying to make the most of your capital.
Here are some things that might help shape your decision:
How established is your business? Buying office space can be a big risk for a budding business. You’ve got to be sure that your bottom line can support an ongoing mortgage payment. Although a commercial property can create long-term wealth – think equity and leases – you’ve got to be sure that your business is stable enough to support it. A lease provides more flexibility, but little long-term return on investment.
How much can you afford to spend? Buying a commercial property will cost you more money up-front than signing a lease. So the question is this: Can you afford the expense at this stage of your company? Or do you need to season your company a little more before purchasing property?
What are your company’s growth plans? Before buying office space, think carefully about where your company is headed. Will the property you’re eyeing accommodate growth, or will you find yourself looking for more space as your employee ranks expand. Conversely, what do you do if you need to downsize your workforce. Think proactively about both scenarios and ask yourself if the flexibility of leasing is worth the drawback of not creating equity.
Hopefully that gets you thinking. If you need some more pointers, try these helpful blogs by Intuit, American Express and the U.S. Small Business Administration.