One of the most exciting aspects of starting a new business is often setting up a physical, brick-and-mortar location for your new company to call its home. That’s why we’ve created this handy guide to tell you all about how you select and set up business premises, as well as the different options you might want to explore.
In this day and age, not every company actually needs a physical location that people can visit regularly. However, a huge number of business owners continue to find the process of opening up a premises enthralling.
After all, not only does setting up a business premises enable you to take a huge, tangible step towards achieving your business ambitions, but it also allows you to create a new and very public face for your business.
Why is it important to set up business premises?
Various companies elect to set up their own business premises for a variety of reasons. Your own reasons will depend entirely upon your business plan and the type of company you’re envisioning. So, before you start shopping around for potential workspace, you should always brainstorm what you could hope to achieve when you set up your premises.
You might need warehouse space in order to manufacture products, retail space to sell products directly to customers, office space to offer business services and house staff workspace, or you might simply want a bit of space to physically separate your new company from your personal life. After all, most of us don’t like taking work home – which is 100% unavoidable if you’ve set up your new company in your garage.
Draw up a list of pros and cons
When in doubt, produce a detailed pros and cons list, consult friends and family and ask anybody you already know in the industry. If you can avoid opening business premises, you will save a whole lot of money on running costs. But if you think your business might benefit from opening up a brick-and-mortar location, then the overheads associated with that location are normally outweighed by all of the other potential benefits.
Perhaps that’s why there are still a huge number of UK businesses opting to invest in a brick-and-mortar premises in order to attract footfall. According to PwC’s Total Retail Survey 2017, some 59% of consumers say they want an inviting ambience when they shop – and 37% of businesses are responding in kind by either expanding or creating new in-store experiences for members of their target audience.
But let’s not get ahead of ourselves, here. Before you start dreaming up fantastic window displays and immersive customer experiences, you’ve got to do some level-headed research about what it is you’re looking for, when you need it for and how much you should be paying for it.
How do I research and price workspace?
When conducting research into the type of premises that’s perfect for your company, you should always start out by creating a wish list.
After figuring out what it is you need your business premises for, you’ll need to work the numbers and develop a ballpark figure in terms of how much you’ll be able to spend on commercial rent or purchasing a business property. Just like paying rental for accommodation, most commercial or retail space can be paid either monthly, or multiple times throughout the year – for example, quarterly.
Create a budget
Based on your projected income, how much do you think you’ll be able to spend renting or purchasing a property without putting a substantial dent in your income?
Combined with rent or property purchase, premises-based overheads like utility bills and insurance form the second largest overhead most UK companies experience. For reference, staff wages usually form the biggest company overhead.
But that’s not all. You’ll also need to take into consideration having to pay a deposit, local authority business rates and any potential service charges. For example, you might need to completely renovate a workspace or shop to realise your vision or make it habitable.
After you’ve developed a ballpark figure relating to how much you’re allowed to spend on a monthly or annual basis, think about the other considerations specific to your company that will impact on your choice of workspace.
What space is right for your business?
How much space do you actually need? How much room do you need for equipment? How much power will you need? How many employees do you predict will work in this space, and do you need space for a shop floor? Do you want the flexibility of an open-plan, or do you want your premises split up?
Depending upon your industry, there might even be legal health and safety requirements you must fulfil.
Potential requirements could relate to the wellbeing of staff members you’re employing, customers or accessibility requirements relating to individuals living with a disability. That could mean setting up shop on a ground floor, or setting up multiple entrances.
If you need help getting started identifying potential legal requirements, the UK Government’s Health and Safety Executive has a checklist online
The best way to figure all this is out is by drafting a property spec illustrating your dream location, why it’s perfect and – crucially – what in your wish list you can live without.
Location, location, location…
The next step is location, location, location. In your market research, you should have developed an idea of who your customers are, where they’re currently shopping and how they get there. When shopping around for your own brick-and-mortar location, you must bear all that in mind.
