Types of Business Premises
Type of Business Premises
The type of business you are in will greatly determine where you can operate your business from. If you have many retail visitors (and not so many in some residential areas), you can only use a property that is determined by the local council as being a retail outlet, alternatively, you would have to apply for retail capability.
Manufacturing, engineering and general industrial businesses are all areas where legislation, environmental issues, health and safety etc have to be considered before the more general issues. Basically, you will always have some choice of location, but not necessarily one that you want!
(i) Home Based
In most situations the home is poorly designed for business use: your operating space can be small (box room), a living hell (the front room), or remote (the garden shed). The home address can be un-business like (e.g. ’2 The Meadow’), and too well known as residential (if you trade locally). Tying up the one phone line causes problems for you and the other family members. Answering the phone “hello, George’s mens wear” can be uncomfortable with family and friends, and may cause endless embarrassment for the kids when their friends call: for credibility all who answer the phone must be in business mode… …but on a positive note; sharing space at home will save you hundreds of pounds a month (the difference between success and failure for many). Working from home arguably allows you to work hard in the early stages of a business by always being at work (starting any business requires extra resolve). A second phone line is a gre at low cost addition, and at an even lower cost than renting a second line you can get a different number and ringing tone for a few pounds a month. A PO Box number is a low cost and simple answer to a trading address, but can be off putting to some customers/clients: adding ‘The Business Centre’ before ’2 The Meadow’ is a more acceptable all round choice.
(ii) Basic Rent
Renting office, manufacturing or stock space is the main avenue for most new businesses. The rent is comparable with leasing, and even buying, but the commitments are limited to a, say, 1 to 3 months rent agreement. Renting also means a one price service: you make one monthly payment and forget the rest (excluding phone bills etc). Visit our article on Serviced Offices for more information
(iii) Lease
Leasing, a more formal agreement than renting, can have binding contracts from, say, 1 to 3 years. The monthly payment may be contracted to increase by, say, 15% per year, with a full review at the end of the third year: bear in mind that you may be able to haggle for a lower fee than the original rent if the landlord (lessor) has problems with leasing other units that they may own.
Leaving a lease before expiry will not get you free of the contract, and many that do leave early have to work hard to find a new occupier (the lessor will not be too worried while you are responsible). With a lease you will be accountable for all repairs and even some wear and tear. Using a solicitor who deals regularly with leases is a must. Haggling over all costs related to leasing is common enough for the landlord not to be offended if you try to drive the costs down.
(iv) Buy or Build
Building premises is not common within the small business start up world, but buying is on the increase as our business location becomes less important (trading outside of a main city did have its knockers) and is also more affordable in low cost areas. The average cost of a lease will easily match the average cost of a business mortgage and builds equity into the bargain. Having the responsibility of full maintenance, inside and out, can cause you more stress than the business you run, and there is no quick way out.
Article Index
- Finding & Using Business Premises
- Type of Business Premises
- Key Issues When Finding Business Premises
- Related Articles
