Dave Says: Examine your business needs carefully

Dear Dave,

I own a small company, and we lease the building we operate from. As an entrepreneur, how do you know when it is time to stop leasing and buy a place of your own?

Peter

Dear Peter,

You should only buy a building when you have solid track record of success, and a really good idea of what your building needs will be. A growing business is always a good thing, but you don’t want to focus too much on real estate and not enough on generating revenue and managing that growth intelligently. You would also want to make sure you’re going to be in anything you buy for a good, long while.
I’m a big fan of leasing the first few years after starting your own business. It’s even better if you can work out of your home, but I understand that’s not always practical. Down the road, you can choose to lease with an option to buy, or in the right situation, just buy a building.

Remember, make sure you do it all with cash. Don’t add debt to the equation!

—Dave