Do you need to be close to public transport? How close is the nearest competitor, and will that help or hurt your business? How remote is too remote, and what sort of infrastructure or logistics will you need in place for deliveries?
And at a far more material level, will the neighbourhood a property is in impact the way customers or potential clients view your business? Again, conduct research about your target market, what they like to see in a business and what they don’t. If you’ve found a cheap deal with the perfect amount of space, but that space is in a run-down neighbourhood far away from where your customers are shopping, you should probably sacrifice price over image.
Once you’ve figured out your budget, property specs and understand what’s expected of your business form a legal standpoint, you can start hunting. Property websites, trade publications and local media outlets are usually the best place to commence searching.
Just remember: when in doubt, always explore your options and avoid jumping up at the first opportunity you encounter. Don’t be afraid to ask developers or estate agents tricky questions, and take your time before entering into a service agreement. This is a big step in your company’s development, and you don’t want to rush into a bad deal.
What are business incubators and accelerators?
The vast majority of small businesses in the UK choose to set up a premises or business location independently. That being said, there are a wide range of organisations across the country that offer start-ups and first-time business owners a creative space to develop their business and start trading.
One of these types of organisations is called a business incubator. Incubators are essentially groups that offer small businesses shared working space. By setting up shop in a shared space occupied by multiple enterprises, you’ll be able to join a collaborative work culture that is designed to try and generate new ideas and innovation.
Business incubators also generally offer various types of funding support and business mentoring services – as well as learning opportunities and access courses for first-time business owners. Some incubators in the UK include built-in support on marketing and analytics, access to professional accounting services and legal advice. Several have been set-up in coordination with UK universities, which means business tenants enjoy discounted courses or access to library resources.
In order to gain tenancy at a business incubator, you will normally be asked to fill out an application. This could include submitting a business plan. Just like organising workspace independently, you should also bear in mind all of your business premises requirements and what was on your wish list before you apply to join an incubator. In particular, have a think about whether compromises on location or space will directly impact your trading.
Incubators aren’t the only organisations in the UK that offer support services and funding opportunities to new UK companies. You could also explore accelerators.
Accelerators are organisations that work by enrolling business owners in a time-limited programme that offers them mentoring, supply chain resources and various types of office space.
How is this different from a business incubator? Accelerators normally ask for equity in your start-up in exchange for offering you access to capital or investment. That means your business will start off with an all-inclusive workspace, access to financing and a brilliant start in life – but you may be asked to sign over shares or a stake in your business as payment for that brilliant start.
Because a lot of business incubators are associated with UK universities, they actually enjoy various degrees of charitable status. In turn, you won’t normally be expected to hand over a piece of your business in exchange for workspace and support – but you won’t get the same level of services at your new premises, either.
It’s worth pointing out that neither incubators nor accelerators are typically permanent homes for a business. Tenancies at incubators are often limited to a couple of years, and accelerators sometimes only house your business for a matter of months.
As with every other aspect of hunting for your permanent company home, you’ve simply got to do your research. If this sounds like something you’re keen to explore, the UK Government has conducted all-encompassing research on the country’s accelerator and incubator scene – including where you can find them.
The bottom line
At the end of the day, the type of premises your company needs in order to thrive will depend on your own, bespoke requirements. Start by figuring out whether you even need a brick-and-mortar location, and then proceed by developing a wish list. You’ve also got to do lots of research and come up with a list of any legal requirements you’ll need to fulfil by opening up premises.
Finally, if your company is totally new, it could be worth checking out the UK’s thriving incubator and accelerator scenes. These organisations aren’t for everyone, but they might be able to offer your company the perfect temporary home – along with some fantastic services you might not otherwise have access to.
Just remember to stay true to your company needs, and your vision for how that company should progress and thrive. This is a huge step in your company’s development, and it’s incredibly exciting. Make the most of it.