Why You Need to Invest in Your Commercial Real Estate

Your commercial real estate is the storefront of your business. It’s how current and prospective clients will form their first impressions of you. It is a place for employees and customers to feel safe, happy and connected to your brand. Above all, it’s where the majority of your money will be made. Therefore, your commercial real estate needs regular attention and investment.

However, most small business owners lack the cash needed to optimize their premises until they grow. Sadly, many don’t realize that their run-down premises are stifling their business prospects. This is one of the reasons why 20% of small businesses in the U.S. fail in their first year.

Why is commercial real estate important?

Your commercial property is one of your most valuable assets. However, this means nothing if your premises are not giving something back to your business.

There are three main reasons why commercial real estate deserves your investment:

1. Your property informs your reputation

“First impressions matter when you want to build a lasting trust.” – Robert Lount, Assistant Professor, Ohio State University.

 

Taking care of your building’s image is one way to ensure a positive first impression of your business. Your commercial property should give people a clear idea about your brand and what you do. They should have formed a good first impression before they even step over your threshold. If your commercial real estate isn’t up to scratch, it might be getting you off on the wrong foot with your customers.

2. The investment will increase your property’s value

You will need to perform regular upgrades and maintenance on your business property to help it retain its value. As a general rule, the higher the value of your property, the better your assets, making you more likely to be accepted for a cash advance and acquisition loans. When it comes to selling your property or moving to a bigger outlet, those renovations could be the difference between equity and loss.

3. Poor maintenance could impact efficiency

These days, even the smallest commercial outlets need electricity, fast Wi-Fi, and running water to perform simple operations. So what happens when you lose these necessities due to bad piping or poor insulation? You can minimize the risk of downtime for your business by staying on top of simple maintenance. You may also need to perform renovations when necessary – especially to old buildings.

In short, investing in your commercial property will save you money (and time) in the long-run.

Does your real estate need renovating?

If you’re not familiar with property development or renovation, it’s not always easy to spot when areas need upgrading. Here are some questions to ask about your property:

Are there visible signs of wear?

If your building looks dilapidated from the outside, it obviously needs some work. If you know your building is slowing you down, but you can’t identify the problem areas, you can arrange for a chartered surveyor to perform an inspection.

A surveyor will put together a building report and make you aware of any drainage issues or damp that you’re unable to see. You will then have an idea what the renovation will cost and how long it will take.

Does your property create the right impression?

In business, impressions are everything. It’s important that your building is well-maintained, painted, lit and signposted from the outside to attract prospective clients.

Does your property reflect your selling point?

Just like an advert in the paper, your property should be marketing your business at all times.
Therefore, it needs to reflect your selling point.

If you’re an eco-friendly business, for example, do you demonstrate this with solar panels and energy-efficient lighting? If you run a café, do you have your menu displayed outside, and a sign to welcome customers inside? Even if your property is well-maintained, it’s the little touches that make you stand out from competing businesses in the area.

How to raise funding for real estate

The main hurdle that prevents businesses from investing in their real estate is lack of funding. Luckily, there are affordable loans for this purpose.

One way to finance your property renovation is with an SBA 504 loan. The SBA provides various loans to small businesses in need of funding, such as the interest only business loan, acquisition loans, and industrial equipment financing. However, there are generally strict terms about what you can use the cash advance for, which is why an SBA 504 loan is recommended to those who want to renovate property.

An SBA 504 loan is a low-interest loan that helps businesses purchase the assets they need to grow. It is a fixed-rate finance option that can be paid back over a lengthy repayment term. An SBA 504 loan can be used for equipment financing or for those looking to acquire or improve business facilities.

To be eligible for this funding option, you will need to put up the first 10% of what you wish to borrow as a down payment. Your bank will usually finance 50% of the loan, while the SBA will cover the other 40%.

You can find out how to apply for a small business loan on the SBA website.

Where to invest

You should spend your commercial loan on long-term investments, such as creating a more energy-efficient building. Doing this will minimize the work that needs doing in the future and help you save on cooling and heating costs. By making smart investments in your property, you can save on overheads and better manage your cash flow.

To conclude

Sourcing funding for commercial property renovation isn’t always easy. However, there are viable options available for a small business owner. One option is the SBA 504, where you can get low interest rates on business loans.

When questioning whether your property is worth taking out commercial loans for, it’s always best to look at the bigger picture. Will these renovations help future-proof your business and make it more attractive to consumers? Could the work boost the value of your property and increase your assets? Perhaps that maintenance you’ve been putting off could decrease your overheads and improve efficiency.

Whichever way you look at it, maintaining and renovating your commercial property is well worth the investment if it helps you improve and grow as a business.

Sam Osterling
Follow Sam:

Sam Osterling

Sam Osterling is a freelance writer whose work has been published in The Oklahoman, American Way, Renovator Magazine, and Hook & Barrel. Sam writes on small business management, marketing and technology. He’s based on Long Island, New York.
Sam Osterling
Follow Sam:

Sam Osterling

Sam Osterling is a freelance writer whose work has been published in The Oklahoman, American Way, Renovator Magazine, and Hook & Barrel. Sam writes on small business management, marketing and technology. He’s based on Long Island, New York.