How to decide if to rent or to own commercial space

Monday Nov 06th, 2017


As a successful home-based business owner, you may eventually need to decide if it's time to move into a commercial space. If so, new offices could give you a more professional presence with room for both expansion and for hiring employees.

Your first decision will be whether to lease or purchase commercial space. In both cases start by carefully examining your cash flow. Many financial institutions offer cash flow calculators to help determine your business position.

Although renting a property may allow you to free up more of your cash initially, do not forget that the lease amount may increase and take those payments out of your financial comfort zone. When considering a lease, find out if you will have to cover utility costs or other monthly fees for services such as cleaning and grounds maintenance or if they are rolled-up into the monthly payments. To get a good deal on a lease agreement, you may need to sign up for several years.

If you are leaning towards purchasing property, consider the following:

• Maintenance. Are you ready to take on the additional responsibilities for maintenance, security and management that come with property ownership?

• Time frame. If you do not expect to stay in the building or in business for several years, buying might not be the thing to do right now. Take into account your closing costs; you do not want to lose money by selling and moving again too soon.

• Growth. If you have to hire employees, will there be enough space? Do you need room for inventory or production? It may make sense to buy more space than you need and sublet it. Using a square footage calculator can help with this decision.

It's a lot to think about so to get it right you may wish to work with an independent commercial real estate advisor who can help you set criteria for choosing the right building for your business.

To learn more about signing a commercial lease and about other resources for entrepreneurs that are free-of-charge, phone Canada Business Ontario (CBO) at 1-888-576-4444 / (TTY) 1-800-457-8466, or visit online.

CBO is a service provided through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario). For further information on FedDev Ontario programs and services, visit or call toll free at 1-866-593-5505.

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