Office Management & HR
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New business owners have a tendency to concentrate on the short-term consequences of leasing or buying an office, store or other facility for their business; for example, they may base their decisions on things like the first-year cash flow projections that would result under each of the alternatives. This is probably altogether necessary: If things don't go well in the first couple of years, your business may not be around to see how a particular decision would have benefited you 10 years down the road.
However, it's a good idea to consider some of the long-term implications, as well. In some cases, buying the facility will be much better for you in the long run, and if you can't afford to buy now, at least you can make it one of your long-term goals.
The main advantage of leasing a business facility is that your initial outlay of cash to gain the use of an asset is generally less for leasing than it is for purchasing.
However, perhaps the main advantage of purchasing is that your facility costs are fixed, and you'll probably end up paying out less in the long term than you would have paid if you had leased the facility. Moreover, if you purchase, you get the benefit of any appreciation in the value of the property.
Aside from the economic issues, the following factors may indicate that you should purchase, rather than lease, your business facility.
The following factors, on the other hand, may indicate that you should lease, rather than purchase, your business facility.