As the owner of a start-up, you will have a lot of critical decisions to make, many of which will include careful budgeting. This certainly applies to your first business premises. You need to determine whether it will be better for your business to rent or buy a commercial property. Most start-up owners will find that the former is the best approach because it is more comfortable for them financially and it gives them greater flexibility for the future. With this in mind, read on to discover more about the many different reasons why renting your first business premises is a good idea.
The many financial benefits
There is only one place to begin, and this is with the financial benefits that are associated with renting your first commercial property. The upfront expenditure for leasing premises is relatively low. You will typically have a small deposit to pay and some admin expenses. Contrast this with the cost of a mortgage deposit, and you instantly see the huge difference. As a start-up, it is likely that it would be better for you to free up this money and spend it on more important and pressing areas of your company. Cash flow is critical at this stage, and the last thing you want to do is tie up all of your money.
Not only this, but you won’t be exposed to any increases to the interest rate, which would be the case if you were to buy a business property. Of course, your rental rate may increase annually, but this will be a steady and stable rise. You also need to consider the fact that you are going to be less susceptible to unexpected monetary shocks. For example, if the value of the property decreases it will not impact you. This means that leasing a commercial property is less of a risk. You are immediately exposed to financial risks when you buy, as market trends and interest rates could wreak havoc.
Maintenance is not your responsibility
Let’s face it; you already have enough responsibility on your shoulders at this stage, do you really want to deal with the boiler breaking or a security issue? By renting your business premises, you won’t have to worry about any of this. If something breaks or requires servicing, your landlord will be responsible, and they will need to act on an urgent basis. From temporary chiller hire to finding a new broadband provider, they will need to take any step that is necessary to ensure that your business is not impacted. Of course, all rental contracts are different, so you are advised to double check that the landlord accepts responsibility for all interior and exterior maintenance. Don’t get caught out by T&Cs in your contract.
The flexibility to grow your business
One of the main reasons why rental properties are so beneficial for start-up owners, in particular, is because a lease contract will give you the perfect platform to take your business to the next level. This is because you experience a degree of flexibility that simply is not possible when buying a commercial property. If the market changes or an opportunity provides itself, you will be able to relocate with ease. This is especially important for start-ups, as they are likely to grow at a quicker rate than established businesses, and so it is likely that their office requirements will change over the next few years. After all, the size of your workforce may double!
If this is the case, it is much easier for you to get out of a rental agreement than it is to sell your property or to find a tenant for it. This can be extremely damaging, as it will stem the growth of your business and lead to missed opportunities. Instead, with a rental property, you ensure that your business can react, and you also have room for negotiation in the contract to begin with. For example, you may decide to have a break clause included in the lease.
As you can see, there are many benefits associated with renting your first business premises. From the many monteray advantages to the greater level of flexibility you will experience, a rental property can give you the perfect platform to take your start-up to the next level. However, it is important to recognise that everyone’s financial situation and needs are different, so consider yours carefully before making your decision.