Assuming you have significant resources to own a warehouse or your new business ideology circles around warehouse operations. In that case, only one option remains—to study the dilemma of purchasing a warehouse.
Advantages of Owning a Warehouse
- The warehouse you own is yours. Comparing it to a rented warehouse, you will constantly seek permission from the landlord or the lessor to change their property. You can alter the floor plan, extend the structure, or edit however you please to facilitate the growing or shrinking market demand. Some of the most common alterations include pallet racking or floor layout adjustments.
Owning a warehouse means you can choose the perfect racking system to facilitate warehouse operations. It will help you create more storage space and optimize warehouse operations. You can install and dismantle freely and make the best of the floor spaces available.
- The second advantage of owning a warehouse is the peace of mind a reliable storage space exists. However, the warehouse will be a mortgage. The best part is that mortgage rates do not fluctuate as much as a rental or lease increase annually. Rent and mortgage are subjected to inflation and other economic factors. A mortgage is a long-term minding contract to allow financial freedom.
Owning a warehouse also aids in helping the business grow. Since the company owns the warehouse, you can grow the operations around it without shifting anywhere. On the other hand, the owner may not renew the lease when working with a leased warehouse. What to do now?
- Consider purchasing a warehouse as an investment similar to purchasing a residential lot or house. The warehouse will grow in value over time which will contribute to the business’s net worth. You can decide to sell it at a profit and purchase a better warehouse with modern features and security control.
The increase in value will add to the equity of the firm, potentially attracting investors too. You can expand the business into different cities or diversify into other logistical departments to grow influence over the market.
Disadvantages of Owning a Warehouse
- Even though owning a warehouse can be attractive, it will not come cheap. Foremost, purchasing a warehouse will require a 30 to 40% deposit, compared to only 4 or 5% on a residential lot. Since the warehouse is a commercial building, separate financial and legal rules apply to it.
- Though you have purchased a warehouse, its operative expenses will add to the cost. This involves paying for maintenance and cleaning staff. Furthermore, any construction is also financed by the owner. There are annual taxes, property taxes to pay, which are also paid by the owner. Therefore, it may cost you a pretty penny to operate your warehouse.
To Own or Not To Own a Warehouse
Based on the previous arguments, it is evident owning a warehouse is a subjective argument. Learn how 3PL from Red Stag can support and improve order fulfillment for your business regarding warehouse operations.