Are you a new business owner looking to find a workplace, but you’re unsure whether you should purchase or rent an office space? If so, you’re not alone.
Many small business owners are confronted by this dilemma. Is it better to buy an office area where you can establish your business, or are you better off renting a space?
Unfortunately, there’s absolutely no 1 size fits all answer to this question. The best option for you and your company will probably depend on your financial situation, your plan, your industry, and much more.
For most small business owners, however, leasing office space is often the safer choice.
What makes leasing the more attractive and feasible solution for start-ups and smallish businesses? Here are a couple of benefits to renting office space instead of buying it.
1. No mortgage
When you’re not locked into a mortgage loan, this frees up capital to put it where it is needed for additional expenses like R&D, marketing, personnel, etc..
2. No Deposit
When you get a lease on an office, there is no humongous deposit! Leasing takes a smaller quantity of money up front — typically the first and last months’ rent. When you purchase an office space recommended by retail property agents, you will have to put down a large fee between 10% to 30 per cent and lots of new companies or startups just don’t have this.
At the end of your current lease term, you may easily decide to expand or not. It’s far simpler to relocate if you want to find a large space for your growing business or a place that suits your budget if you’re renting your current space, rather than owning it.
4. Tax Credits
When you lease office space, your monthly payments are tax-deductible as a business expense.
5. Prime Location
Renting office space in the more expensive cities like Melbourne is generally much less expensive than buying. Plus, the location of a business can make a big difference in a firm’s prospects. If your small business is dependent on image and location, then a prime location is key. If you are in the sports business that deals with walk-in customers a lot, for example, it might worth your time to check if places such as the Melbourne Stadium has spaces to offer for you.
6. Fewer Responsibilities
When you are leasing office space, maintenance, repairs and alterations are usually cared for by landlords. Should you own your property, this becomes the problem. When you lease, you can focus on running your business rather than coping with the nuances of managing a house.
7. Quick Move-in Time
When you lease, typically there is a short lead-time to maneuver in. (But if you are building from the ground up, then it could add some extra time until you can move in.)
8. Free Time
Any type of property ownership includes a lot of headaches! The leasing option frees up your time as a busy small business owner to focus exclusively on running your company.
Whether you choose to lease or buy your next office area, there are pros and cons to each. Make sure you thoroughly research your options before making your decision.
What If You’ve Made The Decision To Rent?
If you do choose to lease an office instead of purchasing, below is a helpful guide that can show you step-by-step the way to procure the rental to an office area for your company.
Step 1: Determine Your Financial Plan
Before you can also begin looking at office spaces, it is important to know what your budget is. Knowing your budget will allow you to restrict your choices up front based on what you can realistically manage.
Step 2: Research On Other Office Spaces
Research different office areas available in your area and have a tour. It’s best to observe the space in person to have a look at the area, make a list of your potential neighbours, and also to visualize what it might really be like to work there. As some buildings in Melbourne rent out spaces as formal venues, you might want to avoid being located next to these as it can get noisy.
Step 3: Pick on an office
Out of those different offices areas you toured, pick which one is right for your business. Listed below are a few questions to ask yourself:
- Is the location convenient for the customers?
- Is the location suitable for you personally?
- Is your location right for my employees/potential workers?
- Is there parking available?
- Is it cheap?
- Can it be located near shops (banks, post offices, daycare, etc.) and other conveniences which are essentials for you?
- How far are you allowed to change the decoration and design to personalise the space?
- Is there a kitchen you can use?
Step 4: Leave room to grow
Consider additional distance when you’re planning to grow your team. As you’re growing your business, you may be able to sublease the extra space to another tenant for extra income. (Remember, the original lease will need to include sublease options up front.)
Step 5: Determine all prices
Make sure to look at all the expenses associated with the move. Calculate the entire price of rent, utility bills, moving costs, expenses for construction and/or office interior design (if any), etc. just to make sure that you won’t be bombarded by unpleasant surprises along the road.
Step 6: Get your financial documents prepared
Before you are able to rent office space, building owners will want to determine if you can pay the rent! Normally, the operator will require a security deposit. Start collecting significant financial documents such as tax returns, bank statements, financial references, along with a bank letter of credit to show that you are able to cover the expenses.
Step 7: Finalize special requests
Do you intend on having the office area revived before you move in? Does the contract contain set up of wifi or some other particular agreements? Ensure these details are covered before the move in date.
Step 8: Move in
Move into your new place and make it your own! Make your workspace imaginative and distinctive by adding your own personal touch.
Follow the following steps for renting office space for your small business and you’ll be on the path to success!