I kind of fell into starting my own business but I would not have had it any other way. Someone wanted something, I knew I could supply it so it started from there. I thought I had better put things into place so that I did not have to worry about them later on. One of the first things that I decided I wanted from my business was the freedom to be mobile. Being tied down to one spot is not my style. I wanted to be able to have a business doing what I loved but without staying in one place. My writing business allows me to do that. I love the freedom, the creativity, the discipline it requires and most of all doing what I love. This does not work for everyone.
Looking for and finding the right business premises can be one of the most intimidating and daunting thing that any new (or even established) businessperson has to face. There are so many issues that have to be looked into and mitigated so that you do not end up with an expensive and time-consuming mess. So this article will look into some of these areas and show how you can help reduce the negative impact.
The most important decision is whether to have a separate business unit or just work from home. There are many many excellent articles on this area on Factoidz. I have set up my business where I can work from home, or Starbucks, or the local library. If you choose to do this, then make sure that you know the legalities and the tax implications of what you are doing. Make sure that you set aside a quiet place where you can work (although if you are a parent, especially of very young children, this can be very difficult). If possible, have a separate business line. It does not really matter where it is as long as it is the place where you go to sit down to work.
If you choose to use a separate premises, the key question that you will want to ask yourself is whether you want to buy or rent. This decision depends on a number of factors including some of the following:
* Your budget
* The size of the premises that you think you will need
* What it needs to have in terms of equipment, parking, connectivity etc
* What your customers will need - toilets, kitchen facilities
* Any special structural things
* Your short-, mid- and long-term business objectives
So when you have decided what you want to do and what you want to have, make sure that your requirements do not leave you with very very limited premises. Ask yourselves which elements are the most important, and then work from there.
Location, location, location . . .
The location of a business, especially a new one, is vital. Whether or not your customers, clients, suppliers, etc., can easily access it may mean the difference between your business succeeding or failing. The lines and margins are that fine in the world of business.
Customers - if your business relies on customers passing by your shop, you want to be in a place where lots of people congregate and gather. For example, if you are a restaurant or cafe owner, a shopping centre or a busy high street may be the place for you to place your business.
Employees - the best location for any employees will be a place that is easily accessible by public transport and has good local amenities. No one wants to work in the middle of nowhere and be starving in the process!
Suppliers - if you rely heavily on supplies being delivered to your business, you have to factor this in when making a decision about location. Make sure that there are good road links so that they can make deliveries quickly and easily.
Business rivals - if possible, you do not want to be too close to your competitors. Having said this, sometimes having the same type of business in close vicinity may attract more customers. Just make sure that you can offer something different to your competitors!
Money, money,money - always a factor. Make sure that there is enough in the kitty - not just to buy/rent your premises but to make any changes that you need to make to make it workable for your business needs.
Renting a business premises
Finding premises to rent may be a better option than buying because you may be tied in but not locked in. Rental agreements and leases are notorious for being difficult. Make sure you read them carefully, including the fine print. If you have to get a lawyer to do this, do it. The thing with rents is that they can go up quickly in a short span of time. Make sure that you know what your responsibilities are in terms of decorating, maintenance and payment for utilities, and check to make sure that the landlord knows his.
Advantages of renting include:
* Easier to budget as, in most cases, rent is fixed.
* There are few upfront costs. However, if you wanted to purchase the lease, they may set you back financially.
* Even if you pay a deposit, sometimes, this is refundable.
However, the disadvantages are:
* The service costs which can be expensive
* The difficulty changing when your business needs to change
In the United Kingdom, there are those commercial properties which have licence agreements. This allows a great deal of flexibility because it allows you to rent a premises for low upfront costs (which is usually a refundable deposit sometimes equal to one or two months’ rent). You are responsible for the health and safety of your customers and you have to keep the premises in decent order but you will not be responsible for paying for structural repairs. Again, like I said: check and recheck your agreements. It will save you a lot of trouble in the long-run.
Buying a business premises
Many businesses, especially those that are new, just do not have enough money to buy their premises outright. The odds have swung in the buyers’ favour with the current global financial problems that are presently at the forefront of people’s minds. It does appear that buyers hold the trump card in terms of getting the best deals on the market.
Buying your premises has its advantages including:
* You can take advantage of any property appreciation when and if it occurs
* You can change it to suit your business needs and personal taste
* You can choose to occupy it yourself or rent it
* Costs are more stable
However, there are some things that you have to consider:
* Buying property, at the best of times, can be a complicated and drawn-out process
* Selling it can be difficult, especially now
* You are responsible for all repairs and maintenance
But there is some good news in terms of tax when you are buying a business premises. You can claim capital allowances towards the costs of doing so. If you decide to set up shop (as it were) in an area that is classed as disadvantaged, then you can claim 100% of the costs associated with buying and renovating premises that have been empty for a year or so. Again, I strongly advise seeking legal advice.
What if I decide that I just want to stay home?
Well, that’s good, because your overhead will be kept to a minimum. I mean, it can work for you if you spend most of your time with your customers on their premises or if you just need somewhere small. However, there are some considerations to keep at the forefront of your mind:
* Will you have visitors coming to your home?
* Does your home insurance cover this or not?
* What are the risks to yourself, your family and to your customers?
* How much space do I need?
* What risk assessments do I have to carry out in terms of health and safety?
When you answer these, be honest and decide whether you want to go for it. There are many legal, financial and tax implications to consider (for the latter, go to www.hmrc.gov.uk).
So there you have it - some of the considerations when looking at business premises. Make sure you do your homework to reduce any problems in the future. You cannot protect against everything, but having the right foundations will help you and your business.
Take care and God bless….
© Ngozi Nwabineli - September 2009
