In our last small business blog, we outlined the pros and cons of owning your own space. That's only half of the picture. The other side of that coin is leasing. If flexibility is what you want, leasing may be your best options.
As you read through these points, remember you have to make your decision based on the benefits of your business and the market conditions. Every small business faces it's own challenges that deserve careful thought. There is no benefit to making a hasty decision.
Pros of Leasing.
- Flexibility - You have the option to change locations without having to worry about selling the property.
- Prime Property - You can rent in an area with a good location, specific reputation and high image at a lesser cost than buying in that area. It’s much more affordable for businesses who are dependent on image and location.
- Free Up Working Capital - With your money not tied up in your property, you have more money to allocate to other business opportunities.
- Free Up Your Time - Being a property owner comes with additional responsibilities and potential headaches. By leasing, you can focus solely on running your business and not as much on maintaining the property it runs on.
- Tax Benefits - Rent is a tax-deductible expense.
Cons of Leasing.
- No Equity Buildup - If you don’t own the property, you don’t profit from it. You are helping fund someone else’s retirement though. Hmmm...
- Variable Costs - Rental rates are subject to annual increases, and if you need to break your lease for any reason, you may be charged with a steep fee.
- A Forced Move - You are at the mercy of your landlord. If your landlord decides to rent the space to someone else, sell or move in himself at the end of your lease, you will be forced to move out, seeking a new location.
Do not take the decision to lease or own lightly. It deserves in depth consideration and analysis of your personal business needs. If you'd like to read more about growing your small business, follow this link to our e-book, "Taking Your Business to the Next Level".