As businesses grow, it’s not uncommon for them to add physical assets to the wealth that comes and goes from within. Owning property is one of the ways for a business to add value to itself, and for many growing businesses, buying up the office space (or other structure) in which the business is conducted may be one of the best business decisions that can be made. As with any real estate purchase, there are many considerations to be thought about long before a property is closed upon. Here are some of them, both pros and cons for the buying up of professional real estate structures on the part of growing businesses.
Pros:
- Building Assets. Many businesses increase their value by owning or building professional real estate. Even in a worst case scenario where a business goes bankrupt, the ownership of professional spaces is sufficient to buoy a business through difficult times. In a case like this, the space may be sold, but your business allowed to stay on as a tenant for the new owner. In the best case, it’s equity that can be later “cashed in” to provide an investment into a growing business sector. Or it can simply remain equity, which will increase the price of the business if you ever decide to sell.
- Personalization. A business space that is owned by your company is yours in every sense of the word. Need to adapt it to the specific needs of your business or your business culture? Fine, do it. Need to add additions as your business grows, for example, expanding the number of bathroom partitions? Fine, do it.
Need to make big internal changes, knocking down walls, installing acoustic wall panels or recreational putting greens for your employees?
Fine, do it. Ownership of a business space is essential for many of the most creative businesses, and it’s one that you might do well to take advantage of. Visit us here to compare loans in Europe for spaces such as this.
Cons:
- Spreading Yourself Thin. Many businesses are not ready to buy real estate, specifically because it’s too much time, money, attention, and energy to take away from the core business. Top finance blogs explain the finer points of when it is time to buy real estate, and for your business the answer might be “not right now”.
- Liability. Because a nice new building is not always affordable for a growing business, you may only have “fixer uppers” available to you. This may turn out well, as improved real estate may be worth more than the combined total of initial price and renovations. But if something goes wrong (the roof collapses, the floors buckle, the pipes go out), the business owner is liable for the costs, and for the safety of his or her employees. For a business that’s just able to scrape by with the combined cost of business and the new real estate investment, a disaster like this can make a growing business sink. At RSG Roofing LLC, they recommend that their clients at least get the building inspected and brought up to code before allowing anyone to work in it. You don’t need to make it into the building of your dreams; just make sure that it is safe for your employees. This should prevent you from being liable for negligence should anything go wrong down the line.
