If you’re starting up a contracting business, there are a number of important considerations that will likely be on your mind. One of these, particularly as you’re planning for the future, is whether to look into purchasing warehouse space or other property that can be used as a workspace, office or for related needs.
At QuickED, we’re happy to provide numerous resources to Utah contractors getting their businesses off the ground, from license renewal courses to several forms of continuing education and much more. When might purchasing a warehouse or similar type of property be the right move for you and your contracting business? Here are a few of the boxes you’ll likely want to have checked if you’re considering this move.
You Can Afford It
First and foremost, you must be completely sure you have the financial wherewithal to make such a purchase. A mortgage or loan for commercial property is often going to be different than one you might secure for a home, so it’s important to be prepared and aware of the potential costs and risks involved.
You’ll also want to factor in things like insurance, taxes, maintenance and other associated costs of owning commercial property. Failure to do so could lead to far greater financial problems down the road.
You Need the Space
Purchasing a warehouse or other commercial property isn’t going to make sense if you don’t actually need the space. There’s no point in shelling out money for square footage you’re not going to use, after all!
Before taking the plunge, carefully consider whether you really need a large warehouse space or if something smaller would do just fine. What is your current workspace setup like, and how much larger do you anticipate needing to be in the near future?
This can help you avoid unnecessary costs and potential headaches from occupying a property that’s too small for your needs.
You Can Find the Right Location
If you’re going to purchase property for your contracting business, it’s important to make sure this is in a location that makes sense.
For example, if you’re going to be using the space as a warehouse, it should be easily accessible for employees and delivery trucks. If you plan on having customers or clients visit your office, being in a good location can make a big difference.
Consider things like foot traffic, public transportation options and other factors that might impact your business if you’re not in the right location. In addition, if many of your clients are in a similar area, buying property in a good location there can be to your advantage.
No Near Future Movement Plans
In addition, there isn’t much sense in shelling out major bucks for a warehouse or office space if you only plan on being there for a year or two.
Be sure you have no immediate plans to move elsewhere before making such a purchase, as this can help you avoid hassles and potential financial losses down the road. Future planning is a vital part of determining whether purchasing property makes sense for your contracting business.
The Property Meets Your Needs
Contractors will have a wide range of needs and wants when it comes to property, so be sure the one you purchase meets your wants and needs. If you regularly deal with large items that need to be stored and transported, for example, you may want large doors or a high ceiling.
On the other hand, what if you’re more concerned with things like the aesthetics of your property or its proximity to public transportation? It’s important to take all of this into consideration, as well as any other needs you may have when purchasing a commercial property for your contracting business.
Considering Growth Potential
There are a couple areas of growth potential to consider if you’re thinking about purchasing warehouse space:
- Real estate appreciation: The value of your warehouse could potentially go up over time, allowing you to sell it for a profit further down the road. This should be a major consideration if you’re planning on holding onto the property for a long time.
- Business growth: As your contracting business grows, you may need more space. If this is the case, owning your warehouse could give you the flexibility to expand as needed.
Not Necessary for All Contractors
Now, while we’ve spent most of this blog going over the reasons why you might consider a warehouse or similar property space for your contracting business, it’s not necessarily a necessity for all contractors.
For example, if you have a very small business or you don’t anticipate needing more space in the near future, it might not make sense to purchase property. In addition, some contractors may find that they can save money by leasing warehouse or office space as opposed to owning it outright.
Still other contractors have easily enough space in another property they own, whether it’s their home or an existing warehouse.
There are a number of factors that can impact whether purchasing property makes sense for your contracting business, so take the time to think about these and any other considerations you might have before making a final decision on this matter. For most contractors new to the industry, it’s likely worth thinking long and hard before spending significant amounts of money on a property.
For more on this, or to learn about any of our continuing education or other resources offered to Utah contractors, speak to the team at QuickED today.