SHOULD YOU BUY A WAREHOUSE OR RENT IT FOR BUSINESS EXPANSION?

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Warehouse Fulfillment Services In India

• https//www.quickshift.in/fulfillment-services

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Should You Buy A Warehouse Or Rent It For
Business Expansion?
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So, you have zeroed in on warehouse as your
preferred storage option over 3PL providers
like Amazon fulfillment centers et al. But a
tricky question you might be facing now is
whether to buy a warehouse or rent it. If that
thought did cross your mind, your business must
be doing reasonably well since buying a warehouse
is an excessive investment upfront. To be
blatant, theres no single answer to the question
for you. It depends upon a lot of factors,
including the availability of capital, business
goals and needs, projected growth,
sustainability, and so on. Here we will discuss
the advantages and disadvantages of both the
option to help you make the right choice.
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• Buying A Warehouse
• Pros
• Flexibility
• This one advantage can also be termed as a con
  taking a warehouse space for rent. While
  launching a new product range or tapping into a
  vertical, you would need to make changes in your
  storage space. This includes the addition of
  pallet racks, an adjustment in layout, and other
  constructional changes. Buying a warehouse
  storage space in Pune and other cities make you
  the owner of your own deeds, which means you
  wont need to take permission from the landlord.
• Renovate your warehouse as well as make other
  changes to boost the growth of your business. You
  can customize a pallet racking system and
  construct the warehouse according to your needs
  rather than using someone elses installed system.

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• Stability
• Rental rates fluctuate quite a lot, and your
  landlord may charge exorbitant prices, which you
  can do little to control. Mortgaging a warehouse
  is a better option in this regard as the mortgage
  rates fluctuate quite less. If you can make the
  complete the payment in one go, you have a large
  property to yourself and would keep your
  hard-earned profit to yourself.
• Taking a warehouse space for rent leaves you with
  no control over when you need to relocate. Your
  landlord may choose not to renew your lease
  calling for urgent relocation. Looking for a new
  warehouse takes time, and you might incur losses
  in such a case. Buying your own warehouse offers
  you the stability to grow your business from one
  place.
• Long term investment
• Along with benefitting your business, a warehouse
  is also a reliable investment. Its value will
  increase over time, and you can also use it as
  equity in loans to grow your business. You can
  also sell the warehouse at a profit if in case
  you need urgent capital.

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Cons Huge investment upfront Buying a
commercial warehouse generally requires around
20-40 of deposit upfront while you would just
pay around 5 deposit on residential properties.
Depositing such a large amount can result in
decreased liquidity, which in turn adversely
affects new businesses. Maintenance While
buying a warehouse gives you the option to
customize your storage space as per your
requirements, it also means that you have to bear
the costs of maintenance. You would have to
employ your own workforce and organize the
warehouse besides focusing on the growth of the
business.
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• ADVANTAGES OF RENTING A WAREHOUSE
• Flexibility
• While you cant customize the structure of your
  rented warehouse storage space in Pune, Mumbai
  etc, you have the option to switch storage
  locations as your business grows. Buying a
  warehouse in different cities can be practically
  impossible, but you can easily rent warehouses on
  different locations for secure storage and quick
  shipment. You can also switch to a more massive
  warehouse when the product demand increases.
• Maintenance
• No one can do all of it alone. Keeping a check on
  inventory, shipments, delivery as well as
  manufacturing and marketing is already an arduous
  task for a businessman. Add to that the headache
  of renovating the warehouse or repair. Your
  landlord will take care of all those problems in
  a rented warehouse.

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• Cons
• Cost
• Rental rates fluctuate a lot while leasing a
  warehouse, and there is no way they will ever go
  down. You will have to pay a monthly rent that
  increases annually. The increase can be quite
  significant, and youre not gaining anything by
  the rent, unlike buying where you are actually
  investing your money.
• Lack of control
• In contrast to buying a warehouse or using
  an Amazon fulfilment center, leasing it means you
  dont have control over customization of property
  or changing the layout. You cant change your
  storage space as per your requirements without
  the landlords permission. Additionally, you
  might have to relocate if the landlord finds a
  better deal, which can affect the productivity
  and stability of your business.

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WHAT SHOULD YOU DO? A small scale business or
startup in its growing stages would be better off
leasing a warehouse for storage. You can choose
to invest in buying a warehouse once your
business has grown enough. Weigh in all these
factors and make the right choice since
investment should always be well calculated to
build a business.
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