What is an advantage an entrepreneur gains by leasing facilities rather than buying them?

• A. ownership of the assets
• B. avoidance of a large cash outlay and a decrease in investment risk
• C. lower maintenance costs in all cases
• D. tax benefits equal to purchasing

Answer: (B)

Leasing facilities helps with cash flow and risk management by avoiding a large upfront payment and spreading the cost over time. This preserves liquidity, leaving more cash available for day-to-day operations, emergencies, or growth opportunities, and reduces the risk tied to a big asset purchase. It also offers flexibility to adapt to changing needs—easier to upgrade, relocate, or scale as the business evolves. Owning the space would require tying up substantial cash and committing to the asset regardless of future conditions, and maintenance costs and tax implications vary and aren’t automatically better under ownership. So the standout advantage is conserving cash and lowering investment risk.