For many businesses, purchasing or signing a lease is one of the biggest commitments they are likely to make. A careful and objective approach will increase the likelihood of finding a suitable home for your business. The cost implications should be carefully considered.
Properties which initially look within budget can look very different once the combined cost of business rates, insurance, maintenance and utility costs are added. Being aware of all the costs associated with taking on premises is paramount.
The type and location of your premises should also be considered:
- Do you want to adopt a building similar to other businesses operating in your sector, or are you looking to break the mould?
- Would your business benefit from being near a university, in an established residential area, or is it more suited to a business park with good transport links?
- Are you looking to secure a property with sufficient space for expanding your business, or would you look to relocate if your business becomes established?
- Some premises can only be used for certain types of business activity. These activities are grouped into categories and permission is only given for certain categories to operate on each premises. For further information visit The Planning Portal: Planning Portal (external website)
- In addition some businesses may need a licence to operate.
There are three main issues to consider:
Identify a suitable location
Consider your customers, competitors and suppliers. If your customers are based in a defined geographical area, it makes sense to locate your business where they can easily find and visit you. This is essential for retail businesses. Decide if it is most suitable for your business to be close to competitors or have exclusivity in an area. Consider if it is important to you to be close to specialist suppliers. You should also:
- Find approximate costs in your potential areas
- Think about transport infrastructure (ease of access to pedestrians and cars, parking, bus routes, etc)
- Research the local environment
- Identify the local facilities you will need (e.g. suppliers, transport links)
- Assess location alongside your business image (e.g. what does the area you’re considering setting up in say about you?).
Type of premises
Guided by your business requirements, you need to decide how much space you need, what access or on-site services are required, and also the security, comfort and appearance of your premises.
Some premises can only be used for certain types of business activity. These activities are grouped into categories and permission is only given for certain categories to operate on each premises. You can find further information about these categories on the planning portal website:
Planning portal - Change of use (external website)
If your business makes noise, creates or processes waste, or handles food, you might need a licence, and there are often additional regulations you need to adhere to. In addition some businesses may need a licence to operate.
Whether to license, lease or buy
A licence gives you maximum flexibility, but minimum security. You, or your licensor, can usually terminate the arrangement at short notice.
A lease gives you less flexibility, but more security. You agree to occupy the premises for a fixed number of years.
You can buy the premises outright and acquire the freehold. Established businesses with spare cash might buy their premises as an investment.
Once you have answered all of the above and have established how much your business can afford to spend your search can begin.
Running a business from home
Something you may want to consider as a means of keeping costs down when you start your business is whether you could run your business from home.
A typical home-based business could include freelance and consultancy services, arts and crafts, home baking, hair and beauty and pet care, generally those that have been developed from hobbies.
Things to consider include:
- landlord or mortgage-provider permissions
- planning permission and building regulations approval
- business rates
- trading licence – i.e. beauty therapists, animal boarding, food business
- tax liability
- health and safety.