Your business location is a make-or-break decision to make. Something you might want to consider as well is whether to rent or buy commercial space.
How do you know which is right for your business?
Cash – like in the case with residential property, buying commercial space generally requires a sizable deposit, perhaps 10 percent of the total amount and likely more. If you don’t have that kind of cash available, or you need to put all your available funds into keeping your business running, than it’s better to rent. Retail investment does require a lot of resources – be careful in determining whether you can afford to buy.
Future – You need to think carefully about your future needs. If you’re renting, you have flexibility to upgrade to larger premises, or to a better location. If your overheads are too high, you can seek more affordable rent elsewhere. If you’re sure that you can make use of a location for a long time to come, then you can consider renting. Even if you foresee yourself moving sometime in the future though, remember your business could earn a secondary income by leasing the premises out.
Availability – There are a lot of factors to consider when choosing your business location, such as available parking space, your cash flow, traffic routes, distance to suppliers, zoning laws and more. Where to put up shop is one of the most important decisions you can make, and not to be rushed. For this reason, if you’re not too sure whether to buy or rent, first check out the availability of property that ticks all the boxes.
It might be the case that there is property for sale in Johannesburg that is ideal for you. But on the other hand there might not be something for sale that ticks all the boxes. In that case, rather rent in the meantime until something ideal becomes available.
In general, renting is preferable for businesspeople who are starting out, uncertain of where their businesses will be in five years, or need more control over their cash flow. Or who simply don’t want to have to deal with the hassles of owning property. On the other hand, buying makes sense for businesses that are established and stable in their cash flow. Also, for businesspeople who like the idea of making a real estate investment.
There’s no rush. Take the time to assess your options so you can make the best decision for your business.