As an entrepreneur with a physical business, you may encounter certain issues that most online business owners are blissfully unaware of. This is especially true if you’re involved in production and manufacturing. Needless to say, many logistical problems arise when you are selling tangible goods.
One such problem may be the lack of space to operate your business. As your sales increase and client base expands, so do operational demands. The need for more inventory, new products, more manpower, and most importantly, a larger space to handle all your business’s operations becomes increasingly evident as the days go by and the demand continues to grow (read more). Thus, around this time, entrepreneurs are plagued with one of the biggest questions:
Should I buy or rent a warehouse?
When it comes to business expansion, moving your operations to a large warehouse built to handle the operational capacity of your growing business is the only sound solution. But the question lies in what would be a better option – to build or to rent?
As the title of this article already suggests, we’re all Team Rent over here, and we have very good reasons as to why we believe renting is a superior choice. Here we list them below:
Collapse The Time You Need To Start Operating
When you decide to build, you’re basically choosing to keep running your business in an inefficient state. Aside from the fact that the entire property acquisition and warehouse building process is super tedious, exhausting, and expensive, you also put your business at risk by running it on shaky legs. If you think about all the opportunities you may lose and the amount of business you won’t be able to accommodate because your expansion is taking time, then building your own warehouse no longer sounds too amusing, does it?
If you rent instead, you can significantly collapse the time for you to migrate your business operations to a larger space. Apart from moving equipment and buying new ones to accommodate larger demands, there is little else that you’d have to do.
Easily Expand Your Business Inventory
Generally-speaking, renting a warehouse will allow you more space to store dry goods and products, especially when your warehouse is organized in the most efficient way possible.
One other advantage of renting a warehouse, besides a shorter transition time, is having that extra budget in your pocket to design the internal layout of your warehouse more effectively. Planning your warehouse layout to maximize the space that can store inventory safely is a good way to increase product orders and shorten the order fulfillment process. Here are more tips on how to organize your warehouse more efficiently:
Lower Maintenance Costs
When you rent or lease a warehouse, you are only temporarily occupying it – regardless of whether that’s for 12 months or 12 years. At the end of the day, you do not own the infrastructure which is why you are not directly responsible for maintaining it. Whenever there’s a need for repairs due to natural tear and wear, it won’t be you covering the costs but the property owner. This means lower maintenance costs overall for the business.
Also, if your business is growing at a rapid rate, chances are, you will eventually outgrow this new space too. You might think that the space you’re moving to is big now, but it would look miniscule the moment your company hits a new level. As opposed to buying a property, renting will give your business more mobility and allow you to move into larger (or smaller) spaces with more ease. To add to this, companies like https://www.risecommercialdistrict.com/ohio/dublin-office-warehouse-for-lease can help you find the right warehouse rental in your area which makes the process all the more convenient.
Lower Tax Fees
And of course, who can ever forget about taxes? When you build your own warehouse, your expenses won’t stop the moment construction is completed. Property taxes apply these types of infrastructures as well and it’s something you will have to pay every year thereafter. Depending on the size of the property and its appraisal value, these property taxes can get pretty hefty.
But if you rent, your rental cost immediately gets categorized as a business expense, which in most cases, can be written off during tax season. You may have to pay withholding tax based on the amount you rent the property for, but it will be significantly lower than property taxes.
So this, combined with the other reasons mentioned above, makes it pretty clear how renting can give you a lot of advantages from a growing business perspective. Of course, if you’re looking for something that can appreciate in value over time and in a way, become an additional investment to your portfolio, then building a warehouse may be more advantageous for you. But for those of us whose businesses don’t really involve real estate proceeds, renting is simply a more convenient option.October 24, 2023