Choosing the right commercial premises is a balancing act - it needs to meet your standards, satisfy the needs of the board, and allow room for expansion in the future. And then there are the set up and maintenance costs to consider, of course.
In this article, we delve into how to find the commercial property that’s the best fit for you, along with exploring the most common pitfalls you could face and how to avoid them.
The location you choose to set up shop in is going to have a huge impact on staff and finances. If you're considering a prime location, higher costs are a given. Think about what makes sense for your business. If a lot of staff members can commute quite easily to a less costly area, then does it make business-sense to pay hefty amounts for a city centre office?
It’s also important to consider the future of the location. Is it likely to become an office hotspot in the years to come? Can you expect the rent to skyrocket? Are there any building works underway which may impact traffic, such as a school or shopping centre? The more you know about the area and its future, the more informed a decision you can make.
If it’s a brand new area to you, consider the local skill base. Are there good employment rates? Will you be able to find the staff you require? If you’re a start-up it’s likely that you’re going to rely on graduates looking to get into their specified field. Does the area have strong university links? If so then you’re much more likely to find the graduate-level staff that you need.
The security of your premises is often closely linked to the location. If there’s a higher chance of you being affected by crime, you can expect insurance premiums to increase. Not to mention the cost of putting security measures in place to help make your business premises safer.
The crime rate in the area you’re considering should play a vital role when it comes to the final decision. There are several online tools you can use to explore the amount of crimes reported in any given neighbourhood.
Rates & costs
Cash flow is king in business, so it’s vital you work out any costs before signing on the dotted line. Research utility bill costs, rent prices and local taxes. Make sure you'll be able to afford the premises and associated costs on a regular basis.
Another cost to consider is the office build-out. Are you moving into an empty space? If so you’re going to need desks, chairs, tables, phones and all the other office equipment your day-to-day work requires - which is often costly. Here are a few tips on how you can save money on your office equipment and supplies:
- Prioritize the necessities: Create a list of all of the equipment and supplies that you believe you need. Work your way through that list and prioritize them. If the items towards the bottom of the list aren’t vital then consider striking them off.
- Bulk order: Ordering large quantities usually means bigger savings. There are two things to be aware of here: you’re going to need more capital to do the initial order and you may need more space to store the extra supplies.
- Do your research: Don’t just bulk order from the first place you find. Consider researching alternative companies to the ones you’ve used for decades. There are always savings to be made if you’re willing to look hard enough.
- A purchase contract: Alternatively, you may be able to discuss setting up a purchase contract for any office items that you buy on a regular basis.
Consider how your competitors' proximity may affect you and whether working in the same location as main competitors will impact your day-to-day business.
If you’re a service-based business, then it’s likely that having your offices near competitors isn’t going to impact you too much. If you’re a business that relies on footfall, then it could severely impact custom.
Questions to ask
To help ensure that the property you’re looking at renting or buying is right for you, make sure that you ask the right questions. Not just of the landlord, but of yourself and your staff, too.
- What policies are in place? Are there policies in place which may impact day-to-day business? Will you have to follow certain protocols when you eventually leave the property?
- What amenities are required? Do you need conference rooms? Will you need your own kitchen?
- Would you be happy bringing prospective clients and customers to this location? It's important to keep office areas smart and professional when hosting clients. Think about how the space will look in the eyes of a client before making a decision.
- How much space do you need? Consider both current staff-levels and predicted growth.
- Is there adequate parking and local transport? You may face backlash from your employees if the office is especially difficult to get to and if there is limited or costly parking.
- How long is the lease for? Is this long enough? Do you want to be tied in for a certain amount of time?
- Are services provided by the building owners? Do they provide a receptionist at the main entrance for visitors? Are the bathroom and kitchen areas cleaned and maintained by the building?
Should you lease or buy?
The answer to this question is most likely going to come down to the stage your business is in. If you’re a start-up, then the obvious route is going to be renting the premises. But if you’re an established business the decision can be a little tougher. Buying, just as with a house, ties you down. Here are the pros and cons of each to help you make a more informed decision.
- Extra income: If you own the property and don’t use all the space within, you have the opportunity to rent the remaining office space.
- Tax deductions: Owning and running a commercial office space could mean tax deductions further down the line.
- Financial and future security: Owning the property means that there’s no chance of increased rent, giving your business long-term security.
- Tied in: If you’re a newer business or expecting significant growth in the coming years then being tied down to one space might not be the wisest option.
- Large initial costs: The most obvious downside to purchasing is the initial upfront cost. The purchase, deposit and appraisals could all significantly reduce a business' finances from the off.
- A better location: If your business is dependent on the best location possible, renting could mean that you can afford a spot in the more popular areas.
- A more flexible business: Renting brings a certain level of flexibility to your business. As you grow you can move offices to accommodate more staff.
- Changing costs: The most clear downside of renting property is the chance of costs increasing at the time your contract expires.
- No investment: The other downside is that renting can be considered lost money. Owning would allow you to save in the long-term.
So there you have it, our top tips to help ensure that you get the best commercial property for your business and make the most of it.
Not sure what to do once you’ve decided on a premises? Take a look at our detailed guide on how to breeze through an office move.
About the Author
Mike Patterson is the managing director of We Buy Any House, one of the UK’s leading property purchasing and fast sale companies. We Buy Any House speeds up the process of selling your home and handling paperwork, enabling you to get on with running your business, and worrying less about your house sale.