How to choose the right premises

27 October 2006
How to choose the right premises

Choosing your premises is one of the biggest decisions you will make when starting up. Deborah Wyatt from Business Link provides pointers on how to select the right site for your business." target="_blank" rel="noreferrer">Business Link is a government network run by the Department of Trade and Industry that provides practical and impartial guidance for new and existing small and medium-sized enterprises.
A number of factors need to be considered when choosing premises for your new company. The most crucial is to strike a balance between cost and convenience.

Remember that every business has different requirements. If you are opening a small café, you will probably be after something quite compact on a busy high street. On the other hand, if you are opening a food supplies business, then premises on the outskirts of a town with good access and transport links will be more appropriate.

What to consider Before making any decisions, identify your key requirements and what you actually need. This will help you get a clearer idea of what kind of premises you want and why. Significant factors include location, layout, access, flexibility to expand and utilities.

Budget should also be factored into what you look for, not just rental costs. Think about how much you may need to fit-out or furnish the premises, and how much insurance and legal costs might cost.

If you are going to be based in a busy urban environment, then finding employees should not be problem. However, if you are looking at out-of-town premises, then think about how to find the right people whilst considering their travel issues. Suppliers are just as important and being located near them will save you money and give you access to supplies at short notice.

You should also do some research into any established competitors in the area that you would want to avoid being too near.

One other significant factor to consider is the type of property you are looking for to accommodate your business. Think about your day-to-day business, what it will involve, with how many people. Some businesses, like bars, may only need a small area whilst others, like wholesalers, may need a warehouse.

The options - do I rent?
Renting has many advantages. Firstly, you won't need to part with a large lump sum of cash. It is also less of a long-term commitment although, in most instances, you will have to provide a refundable deposit.

Taking a lease on a building means you have more flexibility - if you are expanding quickly, then you can move at relatively short notice. Typically, a lease will be for a period of between three and twenty-five years, but this can be negotiated.

On the downside, renting can be restrictive and you may be limited in any work you want carried out on the premises. You may also be obliged to pay maintenance and repair costs throughout your tenancy.

Lastly, make sure that you and your legal adviser thoroughly check all the details of any tenancy agreement before signing it.

…or do I buy? Buying is an ambitious prospect for start-ups or small companies. It is usually very expensive and, at such an early stage, the money may be needed in other crucial areas such as marketing or buying stock.

Buying does present a lot of advantages, including having more control over the premises - if you want to make structural changes then you don't have to consult the landlord. You may also find the property's value will increase over time and, if you choose to move, you can rent it to a new tenant or sell it on at a profit.

Anyone who has bought a house knows that buying property is often time-consuming and can be complex. Make sure you are prepared for this and factor it in to your business planning, whilst ensuring that you have someone you can go to for legal advice.

Find out more:

Information on finding premises from the Royal Institute of Chartered Surveyors

Guidance on business tenancies from the Department for Communities and Local Government -

Information on writing a business plan from Business Link

Call 0845 600 9 006 to locate your nearest Business Link service.

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