Securing equipment and space for your business can feel like a headache. There seems to be so much to know and learn before you even get started. Before securing new assets for your business, here are some questions you should ask.
Takeaways
- How to prioritize your spending
- The difference between buying or leasing
- Who can help
Buying equipment
1. What do I need versus what do I want?
It’s easy to get excited about the fancy stuff you want to buy, but make sure you are buying what you need first. Before you start shopping, make a list of your needs and wants for your business when it comes to equipment. It’ll become clearer what you need to buy first.
2. Will this add value to my business?
Before you buy something, figure out if it will improve your productivity, save time, or eventually lead to more profits. The equipment could also improve your competitiveness for jobs. You may be able to offer more services than before.
3. What should I outsource?
There are some things that are better outsourced. Even if you have the skills to do the job, it may be more affordable for your business to outsource specific types of jobs rather than buying and maintaining certain equipment. Find subcontractors in your area that can help you finish a job. Read our article on managing subcontractors.
4. Should I get it new or used?
Vehicles and tools often lose their value after you take it for its first spin. While there are some advantages to new trucks and tools, your bank account may benefit from buying used. Shop smart and compare pricing and warranty packages for your equipment.
5. Does quality really matter over price?
You may not have the cash on hand right now to buy top-of-the-line tools or equipment, but if you do have access to that kind of money, it might be worth taking a look at buying higher quality products for your business. High-end products can come with better warranties and construction. Paying more now can save you headaches in the long run. To protect your equipment, you may want to consider investing in tool inventory software.
6. How am I going to pay for this?
Accessing financing for your business expenses is important, especially if you’re just starting out. Visit our article on business financing to learn about the different types of financing and what you should have on hand if you’re looking for external financing.
Securing space for your business
1. What kind of space is right for me?
If you plan on serving a specific area, make sure your location is in or around that area. You may find more affordable options in the suburbs, but also think about what commuting to your jobs may look like if you locate your business outside of the city limits. Will you spend more on gas and time spent in the truck? Finally, ask yourself if the property is in the condition you want it in. You might be able to get a deal on a fixer upper, but do you want to spend time and money on fixing a property?
2. What am I forgetting?
It’s easy to get excited about a new space, but you need to buy smart. Research what zoning laws affect a property you like. Even if it’s perfect at first glance, there may be zoning or property restriction headaches you haven’t learned about yet. Also, ask about what fees are associated with securing the property or what property taxes you should expect to pay. Get the full picture before pulling the trigger.
3. What do I want to do with the location?
If you buy a piece of commercial real estate, it can also become an investment and a source of income for your business. Leasing parts out of the building can help you generate revenue for your business to pay for the building itself. Also, ask yourself if this building can be repurposed for whatever you need. As your business changes and grows, you may need to consider expansions or new uses for your property.
4. Should I buy or lease?
Maybe buying a property doesn’t feel right to you right now. Or, you’re not sure where you want to base your operations. Leasing can be a great solution for your business. Big issues aren’t your concern, and you can move easily. Although a lot more rests on your shoulders when you own, you call the shots when it comes to the property. You are also not subject to market pressures to increase your rates. Meet with your accountant on what tax benefits there are to renting vs. owning.
5. What kind of financing do I need?
There are several ways to finance buying or leasing a commercial property. Some common types of financing include commercial real estate loans, bank balance sheet loans, business loans, and seller financing. These are not all of the options available to you, but more than likely you’ll have to undergo a credit check and provide financial statements. Read our article on securing financing for your business.
6. Who can help me?
You’ll need help securing whatever property you decide fits your business best. You’ll likely need a commercial realtor to help you find the perfect spot, a professional accountant to give you advice and help collect your statements, a commercial real estate attorney to check over your paperwork, a commercial lender or mortgage broker, and/or a tax attorney. These professionals can help you understand the ins and outs of commercial property.
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Wherever you decide to headquarter your business, make sure you are happy with the location, the amount you’re paying, and how it serves your business interests.
