Deciding whether to Buy or Rent Office Space?
If you’re looking at offices to let and are wondering if now is a good time to take the plunge and move out of your home office, and whether it is preferable to rent or buy office space, you should first consider the following factors:
• Do you know you have the resources necessary? A good way to be able to tell if you’re ready to rent office space is to research how much the space you need will cost per month, and then work that amount into your budget. If you find you can afford it and still be making a profit over a period of 4-6 months, chances are good you’re ready to rent office space.
• Is your business still small and likely to grow? If your business is still in its early stages, it is almost always a good idea to rent rather than buy office space. Young businesses are in a constant state of change, and if you find your business is becoming successful, you are sure to need to expand at some time in the not-too-distant future. Obviously, you don’t want to do something as serious as buy office space (particularly in a small building, such a converted duplex), just to find you need to expand six months later.
• Are you short on capital? Buying office space requires a great deal of up-front capital, whereas renting office space only requires a modest deposit. If it would be too risky for your business to come up with a large sum of funds and commit to a property, you definitely ought to stick with renting for a while.
• Are you short on time? Most small business owners are already extremely pinched for time, and if you fall into this category, you will almost surely find leasing office space more agreeable. Buying any kind of property comes with more paperwork and complications to deal with, whereas renting is usually fairly simple, meaning that you won’t lose out on time to focus on what really matters: Your business.
When to buy office space:
If you have been leasing for a while and feel your business is not going to substantially grow in terms of its office space needs, you may wish to consider buying office space as this will lock it in at a fixed rates (whereas renting rates can and do vary over time). You’ll need to have the substantial capital investment required, and be fairly certain about the future of your business before taking on such a large commitment. There are also other tax efficient ways of acquiring commercial properties such as through pension schemes.