Leasing and Buying Essay Example | Topics and Well Written Essays - 1500 words

Leasing and Buying - Essay Example This incident Mr. Walton couldn't forget till his grave. It also pictures the dilemma in everybody's mind when it comes to taking a place on rent. So, why would anybody rent Definitely, it feels great to own something. Unless you own something, you can't be happy having it because you always fear that it could be taken away. Every man dreams of owning the world. But, how much can you own and can you handle the hassle of owning everything. Sometimes you have to have a logical thought about what is more important - owning things or just being able to use them. Let us analyze from the point of view of a small business what is good for them. All new small businesses generally start from a relatively even smaller scale. Until the business is not set, the risk factor associated with it is high. So, initially the focus is on keeping investments in the business to what ever is essential only. The owner has to keep a backdoor for himself so that in case things don't work out fine, he has a way of exiting with minimum losses. Because, when the time comes to "Establish the liquidation value of your assets" (Cavanaugh, step 4) you rarely get a fair price. According to the U.S. Small Business Administration, "Generally this amount is at least 20% less than its retail value." Also, initially most of the liquidity is sucked up by the core activities of the business. As such, even if the owner of the business wants to own his premise, he cannot afford it. He is forced to rent. So, as long as the location of the business is not all that important (like in the case of small factories or offices) it makes more sense to rent, since even if they have to relocate, it's not very difficult and it doesn't affect their customers much. According to Dratch "Taking your company from Point A to Point B may seem at first to be a simple matter of "get up and go," but if you plan ahead, you will get it done without too much trouble." (Dratch, par. 1) But as the business grows old (as in the case of most mom and pop businesses), it becomes more stable. Or even initially, if the location of the business is very important, like in the case of a small shop, re-location becomes a hassle. So, it makes sense to buy your own property instead of paying rent. If you own your space, it also gives a sense of belonging. You know that it is yours and no one is going to ask you to leave from there. You take more efforts in planning it, furnishing it, decorating it and incase you need to change anything, like even pulling down a wall to make more room, it's totally upon you. It gives both, mental as well as physical stability. Large Businesses: Large businesses have their own way of doing things. Being usually tied down with their bureaucratic inertia, they have to fix their policy once and once fixed, they have to follow it. Either they buy the space or they rent it. They usually do not prefer to rent in the beginning and buy later. They usually will just follow their policy. The concerns of big companies are not very different when it comes to premises. Usually big industries and corporations will prefer to own their premises. This is because relocating a big industry is not easy. Finding a similar huge place, with all the necessary approvals and facilities is most difficult. Since most of the equipment or machinery is tailor made and huge, it's impossible to relocate. And even if they try, the cost is exorbitant and the