If you are outgrowing your current office space, or you need a new space for your business, you are probably pondering whether to purchase or lease more space. To help you make that decision, we will look at both these options’ pros and cons. Having this information will help you decide on the best choice for your business.
Purchasing Office Space
A house is a fixed asset. It can help you build equity, and you can use it as collateral when taking out a loan.
If the space you buy has extra space, you can rent it out. That will act as an additional source of income.
The cost of owning a commercial space can act as tax deductions due to the interest payments.
You have complete control over the space and get to decide how to utilize the space.
You get a fixed mortgage for every month. You will also be in the same place for a long time, suitable for a business that is looking to grow.
You can sell out the space to fund your retirement once you are done.
You will spend a lot of money when purchasing the space and even more for maintaining it.
There is a lack of flexibility, and you will incur more costs if you need to expand.
You can get a space in a prime location with a high image at a more affordable price.
Your time is spent on running and growing the business instead of the maintenance of the place.
Lease payments are tax-deductible.
Higher cash flow helps you act quickly to changes in the market. You will also have a higher ability to borrow funds.
Low initial financial commitment. You only have to pay for the deposit.
You can leave if you need to expand.
You are subject to increased rent and higher costs.
You will have no control over the use of the space.
Before settling on either, consider your cash flow and the kind of control you want over your business, along with other factors, which will help you make your decision. Look for a decision that will suit you, your employees, and your business.