Business is all about profit, and one of the biggest expenses to cut into your profits each month will be rent on your premises. If things are going well, your business is expanding and you’re turning a reliable profit, the next logical step would be to invest in your own building.
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Owning your premises means you have capital, and if you need access to money later down the line you can always sell. And just like renting a house, renting business premises is expensive and in many ways a waste of money. You’re at the mercy of the landlord, your rent can go up at any time or they could decide to sell.
Once you’ve paid your rent each month you’ve nothing to show for it, whereas paying a commercial mortgage will eventually mean you’ll own it outright. But there are lots of things to consider before taking the plunge, here’s what you need to think about.
Consider the Location
When you’re buying commercial premises, your first decision will be the location. Some kinds of businesses will need a central location, if you’re in retail, for example, you might require foot traffic to make a large proportion of your sales.
While these locations will cost more, it might be necessary depending on what you do. If you’re the kind of business that doesn’t require foot traffic or doesn’t deal directly with customers in person (such as an office) then a location further out could be cheaper and give you more for your money.
Hopefully renting will have given you a good idea as to what kind of location will be best for you, so you can make an informed choice before signing on the dotted line.
Build From Scratch Or Renovate?
Will you renovate and adapt an existing building, or will you build from scratch? If you have a very specific kind of business that requires a particular layout or kind of space then having bespoke plans drawn up could be beneficial. Otherwise, buying a building that was previously used by a similar business might only need minor adjustments to adapt it for yours.
If the building is older, be prepared to pay for things like new windows and doors, new electric, plumbing such as new water tank pumps and maybe even a new roof.
Weigh up all of the pros and cons of building vs renovating, and consider any ‘hidden’ costs so you don’t end up caught short.
Think About Security
Thieves like to target commercial buildings, as they’re usually empty out of office hours and contain all kinds of expensive equipment, cash, and data that can be sold on for fraud purposes.
If you previously rented an office or unit within a commercial building then the whole area might have been covered by CCTV, burglar alarms and more. When setting up alone, be sure to take these things into consideration.
If you’re a shop, investing in lockable window shutters that you can pull down after hours might be a smart move. Make sure the lighting around the premises is good, avoiding dark areas that burglars could hide in.
