Terry Gilbert, business support manager at North Somerset Enterprise Agency, answers some key questions about finding premises.
Providing it won’t hinder the business or adversely affect your home life, then yes, even if that’s just while you’re getting established. After wages, premises are usually the biggest overhead, so running a home-based venture can save you a lot of money.
It varies, but it can take longer than you imagine to find the right premises. You need to know exactly what type of premises you are looking for – size, type, layout – and in which location. For cost and other reasons, you might need to look at other options, which means your search will continue. Then you have to sort out the paperwork, plus, you might need to fit out, decorate or even renovate the premises, so build in as much time as is necessary.
For businesses that rely on footfall for custom, location is crucial. Even if not, your premises need to be easily reachable by customers, suppliers and staff. If your employees don’t own a vehicle, they need to be able to reach you by public transport. If cost-efficient, high street premises are best for retailers. If you have to go off the beaten track, you’ll have to spend more on marketing.
You shouldn’t overstretch. Burdening yourself with unnecessary additional costs can be disastrous. Look closely at your anticipated sales and all other costs and then work out how much money you can afford to spend on premises. If you can’t afford your ideal premises, you’ll need to compromise.
Simply walking around a preferred location can throw up leads – perhaps you’ll see an agent’s board attached to vacant premises. Local papers are worth a scan, as well as property websites. Ask other business owners if they can recommend properties and agents/landlords. Your local enterprise agency will be able to help. Look at as many suitable premises as possible before making your decision.
Potentially, your premises could be broken into, so security is key. Make sure doors and windows are secure and assess low roofs, entries, etc. Installing burglar alarms and CCTV can be a good additional deterrent. If premises aren’t adequately secure, ask the agent/landlord whether they’re prepared to pay for all or at least some costs.
Depends on demand. In some locations, the commercial property market has not been as hard hit as the residential property market. If a landlord/agent is eager to rent, you might be able to negotiate a cheaper price or rent holidays. Before signing any agreement, speak to other businesses that rent from the same source. Also speak to other businesses nearby to find out about business rates, local crime levels, etc.
Rental agreements with reputable agents/landlords are compulsory, but at least then both parties understand their responsibilities. Seek professional advice before signing an agreement. Don’t sign up to excessive terms. You might be able to negotiate a short-term deal in the first instance, say, for 12 months.
Traditionally, buying property has proved a wise long-term investment. Obviously, you must be able to afford a deposit and your monthly mortgage repayments. Selling premises can provide excellent returns should you move or close down the business, providing demand exists. Buying also protects you from rent increases and, potentially, from being told to vacate. However, buying premises can tie up capital that you will need to grow your business. For this reason many businesses choose to rent premises, which can be more affordable and give more flexible.
Don’t rush your decisions. Focus on your real needs, explore all of your options and carefully considered the full implications before you sign agreements. Sometimes you have to trust your gut feeling about premises, but seek professional guidance before you commit.