Why do small businesses rent space instead of buying? There are dozens of reasons, most of them related to money.
Often, a business owner decides to temporarily test demand while fine-tuning parameters for the best permanent geographic location and future square footage.
Buying is such a permanent decision. It is generally a slow process and involves various expenses, such as closing costs and a down payment. In many instances, the needed level of capital is not remotely available, or limited funds are better preserved for support staff, equipment, inventory, vehicles or advertising.
As a result, new and expanding businesses choose instead to rent. But, is paying rent akin to throwing money down the drain? Even if it is, renting may be the best — or only — alternative at certain stages.