Commercial property: renting vs. buying

Finding the right spot for your business is key to your success. If customers can find your place of business easily, you won't have to work as hard to drive traffic to your doorstep. This means you have to identify your demographic (who your customers are), where they live and work, and where they typically go to find the type of product or service you're offering.

The question of whether to rent or buy commercial space is an important one, and the availability of property for rent or purchase will determine your location to some extent. The right choice varies from one business to another. Here are some questions to consider:

What can you afford?

When you lease or rent a property, you pay a monthly fee that covers the rental of the space and, in some cases, a portion of the utilities. When you buy a property, a sizable down payment is required, along with utility bills, property tax and ongoing maintenance cost. Before you decide which is the way to go, ask yourself the following questions:

• Have you considered all costs of each option?
• Can your business afford to use potential cash flow funds as a down payment?
• Will this investment help your business grow over time?

How long are you staying?

Put some thought into how long you expect to be at the location where you plan to set up shop. Do you expect your operation to grow over time, requiring more space for staff, inventory, or production? Leasing gives you the flexibility to relocate without incurring significant cost, and may be a better choice if you think you'll only be at a particular location for a short time. If you are certain that your business won't experience any dramatic growth, and that there are benefits to establishing yourself in one location to build awareness and customer loyalty, then purchasing a property may be your best bet.

What do the experts recommend?

As with any big decision, it's always best to seek the advice of professionals and your support network. Speak to a commercial realtor about property costs and market conditions. An accountant can help you weigh the financial pros and cons to each option and if you need financing, a financial advisor can help you determine what is available. Taking the time to assess your options will help you make the best decision for your business.

Thanks to the RBC Advice Centre for the great info!