The thrill of launching a business comes hand-in-hand with a whirlwind of decisions. One of the most crucial choices that many aspiring business owners face concerns any commercial space that they may need in order to operate. Many entrepreneurs have to decide whether they want to rent a commercial property or take the plunge and purchase one.
Making the right choice requires factoring in the circumstances unique to each entrepreneurial journey. By understanding both options, entrepreneurs can be empowered to make the best choice for their business’s unique needs.
The allure of renting
Renting a commercial space can be an appealing option for startups and businesses with fluid growth projections. Commercial leases typically range between one to five years, and this gives business owner the flexibility to assess their commercial space needs once the lease is up. Suppose the current commercial space no longer aligns with the business’s unique needs; the entrepreneur has the liberty to relocate to a more fitting commercial establishment. This adaptability is invaluable for young companies still finding their footing.
Renting is alluring due to the lower upfront costs of setting up a business as compared to purchasing a commercial establishment. Even though renting a commercial space requires a security deposit, this is much lower than a down payment and hidden closing costs associated with purchasing a commercial space. Therefore, renting can allow an entrepreneur to channel their capital towards vital areas like:
- Equipment
- Inventory
- Marketing
Despite the obvious benefits of renting, this option also comes with drawbacks. Lease agreements can be restrictive, limiting the ability to customize the space. Rent increases can also pose financial challenges, and there is no opportunity to build equity in the property.
The power of ownership
While the flexibility of renting is undeniable, purchasing a commercial space can unlock unique benefits that can fuel long-term success. By gaining ownership of their commercial space, an entrepreneur earns a valuable asset whose value could appreciate over time. An entrepreneur may choose to sell their commercial property for a profit when the business outgrows it.
Owning a commercial space also gives an entrepreneur the liberty to customize the unit to suit the enterprise’s unique needs. This might involve:
- Renovations
- Painting
- Installing specialized equipment
These modifications can streamline business operations and promote better service delivery.
When deciding whether to rent or purchase a commercial space, entrepreneurs can benefit from seeking appropriate legal guidance to put things into perspective. While renting provides flexibility, entrepreneurs also have to consider that ownership may give them the power to fuel long-term success.