Should a Small Business Lease Space or Buy Space???

I've been working with small businesses that at times seem to waffel between leasing and buying. I think that there are two major questions to ask yourself before making a decision:

1) Is your business in a growth phase; or is it a mature business with a consistent client base?
2) What kind of upfront costs can your business handle?

Typically, the positives in a purchase tend to be fixed costs, certain tax deductions, potential additional income, appreciation of property. The negatives of purchase can include the fact that in a relatively short period of time your business space needs may change. Upfront costs such as down payment and buildout can tie up working capital. And the property may take more time away from the actual business.

To lease space, a small business owner can chose their location!location!location! Working capital is not tied up in a mortgage. The landlord focuses on the real estate so that the business owner can focus on the business. The downside is that there are variable costs involved and there is no equity.

So how does one make the right choice? Checking in with your financial planner and accountant is a great start. Then the next step includes a discussion with a reputable commerical real estate broker. It's at this step that one can look at what the market bears and make educated decisions that are right for the business.