If your business is rapidly expanding, you may be considering some low-cost strategies for expanding your operations. Should you construct your structure or rent one? Where can you find the best commercial office space for your requirements?
You are having difficulty deciding what to do because you do not have a good understanding of the reasons for your expansion. Everything is influenced by the nature of your business and the reasons for your desire to expand it. When you have a clear understanding of why you want to expand, it is easy to examine each option and obtain a detailed rundown of the steps involved.
Determine why you want to expand your business first, as this will help you determine how much space you will require; then, get an estimate of the costs associated with each alternative. Once you’ve determined the reason(s) for your desire(s) to grow your business further, you’ll be in a much better position to decide how to expand it.
A Simple Workaround
If all you need is an additional warehouse for your inventory or to expand the workforce for your cottage industry business, you may not need to rent or buy a commercial building at all. Purchasing a commercial steel building will be much simpler and less expensive than purchasing other types of buildings.
When compared to the cost of purchasing or leasing a building for several years, the cost per square foot of a steel building is quite reasonable. A commercial steel building can cost between $16 and $20 per square foot on average, making it one of the most cost-effective types of commercial construction. This price includes the cost of girts, purlins, I-beams, and other structural components. This price also includes the cost of delivery, the cost of the foundation, and the cost of construction.
If, on the other hand, you require a company for a more involved purpose that necessitates the use of a traditional brick-and-mortar building, such as a casino or a grocery store, the following are some factors to consider when deciding whether to buy or lease the property.
When Should You Make a Purchase?
You Should Consider Purchasing a Building if the Following Conditions Apply
- If you want to retain control of the property. If you are building a motel, for example, you may need the freedom to experiment with new ideas. It is possible that in the not-too-distant future, additional rooms or a swimming pool will be required. Signing a lease will be prohibitively restrictive if you intend to expand your business to the point where you will require more space on the property.
- If the benefits of lower long-term costs are important to your company. Perhaps you’re considering starting a business that will only grow in value over time. You are considering investing in this scenario, and it is in your best interest to avoid foregoing the profit premium that would be earned by paying a landlord.
- If the location of your business is critical to you, buying the building is the better financial decision. Some businesses are acutely aware of their physical surroundings. A gas station, for example, must be located in an area with a high concentration of passing vehicles so that people can easily see it.
- If you are unable to find a building to lease in the desired location and for the desired purpose, you may be forced to purchase one instead.
- If you live in an area where land values are consistently rising, investing in real estate could be a wise financial move for you.
- If buying a home will result in a significant reduction in the amount of taxes you owe. Renting out a property does not qualify for a tax deduction; however, purchasing a property does.
When Is It Time to Lease?
If Any of the Following Situations Apply to You, You Should Consider Leasing a Building
- If you do not have enough cash flow to purchase a home. If you’ve only been in business for a few years and don’t want to tie up a large portion of the cash you’ll need to cover your overhead costs, this may be the best option for you. It would be most convenient in this case for you to pay both the security deposit and the first month’s rent at the same time. When purchasing a commercial property, you must provide either a down payment on the mortgage or the total amount required to pay for the property all at once.
- If you do not have the necessary resources, such as time or money, to perform maintenance.
- If you only intend to run a business for a few years before retiring, and your company’s success is not dependent on its physical location. You might be interested in running a gift shop for a couple of years but have no plans to make it a long-term business.
- If your company has a low credit rating that prevents you from getting a mortgage, leasing is your only option. Consider commercial leasing if this is the case.
- If you are thinking about making a purchase shortly but are not quite ready to leap. Perhaps you are concerned about how well the company will perform in the future. You may live in an area where real estate values are declining. You might also be waiting for better properties to be developed closer to your target market. This could be an additional option.
- Determine your specific needs, wants, and desires.
- When you know exactly what you want your company to accomplish, the question of how you will grow your company becomes much easier to answer.
- Should the only additional space you require be for storage or working, it may be easier for you to purchase a commercial steel building.
- If you want to start a long-term business, you should probably buy rather than lease.
- If you are only concerned with having low initial costs, leasing is an excellent option to consider.