Rent Is a Drag – Have You Considered A Steel Building?
Like millions of other small business owners in the marketplace, your goal is simple. You want to grow your business and make money. Since small businesses mature in phases instead of all at once, you likely have time to plan your next move. Is your business jam-packed into a tiny office space, or are employees piled on top of each other? What worked for you when you first started isn’t suitable for this stage of your company’s life.
Small business expansion can be nerve-racking, but it’s part of the natural evolution of a good business. It means you’re having success! But after you decide that expansion is necessary, where do you go from there? Talk about opening up the floodgates for more questions – now you need to decide if you will rent a space or buy your own steel building.
Unless you plan on being in your space only temporarily, buying a steel building is one of the best ways to go. There are many significant benefits to owning your own building. Renting has the potential to hurt your return on investment (ROI). Think of ROI as a calculation used to evaluate the efficiency of an investment, or compare the efficiency of several investments. A high ROI means gains compare favorably to costs.
Building your own steel building is an investment in the future of your small business. Remember that word. Investment. Your building and property is an asset. Every month, you might be spending thousands of dollars on your workspace regardless whether you rent or buy. Would you pay that sum to a landlord, or turn it into an investment and gain your own equity? Owning office space is like owning your home. The business will appreciate over time and give you more money. When you plan to spend a significant amount of money, you want it to work for you, and not against you.
The same can’t be said about renting. Renting and paying off a lease could cost much more in the long run. First of all, once you pay a monthly fee to a landlord, that cash is gone. It’s possible a lease could beat out a steel building purchase in the early years, but over the long haul, the steel building purchase is usually less expensive because the landlord is trying to make a profit on his rental property. That being said, renting is subject to price increases in the future. Right now, historically low interest rates and special tax breaks or incentives for property owners are making small business owners rethink their leases. Why rent when you can gain equity, especially if you sublet some extra space to other businesses to create extra income?
If steel building prices are affordable, it might be time to make your move. When you decide to buy, you’ll pay more up front, but you’ll reap the appreciation and tax benefits of being the sole owner of the building. Expense deductions come from interest, property taxes, and maintenance or repairs. Chances are if you are able to grow, add more employees, and move to a bigger space, you have the capital to make your move. If you don’t have the cash on hand, you can secure financing. The U.S. Small Business Administration reports that financial institutions want to see a certain amount of equity in businesses before offering financing options.
When you own a steel building, you are your own landlord. While you’ll be responsible for your own maintenance, security, and management, you control every aspect of your building. Steel buildings require very little maintenance compared to traditional constructions. Plus, you won’t need anyone’s permission in the design process and can make any improvement decisions yourself once you move in. That kind of freedom is important as you continue to develop your business.
You want your small business to survive. You have long-term plans for it, and you intend to watch it grow. Since that’s the case, why would you choose a short-term solution like renting? Invest in yourself.
What are some of the issues you have with building expansion?Photo courtesy: jazbeck