Entrepreneurial journey is trodden to, too many changes and challenges. Every entrepreneur when he steps into his business aspires to scale or expand some or the other day. So, When that is the case buying an office or real estate would not serve the purpose in the near future. You might definitely think, Why do they not prefer one- time investment over repetitive rental payments ??? Well..!! An entrepreneur and his business in general terms either grow or shrink. And in either of the case buying a restricted office setup would be like wasting the hard earned money. As ultimately you gain nothing. On the other hand, some entrepreneur does not have the requisite capital to buy office and simultaneously develop business.
If you are a startup, then it is advisable that you take office on a rental basis as it will help you save cost. And the saved sum of money could be directed towards promoting and capturing the market. Because when you are at the beginning stage your own office would not yield you good returns. So, it would a better option to focus on business development, competition, and other factors.
Renting Over Owning:
Many entrepreneurs consider renting as an optimum choice over owning. There are several reasons why entrepreneur falls for renting rather than buying an own office building. Have you ever thought ? What hinders owning an office in the entrepreneurial journey ???
Well.!!! Some of the reasons are:
- High Cost Of Maintenance: Buying your own office building states that you are responsible for all the maintenance factors. The entrepreneur has to take charge of the maintenance expenditure. And you never know maintenance charges gets more expensive in no time. Getting a piece of land that does not contribute any good to your product is more like a burden than a joy. So, instead of spending more on maintenance one could invest in the product and business development.
- Taxation: So, when you buy your own office, it becomes the asset of the business. But then, when it comes to taxation and book-keeping rental office gains the added benefit. Because it is paid from the gross revenue as an expense which in turn reduces the net taxable revenue. Thereby renting has accounting benefits rather than owning.
OK..!!!! Now, Why rental office ? Is renting fortunate for the entrepreneurs ?
Yes, Indeed. Renting is a bliss, especially for a startup and progressive entrepreneur. Want to know the benefits of going rental ?
- Highly flexible: Renting has a free flow of flexibility as well as mobility. Because when you are engaged in a business your fortunes help you grow or scale and maybe your misfortune would leave you to shrink. So, in either of the cases, renting allows you to move out of the zone and change the location easily. Because change is very crucial to lift your business. But, if you are held with your own office then you are stuck in the mud as moving quickly would be a little difficult task.
- Economical: Renting sounds highly economical and feasible when compared to owning. And for startups they cannot afford to have a lump sum amount on their balance sheet that to at the very beginning. Above all, own building requires the big hand to maintain well. If you go with renting you have to bear less expenditure. Too big investment would keep you knitted in the frame.
- Immense Co- working spaces: When you take an office space for rent, you are likely to have good co- working space that too with all the good amenities be it with infrastructure or the allocation of space and areas. If you have great ideas you convert the place according to your need.
- Helps you Focus: Buying your own office and running behind numerous contractors to maintain it would be a foolish thing to do. But if you go with renting, you can focus very well on your business. And why not? It is a cheaper option to carve on. The entrepreneur can wisely make use of the saved money to invest in product enhancement.
Therefore, if you are just starting up to go with renting and focus on product, employee’s salaries and market. But if you are a very big company with good profitability structure then real estate purchase is the most viable option for you as it would help you cut down a variety of expenses and would also help you acquire certain privileges under that section.