Business owners’ options: Is it best to buy or rent

Whether it’s a small
charming shop or a larger office space, premises put small business owners on
the map, so to speak. The question is: Are they better off renting or owning
the property?

While the advantages
of each may seem obvious, the decision is not an easy one for small business
owners, especially in these difficult economic times.

“Rent can be very
hard on business owners’ bottom line,” said Debbie Hand, a member of the Small
Business Association, “but I don’t know many who own their site — it can be
difficult economically.”

These days, it seems,
the state of the economy appears to be the overriding factor when it comes to
making a decision on where to locate a small business. Others issues are
certainly considered, including cash flow, funds available for capital outlay,
how long the business intends to stay in one area and how much the business is
expected to grow.

“My personal opinion
is it would better to own your premises,” says Hand, but each owner must weigh
the pros and cons.

For Phillip D.
Ebanks, owner of the Heart Health Centre, leasing is the answer: “I prefer to
rent. If you can find the right landlord and the right price, that’s a big
advantage.”

For Ebanks, his West
Shore Centre location is ideal.

“The common area
maintenance is included, and there are other benefits, like if your water line
breaks or your a/c acts up (you contact the landlord). Your windows get
cleaned, the parking lot is paved,” and the landscaping is tended to.

“It all comes with
finding a good landlord who has the resources,” he said.

Further, he noted,
“If you look at the Fortune 500 companies, a lot of them don’t own their own
buildings…it keeps their liabilities down.”

On the other hand,
Ebanks noted some of the drawbacks if small businesses choose to lease their
premises: “You can’t do things you’d ordinarily do in your own place of
business, like put up big signs in the windows or alter the building to suit
you — you can’t throw a garage up on the side.

“You might get a
landlord who doesn’t care or respond to your needs,” he said, and if you leave
because business is slow, you may still be liable for a lease. “But if you own,
your bank would work with your or you could divide your property and lease out
ten other spaces, for instance.”

Having weighed all of
this some time ago, Ebanks is certain in his decision. “I prefer to rent at
this stage of the game, for the business I am in.”

Another renter, Sally
Allison, part-owner of Absolutely Fabulous in the Caymanian Village, took over
the business six months ago, and believes it is a good way to start.

She cited some of the
same reasons as Ebanks, and added: “Another big plus for me is if a hurricane
does come, I can just up and move.”

Having said that,
however, Allison notes that if she were to find the right spot — most likely a
small house — she would definitely consider buying.

One owner who has a
hand in several businesses is attorney H. Philip Ebanks. He’s involved with
Premier Solutions Group in Queens Court and part owner of a cabinetry business.

“I lease everything,”
he says, adding that it all boils down to whether a small business owner has
the capability of owning given current economic conditions.

“Many small
businesses are really concerned because we don’t really know where the end of
this downturn really is,” he said. “It’s a big concern …as to whether we are
going to spend a big capital outlay or remain lean and mean and see this thing
through.”

If the economy were
to improve, he said, “I think you’d see very quickly small businesses get on
the bandwagon because it’s a buyer’s market.”

On the plus side, he
said, leasing rates have gone down as more commercial properties have become
available.

One business owner
who is in something of a unique situation is Debbie van der Bol of Pure Art in
South Sound. Her partners are her son and his grandmother, who actually owns
the property and sits on the board.

“We do have the
advantage of making changes without asking the permission of a landlord,” she said.

Recently, the
interior has been renovated to accommodate the works of local artists in an
exhibit space — again, all changes that the owners agreed on for the business,
so “asking permission” was not part of the equation.

Ownership, in this
case by other family members involved in the business, has been a very
successful arrangement. Come November, Pure Art will celebrate 25 years at its
South Church Street location.