Choosing the right premises for your small business is crucial to its profitability. Our essentials guide explains how to find the right location for your company and make sure you get value for money...
Taking on premises is one of the most important decisions you have to make in running a business, not to mention one of the costliest, so it pays to get it right first time.
Choosing your premises: questions to ask
Whether you intend to lease or buy, you need to consider these points to make sure you find the most suitable premises for your business:
1. What kind of location do you need?
Different types of business need different locations. A bar or restaurant may rely on passing trade and town-centre frontage, for instance, but many other businesses - from bookkeeping to specialist car parts - will not lose customers by selecting an affordable out-of-town locations. There's no point paying a premium for property advantages you don't need.
2. How much floor space do you need?
You can use a piece of graph paper or a simple computer program to work out how many desks will fit in a particular space. As a rule of thumb, you should allow about 15 square metres (160 square feet) per person. Some businesses may need high ceilings or reinforced floors if heavy machinery is being installed.
3. Do you want to buy, lease or opt for serviced offices?
Most small businesses opt for leased premises to start with, to avoid the capital outlay of buying. (See Buy or lease? below).
4. What's your budget?
Bear in mind that on top of rent, you will need to budget for service, electricity and gas bills, insurance and business rates.
5. What's the market like?
Compare different costs of premises to find the best deal. Ask around other businesses and contacts for their tips and recommendations.
6. Do you need planning permission?
Some businesses require planning permission to use premises for what they do. If your business is particularly noisy, for example, you may need to find out about restrictions on noise emissions.
7. What facilities do you need?
Think about the facilities you require like lighting, toilets, a kitchen or boardroom. Consider whether you need parking for staff and customers. If your business gets lots of lorry deliveries, for example, you may need good access.
8. Are the premises future-proof?
Think ahead to your long-term aims and whether the premises will be large enough for when you expand or take on more staff. If you are likely to expand rapidly, moving again could be costly.
9. Are the premises safe and lawful?
Check the premises comply with fire regulations, disabled access and other health & safety legislation.
10. When can you move in?
Time is money, so check how quickly you can move into the new premises and how long fixtures and fittings might take to install. Think about when the best time to move would be for your business: you don't want to be between premises at your busiest time of year.
Buy or lease?
Buying premises is obviously the most expensive option as you will need a commercial mortgage and plenty of capital to pay out for a deposit, legal and surveyor's fees. On the other hand, buying is a significant investment and gives you the flexibility to expand and alter your premises to suit your business.
Serviced premises are an alternative to leasing. These are offices complete with desks and phones where the building operator takes responsibility for all the services like Internet access and reception. Serviced offices tend to be pricier than leases but have several advantages: they're very flexible, you can buy in office services only as you need them, and you can project a professional image, with mail and calls handled, even when there's only one of you.
Most small businesses opt to lease premises to avoid such large capital outlays, however. When looking at leases, always check:
- the length of the lease
- any break clause that allows you to terminate the agreement before the end of the lease
- whether you are allowed to sub-let the premises
- any restrictions on how you use the premises
- whether you are responsible for repairs and maintenance
- when and how often the rent is to be reviewed.
How we can help
Read our budgeting guide for small businesses