Commercial premises

Once you have decided you need premises for your new business, you need to think about what type – office, retail, industrial unit, garage, other or mixed?

Premises size and appearance

Size matters, so think about layout and how much space you need. Obviously, you should minimise costs, but better to have slightly too much space than not enough. You don’t want to be hindered by cramped conditions, plus, there are health and safety rules to observe. So think carefully about how much space you’ll need or what storage facilities you’ll require.

Also think about appearance, because this will affect perceptions of your business. If customers won’t be visiting your premises, this is less of an issue. However, if they will be and your premises look unclean, untidy, unsafe or old-fashioned, customers could be put off – and that’s without considering the negative effect it can have on staff morale.

Legal requirements

Businesses must also make ‘reasonable adjustments’ to their premises to enable access for staff, customers and visitors.

Planning permission is not necessary for minor changes to building interiors. More significant alterations are likely to require planning permission, so check with your local council first. All major work must conform to building regulations, of course. You could require planning permission to use your home as premises if this fundamentally alters how the building is used or affects the surrounding area.

Premises location

Weigh up how easy to reach your premises need to be, especially if you plan to employ people or need customers to visit you. If you’re looking to find an office or warehouse space, how good are local public transport links? What about parking? Commercial premises or industrial units in more remote areas might be cheaper, but that’s no good if customers and employees can’t reach you.

If you’ll be relying on footfall, location is critical, of course. Even in busy places, some locations are more popular than others, but there are cost implications, too. Prime locations usually come with prime price tags – particularly if you’re looking to open a retail business.

You also need to consider other businesses nearby. For example, a smelly take-away could put off your customers. In other cases, a take-away might be good for your business. In most instances, locating your business too close to your competitors isn’t wise. Before deciding on premises, find out how much competition will be on your doorstep and what potential customers think of your proposed location.

Searching for premises

Decide how flexible you are about condition of premises. Are you willing to adapt or improve them – or is that hassle and expense you don’t want? Will you need to make specific security arrangements?

Also beware that some rent/lease agreements forbid alterations. In other instances, a landlord might be willing to share costs.

Whether to rent, lease or buy – that’s the question. There are pros and cons to each. Most small businesses rent property or lease space, because it requires less investment. Buying might still be wise, if you have the means. However, deposits for commercial mortgages are normally quite high and credit has tightened significantly.

Even when leasing or renting premises, you’ll need to stump up a deposit, the size of which will depend upon on the length of the lease/rental agreement.

Premises costs

Renting or leasing might include additional monthly costs for which you hadn’t budgeted (eg service charges), while buying will involve professional fees. Find out how much rates and insurance will be, too, because these can add significantly to your overheads.

Set a monthly premises budget and search accordingly. Local newspapers, the trade press and property websites are good for leads. Talk to other businesses near your preferred location or ask commercial property agents what they have available. Make a shortlist of suitable properties and view as many as you can.

Seek professional advice before signing any agreement and walk away from contracts whose terms are weighed unfairly in the landlord’s favour. If possible, seek clauses that allow you to vacate the premises early.

More on this topic:

• Q&A: Finding premises
• How I found my premises
• Q&A: Setting up a home-based business

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