Commercial Premises

Deciding whether to take out a lease for your florist premises involves weighing several factors. Leasing can offer flexibility and lower upfront costs compared to purchasing a property, but it also has its drawbacks. Here are some considerations to help you make an informed decision:

ADVANTAGES OF LEASING #

1. Lower Initial Costs: Leasing typically requires less upfront money than buying, making it easier to start your business without a large capital outlay.
2. Flexibility: A lease can offer more flexibility if you anticipate moving to a different location as your business grows or needs change.
3. Less Responsibility for Maintenance: Depending on your lease agreement, the landlord may be responsible for maintenance, repairs, and security, reducing your workload and expenses.
4. Tax Benefits: Lease payments are usually deductible as business expenses on your tax return, potentially lowering your taxable income.
5. Easier to Obtain than Mortgages: It might be easier and quicker to secure a lease than a mortgage, especially if your business is still establishing its creditworthiness.

DISADVANTAGES OF LEASING #

1. No Equity: You won’t build equity in a property since you don’t own it. The money you spend on rent is an expense without a return on investment in terms of property value.
2. Variable Costs: Lease costs can increase over time, especially when renewing, which might make budgeting for the future challenging.
3. Restrictions: Leases come with restrictions on how you can use and modify the premises, potentially limiting what you can do with your space.
4. Instability: There’s a risk of not being able to renew your lease at the end of the term, which could force you to relocate unexpectedly.
5. Dependence on Landlord: Your business could be affected by the landlord’s financial situation or decisions, such as selling the property or failing to maintain it properly.

QUESTIONS TO CONSIDER #

• What is your long-term business plan? If you anticipate significant growth or relocation, leasing offers more flexibility.
• How much capital do you have? If upfront costs are a concern, leasing can be a more accessible option.
• What are the market conditions? In a rising property market, leasing might save you money short-term, but purchasing could be a better long-term investment.
• How important is location to your business? If your florist shop relies heavily on foot traffic in a specific area, the right lease in a prime location might be worth the cost.
• Are you prepared for the responsibilities of owning a property? Owning requires dealing with maintenance, taxes, insurance, and possibly mortgage payments, which can be more than you want to manage along with running your business.

Ultimately, whether to lease your florist premises depends on your specific business goals, financial situation, and the terms you can negotiate. It’s wise to consult with a financial advisor or a commercial real estate professional to discuss your options and what makes the most sense for your florist business.