Tuesday, December 14, 2010


Many of you who own and operate your own business have been leasing your space for years and may be thinking about taking the first step to owning your own building. It is a good time to consider purchasing because interest rates are down, many properties are available, and it may be a way for you to build equity in your business. But before you take the leap, there are some important things to think about. You’ve probably already given some consideration to the physical attributes of the property if you’ve actually got one in mind right now. But you may not have thought about the following:

1) Do you have sufficient down payment?

2) Have you completed cash flow projections and included the new financing?

3) Will the new debt put existing operations at risk?

4) Will the property be marketable if you decide to resell in the near future?

5) Will this property work as the business grows?

6) Is the building well maintained or is there a lot of deferred maintenance?

7) Have you taken into account the moving costs and advertising costs associated with a new location?

8) Is the property appropriately zoned?

9) Will you need any environmental permits for the new location?

10) Have you taken into account any long-term costs for repairs/upgrades?

11) Are you working with a reputable commercial agent?

It’s easy to fall in love with a particular piece of property and to overlook some of these points. It is also easy to overlook how your customers may react to a new location and whether parking will be adequate for both your customers and your employees.

Be sure to do your analysis before you sign a purchase agreement and be sure to consider appropriate language for financing and regulatory contingencies. A reputable commercial agent can assist you but you may also want legal counsel before signing on the dotted line.

It’s a good time to be looking at commercial property! If you need assistance with the financial analysis, contact your accountant or use the services of the Small Business Development Center.

This article was written by Susan J. Hoosier, a SBDC Certified Business Advisor with the Longview Small Business Development Center, which is part of the 24 statewide offices of the Washington Small Business Development Center (WSBDC) network. The WSBDC offer in-depth, confidential, and no-cost management advice to businesses within Washington State. To locate your local SBDC advisor please visit the SBDC web site www.wsbdc.or/map or if you or your business is close to the Longview WSBDC office you can contact Susan Hoosier at shoosier@wsu.edu or 360-442-2946.