We have heard this since our childhood that property and gold are two wisest investment options one can choose. With the growing hike in property prices and increasing inflation, it has become difficult to purchase a property for an average person. Buying a house is fine, but when it comes to buying property for our business, the situation becomes a little dicey.
With inflation at its peak, cash flow is the most crucial asset of your dream company. Using the major part of your cash in purchasing property for setting up your business, then spending further on the set up, are not the correct options. This is how leasing your business space and resources help you overcome the number one hurdle in starting your business.
We have realized that the businesses that channel their cash flow more towards implementing the business processes, rather than on setting up the business tend to grow faster. To clear the picture for you, we are listing the following reasons that support the statement that leasing commercial space is more convenient that buying one, in the present day scenario:
1. Saving the Working Capital is equal to cent percent useful Financing:
If a person is choosing to lease a commercial space, they are saving themselves a major amount of cash. On the contrary, if they wish to purchase the property and set up the office from scratch, they may have to spend a major amount of their savings. What other people tend to do is, applying for a loan and then blocking all their required liquidity in paying the down payment for that loan.
Therefore, one can rather choose leasing the commercial space so that they can save their money from getting spent on all the service costs, installation costs and other costs. Also, the bills and payrolls at the end of the month are so demanding that it creates a huge tension on the cash flow. So, if you have opted for leasing the office space, you have already saved a huge amount of maintenance cost for the upcoming months, so that you can function smoothly. Also, this saved capital can be invested in various profit-generating activities.
So, upon choosing leasing all your large cash investment got converted into low monthly payments that are tax deductible.
2. Adopting the culture of co-working space:
Keeping in mind, the growing popularity and success of the culture of Co-Working space, it would be an intelligent step to take a startup this way. Nowadays, majority of the people love to take up furnished office spaces available on lease inside the multiplexes or shopping malls that have so many other offices working parallel.
Imagine you start an office on the same floor as various other offices, Your employees will get to bond with a good mix of people having various talents, thus making it a competitive and growth-inducing environment. Moreover, these co-working environments have common recreational spaces that promote team building and induce fun at work. Having a happy team is the biggest asset that any office needs in order to achieve goals.
3. Avoid the hassle of owning:
There are a lot of costs that are needed to be taken care of, say, the costs of property taxes, maintenance costs and repair extra costs. Other costs include security costs, parking costs, insurance costs, etc. Being an owner makes it very difficult to take care of all such crucial documents single handedly, so you then tend to hire another segment of employees for taking care of the same to avoid any negligence. This definitely lures you out of a huge amount of money and you end up with a very less cash to be invested on actual business growth.
Whereas in case of leasing, if you have a good relationship with the landlord, you can negotiate on lower monthly debt rate, longer lease period and improvements in the premises, thereby reducing the unwanted stress. Not just money, you save a great deal of time that can be used to focus on various business activities.
4. Cost overrunning, not an issue:
You are making the most out of your current savings if you choose leasing. Ask how? It is because the lease payments are much much lower than the purchase installments. With the saved amount, you can invest in the latest equipment that will supplement the growth of your business. This way you get the edge over your competition rather than using inferior equipment.
In the startup phase, there are a lot of investment areas other than buying the commercial space. And if your business is in the growing phase, buying an office space is not a good option. You never know when you need to expand or reduce the space.
5. Enter the prime location, with minimum hurdles:
If you want to set up your business at a prime location, buying is not a smart option. Inflation in property prices is still expected to see an immense rise according to most economists. Through leasing, you can fight this inflation and acquire an office in a prime location easily.
So, try to visualize the situation and map the cash flow, considering our aforementioned points, you will definitely prefer leasing over buying.