Location, Location, Location Essay Example | Topics and Well Written Essays - 750 words

Location, Location, Location - Essay Example Once the business starts, that money can be spent on other income-increasing investments. The next important advantage is the tax advantages in the form of reduced AMT (Doosan Global Finance, 2008). However, there are disadvantages too. First of all, leasing gives no ownership, and hence, returning the product or upgrading the product as one wishes will not be easy. Even if the thing goes into disuse, it will not be possible to dispose off the same, and till the termination of the contract, one will have to pay according to it. The second point is that when the expenditure over a long period is considered, it will cost more than actually owning the property. However, considering the low initial cost, possibility of open credit sources, chances of relocation and modification, it is wise to have property leased of owned (The top 10 reasons, 2012). The very first advice for the friend is to have the mobile home as office instead of building a permanent structure. This is so because not building a permanent structure at this beginning stage has financial advantages. First of all, the cost is spread over a number of years, and this, undoubtedly, helps in controlling the problem of cash flow. In addition, if the decision is to use the mobile home instead of permanent structure, it is easy to get the best location as there is no extra expenditure involved. Another problem is the issue of undercapitalizing. Here, one has to remember the fact that many businesses face failure because of undercapitalizing the business. This takes place because they spend the money on not so important investment. Doing this, especially when there is uncertainty regarding future cash flow, is disastrous. What is required is the strategy of staging investment. In the first stage, the business should not invest in building a permanent structure. In fact, there are a number of benefits as associated with not constructing a permanent structure, especially in accounting terms. They are: it