Building Value in Your Business’ Commercial Real Estate for the Future

Most small to midsized business owners are focused on generating immediate and steady income; however, focusing solely on income can have a negative impact on transferable value when it’s time to sell or retire.

Often commercial real estate is overlooked when planning and preparing for the sale of a business. Not planning early and preparing your real estate, whether you are leasing or selling, can cost you thousands of dollars, and potentially millions, in a sale.

According to the U.S. Small Business Administration, over 50% of small business owners are over 50 years old. This means a large amount of small to midsized business owners are selling for retirement within the next 5-15 years. In today’s competitive climate, building value in your business is as equally as important as generating immediate income.

For business owners, selling their business can be complex and owners are often overwhelmed. These two factors may cause owners to neglect developing a real estate strategy that lines up with the disposition of their business.

Businesses are typically valued on EBITDA (earnings before interest, taxes, depreciation and amortization) and real estate can have an extreme impact on EBITDA. Not developing a cohesive strategy can cost owners more than just saving a few dollars on the rent per square foot price.

Many business owners overlook aligning their real estate with their business’ disposition strategy because they look at real estate as an expense. Unfortunately, viewing real estate as merely an expense results in missed opportunities and less flexibility when it comes time to sell your business. Positioning your real estate with the business’ disposition strategy can payout thousands of dollars, and in some cases millions, in the sale of your business.

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