For some business owners, buying a commercial property is a sound financial decision. Owning the space where the business operates provides flexibility in terms of ensuring the space meets the current and future needs of the business. It can help business owners build equity and removes the risk of rent increases or unexpected lease terminations. If you are contemplating buying a commercial property for your business, here are a few tips to help ensure your endeavour is successful and profitable.
Meet with the right people
Before you set foot in a commercial property, meet with a team of advisors to help you determine if buying is the right move for your business and to figure out how much you can afford. Your team of advisors should include a qualified Business Broker or Certified Business Intermediary, a Commercial Realtor, and your accountant.
A Business Broker can look at your business plan and projections to help determine if purchasing makes sense for your business. The Broker can advise on additional aspects of your business and recommend strategies to increase profits, minimize unnecessary spending, and minimize disruption or downtime during the move into your new space.
Your accountant and Commercial Realtor will help you figure out how much you can afford to spend both in upfront costs and on an ongoing basis. This financial information will act as an objective guide as you move through the purchase process. As you get close to making an offer, you will need to bring a commercial real estate lawyer on board to help facilitate and finalize the transaction.
Once you have determined how much you can afford to spend and worked with a qualified Business Broker to improve the overall health of your business, it is time to secure the required financing for the purchase. Your Business Broker can provide a great deal of support during this part of the process by providing guidance on where to seek funding, advocating on your behalf as required, and supplying profit projections based on their review of your business.
Together, with your accountant and Business Broker, evaluate your opportunities for financing alongside the financial and tax implications of each option.
Determine your needs
Before you begin to tour potential properties, it is critical to have an understanding of what type of space will be the best choice for your business. Make a list of what you need from the space including things like
- amenities within the property and in the surrounding area, and
- other businesses operating in the same area.
You will be responsible for ensuring the property you choose allows your particular business operations within the existing zoning and land use bylaws.
When viewing properties, be sure to take into account the projected costs for renovating or upgrading the space to suit your business. Your Commercial Realtor can likely provide a rough estimate. You can also invite your preferred renovation contractor to look at properties with you and have them estimate the costs for making the space suit your business.
Before you sign purchase documents, be sure to have a thorough inspection conducted. For a commercial property, the inspection process should include all interior and exterior aspects of the space as well as a site assessment.
While it may seem overwhelming, purchasing a commercial property can be a smart and profitable move for your business. Acuity Business Group would be pleased to provide strategic consulting to help you make this exciting purchase. Contact us today to find out more about how we can help.