A growing business is a good thing. But if your business grows too rapidly and without enough planning, you can find yourself with a common growing pain: not enough space for everyone to work efficiently.
With increased orders to fill, or clients to service you may also need to find premises that accommodate bigger production facilities and storage, or your growing staff.
There are several things to consider when deciding to expand premises, including whether to buy premises and equipment outright or to lease them. In a period of rapid growth, when working capital may be under pressure, leasing premises or hiring serviced offices gives flexibility but can cost more.
Outgrowing your premises – what are your options?
542 Partners found themselves in this very conundrum just this year. Our rapidly expanding team has meant our original office space simply couldn’t house our team comfortably any more.
Review your options
So (cramming into our meeting room) we figured out our options. The basic options were:
- renting somewhere else by yourself;
- Renting with related parties /similar businesses or;
- Coming up with deposit and borrowing from the bank to purchase our premises in our own names, trading entity or family trust
For various reasons we looked for something more.
For commercial premises there is always the option of borrowing and buying in a self-managed superfund (utilising your superfunds as a deposit) and renting the premises from your fund.
So we combined the super of Adam, Stu and Craig into a combined SMSF and borrowed the balance to purchase our new office. 542 Partners now leases the premises from 542 Partners superfund.
There are strict regulations around the entities required for the type of structure we developed. And while it’s working well for our individual circumstance, we always recommend seeking financial advice to ensure it is a suitable strategy for your super investments.
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