While a home office can work for many start-ups, zoning and other regulations might require you to have a physical business location. As a business owner, it is important to understand the costs associated with having a business location. A physical business location can cost you lease or mortgage costs, maintenance costs, and insurance costs.
Lease or Mortgage Costs
When opening a physical location, you must decide between renting and purchasing your commercial space. With a lease, you rent the property for a set term. At the end of your term, you must renegotiate if you wish to continue using it. Leasing fees often increase but provide flexibility for moving your location. Purchasing is an investment that will give you equity but requires a large payment upfront. A mortgage can give you more control over your property with a predictable payment. It can also be difficult to qualify for financing, especially if you are just starting out. Whichever option you choose for opening a physical location will require regular payments for operating in commercial real estate.
Maintenance Cost
Maintenance and utility costs can eat into your budget. Many lease spaces often include these costs as part of your agreement, however there are various maintenance items that could be left out. Maintenance for your building is vital for the health and success of your business. Roof, plumbing, electricity, and HVAC are crucial for providing a safe environment for employees to operate in. You can save a lot of money by proactively maintaining your HVAC. By maintaining these systems, you prolong the usability and efficiency of your office space.
Insurance Costs
A business needs the same protections you provide for your health, home, and car. There are many kinds of business insurance. The type of insurance your business needs will depend on your business, industry, employees, location, etc. A physical business location requires additional insurance. For example, commercial property insurance is required for your location. This can cost anywhere from $300 to $2,500+ per year. Insurance for the building, equipment, and employees will be vital to safely running your business.
Outside of production, there are various overhead costs associated with owning a business. A physical location will give your business a place to grow and thrive. This location can also offer your company tax breaks. Evaluate future projections to find the right operating space for your business.
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