When setting up a brick and mortar business, one of the most important things that people often overlook is the business premises. With landlords and property owners all too happy to let a storefront, whether it suits your needs or not, it’s worthwhile asking yourself a number of questions before you commit. We’ve compiled a list of 5 key considerations, whether you’re moving, opening up your first store or your 51st.
1: Location
Questions to ask yourself
- How much passing trade you need? Work out the average spend per customer and find out if the area provides enough footfall.
- Are there good transport links? If not, this could go against you when hiring staff.
- Are there any similar businesses nearby? Too much of a good thing can be bad. If you’re surrounded by similar businesses, find a way to stand out.
- What kind of talent are you looking to attract? If they aren’t in your local area this could pose a problem when recruiting.
- Is there good parking or driver access? If not, this can cause problems for your suppliers, especially if you have regular deliveries.
- Is it important to be close to your suppliers? If done right, this could this give you flexibility on stock control or reduce transport costs.
- Does the local area have good amenities? Think about regular trips to the bank or Post Office. Your employees will have a better time at work if they don’t have to go far for lunch.
- Ultimately, how important is the location? Perhaps you can find an alternative such as working remotely or from home.
2: Expense
- Do you need to be in the centre of town? If your business relies on passers-by then it’s worth considering a prime location.
- Have you thought about a newly developed towns? These can be less expensive, and may offer cleaner, more open spaces with plenty of parking.
- Have you been offered a location with many vacant properties? The price may be lower, but it may not pay off if the area affects your image.
3: The space
- How much space does your business need? Depending on how you use the space provided you could make significant savings.
- Does it supply all the basics you’ll need? A telephone and/or broadband line, plenty power sockets, counter space, working plumbing, good air conditioning, electricity supply with certification.
- Do you have planning permission? If you’re signing a long lease you may want to expand when business takes off.
4: Legal bits
What are the set up costs for new premises?
Consider how many weeks on average it will take you to recoup your legal costs and include this in your business plan.
Have you had someone look over the contract? If you’re not experienced with property and business agreements it’s a good idea to have someone read through it with you.
Do you have business insurance in place? It’s a legal requirement to protect your business – make sure you have it before you start trading.
Lease, licence or acquire the freehold? This is a big decision to make that could affect how your business grows.
Licence
Licensing usually last up to two years before they need to be renewed. For this reason they’re better for smaller businesses and startups that could expand quickly. Licences usually incur fewer legal fees and deposit is typically as little as a month in advance.
You can often get a subsidy on the rents for licensed office space from local authorities and enterprise agencies and you can usually terminate the arrangement with little notice.
Another advantage is that landlords of licensed premises may grant you access to secretaries, concierges, switchboards, meeting rooms and other services. If anything were to break, you should be able to get it repaired pretty quickly by the landlord.
The cons involve licences being limited to offices, studios and workshops. If you have plans to expand you may have to look at a bigger space quite soon. While you’re there, you’ll have limited to change the look and layout of your premises.
Lastly, when it comes to delivery times, noise and pollution levels, you may be restricted due to neighbouring businesses.
Lease
Leases are usually between 5-25 years but you may be able to negotiate longer if needed. These are normally for more established businesses who want greater security and wish to stay for a longer time.
There are many benefits to leasing. You can have regular rent reviews with the property owner. This can be handy if rents are falling in your particular area, but bad if you’re in an up and coming area. Unlike licences, alterations can be made (with the landlord’s consent). But you might have to return the property to its original condition at the end of the lease.
There are downsides of leasing your business premises. For instance, having to cover the rent for the entire lease, even if you leave before end. It’s not impossible to negotiate with the owner before signing and ask for a ‘break clause’ to be included in your contract.
Unlike a licence, you’ll be responsible for internal repairs and maintenance of the premises, while the landlord normally takes care of repairs for communal and external areas.
5: Where to look
- Online: websites like Gumtree and AppearHere are a good start. Look at their competitors to find the best deal. You may be able to deal directly with the landlord and strike up a good relationship.
- Estate agents: look on their websites and then pop into a branch nearby your desired location to get a feel for what’s involved. You may even be able to get a viewing the very same day.
- Councils: unknown to most, local councils rent business premises as well as residential ones. Check the different local authority websites for details – you might be surprised what you see.
- Tip 1: Most people aren’t aware of this trick but if you search for your desired location on Google Maps the busy areas are shown as a brownish colour. If you rely on heavy footfall this can help you make your decision pretty quickly.
- Tip 2: the Government website has a business rates calculator that can help you estimate what it will cost to run your business based on where it is in the UK. Before you get in touch with any landlords, you might want to try calculating how much you’ll pay in rates.