Episode 18: Should You Rent or Buy Space For Your New Practice (Business)?
I’m frequently asked—Should I rent or buy the space for my new practice or business?
Regardless of whether or not you want to initially rent or buy, there are a number of considerations:
1. How soon do you want to move into the space?
Let’s say that you want to start your practice or business in the next 6 months. If you want to buy the space, you’ll need to go through the due diligence, get financing, and do the buildout you want–a process that's likely to take more than 6 months.
On the other hand, if you are looking to rent, you’re likely to find the space in a much shorter time period. The only significant time-limiting factor is the time that you’ll need for tenant improvements.
2. Do you know where the best location is for your new business?
You need to think about things like the ease of getting to your location, getting into your parking lot, getting to your space and more. Look, you could have the nicest space but if it’s a pain to get to, you’ll lose patients. People follow the path of least resistance. If it’s a hassle to turn into your parking lot or there isn’t enough parking spots, people will get turned off.
3. Do you understand your clinic flow?
When you are starting a new practice or related business, you need really understand your business’ flow. You need to walk it, do it –exactly as you would once you move in so you can identify the limitations. I can’t stress enough how important it is to do this. You can think it, and you’ll fool yourself into thinking you have every step down. I’m here to tell you that unless you physically walk through each step and write it down, you will miss something. And you want to know what you’re missing before you move in—especially if you are buying a place.
4. Fourth, how much space do you need?
When you are first starting out, how much space do I need is one of the hardest questions to answer. On one hand, you want to have enough space to function efficiently. You want to utilize all the space that you have. On the other hand, you don’t want to have more space than you need.
Yet, you want to have enough space so that your business can grow and expand without you having to move. You don’t want lack of space to limit your productivity.
5. Lets talk money.
Remember that you will have other start-up costs before you open and then operating costs that you will need to cover until you turn a profit. If you buy a property you may end up with a mortgage for the property in addition to a loan for your initial business costs.
Buying straight out of the gate definitely increases your risk relative to renting. When you rent, you minimize your risk.
It takes time to really understand your business and your needs. And this is the key to determining whether you should rent or buy the space for your new business.
Personally, I am a big fan of renting until you know what you truly want out of the space and what your growth is going to look like. It is by far the easiest, least expensive way to get started and to be able to scale.
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