One of the best features of an accessory dwelling unit (ADU) is the fact they can serve a huge range of functions. The most common use is to add living space – either for personal use or as a rental property – but people use ADUs for many other purposes. They’re a popular choice for an art or music studio, for example. Others use them as a dedicated home office.

However, if you own a small business that requires a physical space, you can also use an ADU as your business headquarters. Doing so offers quite a few benefits and could be a catalyst that improves profitability and helps your business grow. We explore some of the reasons why in this article.

Benefits of Using Your ADU for Your Business

Locating your business in an ADU on your property has some serious advantages that can greatly benefit you and your company. Depending on the nature of your business, where you’re located, and other factors, it can offer several financial incentives. But the benefits of putting your business literally in your own backyard extend beyond just the money you spend – or don’t’ spend.

It Can Save You Money

The bottom line is the main consideration for most business owners, and the opportunity to save money is one of the most obvious and impactful benefits of building an ADU for your business. For a business that requires a physical space, rent is typically a considerable expense. 

Depending on your space needs and other factors, you can likely spend less on monthly finance payments than you would on commercial rent. This is especially true if you’re located in a high cost-of-living area where commercial real estate comes at a premium. This one is simple – spending less on rent means more profit, or more to invest back into your company.

You Don’t Need To Commute

Another key advantage of having your company just a few steps from your home is that it eliminates the need to commute to and from your business. For many, the convenience factor alone is enough reason to build a secondary dwelling on your property for your company. It’s simply easier to attend to one task or another when you only have to walk a few feet to get there.

But there are some more practical and quantifiable reasons why eliminating that commute makes good business sense. Commuting comes with some costs that may seem small but add up quickly. There’s the cost of fuel to consider and the wear and tear you put on your vehicle every day. Another thing to consider is the amount of time you would otherwise spend commuting. That’s time you could be working on your business or taking a break from it.

You Have More Control Over Your Space

When you rent a space, you’re subject to the rules set forth by the property owner or property management company. That can make it difficult to make changes to the space that can benefit your business, such as adding new power outlets, removing a wall to open up space, or even just repainting a wall.

However, when you own the space where you put your business, you get to make those choices – and any others – without having to ask anyone for permission. Without having to worry about what you can and can’t do with your business space, you can instead focus on improving your operations however you need to. You also don’t have to worry about neighboring businesses interfering with your own company.

It’s More Predictable

Renting a space puts you at the mercy of property owners, management companies, and the commercial real estate market. That means that there is always a risk of periodic rent increases or being pushed out if a property gets sold to a new owner and having to relocate at your own expense.

Owning your property offers much more consistency – something that is often hard to come by when you own a small business. If you decide to finance your ADU build, you may get a loan that comes with adjustable rates and therefore may still face periodic changes in your monthly expenses. However, you’ll know when they’re coming and you won’t have to worry about being kicked out of your space on short notice. Having that kind of consistency can remove some of the stress and anxiety of operating your own business.

You Can Design Your Space To Fit Your Business’ Needs

When you rent a commercial space, you need to find ways to fit your business into the existing space. Those spaces may not always be set up ideally for your business and therefore can impact your efficiency and profitability.

One of the biggest advantages of working with an ADU contractor to build a space for your business is that you can design it to be optimized for what you need it to do. Whether that’s putting storage where it makes sense to you, designing the space to fit your workflow, creating a loading area where it’s most efficient, or anything else that helps your business, you have the option to build that in from the start when you build your own space.

a drop shipping company in an adu for business purposes

Should You Build an ADU for Your Business? What To Consider

Creating a new space on your existing property can be a game-changing move for many small business owners. However, whether or not it’s a good idea for you to do so depends on several key factors. Be sure to fully consider the advantages and drawbacks of these factors before going ahead with your build.

Business Function

Some businesses are very well-suited for an ADU. Businesses like creative agencies or small software firms that don’t require much infrastructure are ideal for smaller spaces. Retailers that sell smaller items such as jewelry, screen-printed shirts, or computer parts can also thrive in an ADU.

However, if your business deals with large machinery, for example, an ADU may not provide enough space to operate effectively. Companies with more than a few employees on site may also have a hard time functioning in a secondary dwelling.


Monthly finance payments for an ADU build are often cheaper than commercial space rental, but not always. That math depends on the cost of your ADU including financing and the cost of equivalent commercial properties for rent. It’s a good idea to research your rental options before committing to building a space. You may find cheaper options or similarly-priced ones that don’t require you to use your home as collateral.

We offer an ADU build cost calculator that can provide you with an estimated cost range after you select the options you want to include. While this isn’t an official estimate, it can give you a general idea of what you might have to pay to construct your own place for your business. However, keep in mind that if you are financing your structure, you’ll want to consider the total cost of the loan, including the interest you’ll pay.

Traffic Needs

An ADU can be an ideal solution for a lot of types of businesses, but if your business relies on getting heavy foot traffic, you may want to seek other options. This is because your ADU will be located in a residential area, where neighbors may grow tired of cars and people coming in and out throughout the day. 

Growth Potential

The goal of most business owners is to see their business grow over time. One advantage of renting is that you can upscale when you need to relatively easily. The same can’t be said for an ADU.

Don’t just consider your business’ current needs. Think about where you want your company to be a few years down the road and whether the space you can afford to build can support the best case scenario. This is less of an issue for creative or information-based businesses, but it’s still something to consider. 

Personal Preferences

Many people will appreciate not owning their own space for their business and not having to travel to and from their company’s location. But that’s not true for everyone and it may not be true for you.

Furthermore, some people consider renting to be a more worry-free option for locating a business. Just like owning a home, owning a business space comes with a lot of responsibility that you may not have time or bandwidth to handle. Think about the best scenario for you and how you like to operate as part of your decision.

Building an ADU for Your Business: Conclusion

There are a lot of advantages to building an ADU on your property for your small business – financial and otherwise. If doing so can save you money and make it easier to run your business, it may be the solution you need to find the kind of success you seek.

But just like any major financial decision, there is a lot to consider. As an ADU specialist contractor have extensive experience building tiny houses and in-law suites for all sorts of purposes. With a free consultation, we can help you walk through everything you need to consider and answer whatever questions you might have. If you’re ready to start a conversation, click the button below to set up your free consultation.