Business works on the principal of taking the right decisions at the right time. This is the crucial task as the profits and business prospects are completely dependent on such decisions. The most important part of a business is the work premises. It can either be rented or owned but should you rent it or own it is the question. There are many types of impact that happen in the business when you have a rented or an owned property.
So, it is important to decide whether to buy or rent a commercial property. Let us look at the right approach to this decision.
Clear Your Business Plans
You need to be clear about your business plans so that the right premise can be chosen for the business operations. If your business is in a metro city, then the place is not a concern as you have a wide variety of options available and your business may also flourish depending on the location of your workplace. If the business is in a non-metro city, then options are less as business premises care not easily available. So, you can look at the long-term prospects and then decide whether you need to buy or rent a commercial property.
Benefits of an owned property vs rented
When you have a property, which is owned by your business, you can make the changes as desired. There is a complete control on the way you would like to fit things in the vicinity. However, you will need to follow the rules and regulations as per the laws so that there is no trouble in the paradise. But with the rented property you have owner restrictions which can impact your decisions to run the business and use the workspace as per your needs. In an owned property, you have full right over everything in the property. You are neither answerable to anyone nor have to think twice before anything you do in the property. You are the king.
On the other hand, if it is a rented property, you are question for every action; you are bonded by certain terms and conditions and give you a feeling of being trapped. You never feel at peace when you have a rented property.
Owning a Property
It is always better if you own a property. It raises your financial stability and helps you to look at things in longevity. This can build an equity in your business and paint a better picture for your business. It can also have tax benefits of you own a property and lease it for returns on investments. It can also help you in times of financial crisis to pay the creditors. It can also pose as a personal property when you purchase it from the business profits. All these can be a tax saving component if planned well with the right knowledge from the tax experts or chartered accountants.
If your property is in the prime location, it will fetch you good returns in the times to come. It will have a great appreciation value and if the property is purchased at a lesser value then the returns are huge. If the land is also owned by your business, then it has a humungous impact on your business profits as you can expand as and when required with the right permissions from the law. This way a new building or an office can be set up within no time and without worrying about renting it.
If your business is not dependent on the premises, then you can surely look at the better prospects of not investing in a property. You can find a rented office or commercial premises which can save you the rent cost and can be left without any hassle. You need not create any property within office like furniture or fixtures so that moving is easy. This will also give you an upper hand on free and liquid cash to use in the business and earn more profits from it. Working capital is important for any business to function.
Owning a business property can also help you to mortgage it at times when you need cash urgently for business purposes. It needs personal guarantee which can be the office premises without any doubt. You can purchase a property when your business is at its peak and make your future secure so that at times when the money is needed the assets can be liquidated. All such things matter the most when you are in debt and need to get out of it to make a fruitful future for you and the business. So, analyze all the above parameters before you decide to buy or rent a commercial property.
With all the pros and cons considered properly, one can take the decision that will be more beneficial from all aspects. It differs from one person to another whether commercial property should be owned or rented.