There comes a time for many business owners when they have to decide whether to buy or lease their business premises. There are pros and cons for each option, and more often than not, the right decision depends on the unique circumstances of the business owner. Here are four key questions every business owner should ask themself when they’re considering buying a commercial property to base their business.
1. Is the property’s location suitable for business operations?
Depending on the type of business you’re operating, you need to consider foot traffic, proximity to other business establishments and accessibility to transport infrastructure. A manufacturing/industrial building requires different location criteria compared to a medical clinic, but most properties will need to be located near clients and/or related businesses. While the location may not be the only factor that will affect your business growth, it plays an important role
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2. Can your business afford the property?
It’s always tempting to imagine that future tenants will pay for your mortgage, but there’s no sense in buying a commercial property if it is clearly out of your financial reach: Large commercial properties cost a fortune to acquire and maintain. The risks are higher if you plan on leasing out commercial space to other businesses as they could encounter financial stress. As an entrepreneur growing their business, you should ask yourself if investing in commercial property is more wise than allocating capital for growing your business..
3. Who will be responsible for the property management?
As a business owner, you need to check whether you have the knowledge and capacity to manage and maintain the property while also finding the time to run your own business. Its
impossible to be the plumber, electrician or IT expert to your tenant while you’re busy or at a meeting with your clients. While you can delegate this responsibility to a property management company, you must be
aware of the costs involved and whether the team you hire is trustworthy. Alternatively, you may find yourself spending valuable time learning about the world of property management, hiring and managing staff, dealing with tenants and amenities — and you may find you have less time to manage your business.
4. How difficult will it be to relocate or expand?
As a business owner, even if you think the location you’ve chosen is the best in the area, it’s still possible that things won’t work out in the future. Consider what would happen if a competitor suddenly barges in and you lose some of your clients or if the property decreases in value. You should also ascertain if the location has enough space to accommodate growth of the business, because the process of relocating your business away from the commercial property you’ve purchased will be tedious and expensive.