Choosing premises is an important issue for a business. As well as being affordable, your premises need to offer the right facilities, give you flexibility to change in the future, and give the right impression to staff and visitors.
Here we talk through what you need to think about before you decide – and your contractual options.
Choosing your premises
Before you commit to a place, there’s a lot to think through. Consider:
- What location is best for your business? This might depend on your type of business – for example, a shop that relies on walk-by business may need to be central, whereas a factory could save costs by locating out of town.
- What transport links and access will you need – for deliveries, collections and employees coming to work each day?
- Where do your employees live? If you need staff with particular qualifications, are they likely to live nearby, or be able to commute there? Look at other businesses in the area – similar businesses suggest a pool of suitable talent.
- What types of space will you need – for example, office facilities, meeting rooms, storage or a factory floor?
- Will you have visitors to the site? If your customers come to the premises, you should think about the impression they’ll get from the place itself and from its surroundings – does it give the right impression?
- How flexible is the site? Does it offer room to expand, or change your activities, if that’s in your future plans?
- Will you need to make alterations to the premises? If so, look into the terms of the licence or lease, or at planning permission requirements if you’re buying.
- How much responsibility do you want to take on for facilities like post and reception, repairs, insurance, risk assessments and utilities? A serviced office could be more reliable and need less management than unserviced premises.
Property contracts
There are three main types of contract for a commercial premises.
A licence lasts up to 2 years and is the most flexible option. You can cancel at short notice, rates and utilities are often included, and the premises might be serviced. You’ll have very little security, though.
A lease last for longer – up to 25 years. It’s the most common option for business premises. Under a lease you may be able to make alterations and will have more security – but you’re liable for longer if you decide you want to leave. The landlord will probably also be able to raise your rent (by a reasonable amount) at regular intervals.
Purchasing the freehold of your property is the biggest investment, but the most secure option. You can make alterations (subject to planning consent and building regulations), but you’ll have full responsibility for your own facilities management, repairs and utilities. It’s a major commitment, so make sure you’re ready and have done your research.
Homeworking solutions
You could of course decide to run a very small business from home, or ask employees to work from home to save on premises costs.
You’ll need an appropriate work space with all the equipment needed, and to make sure it’s covered by the right insurance, complies with health and safety requirements and is secure – especially if sensitive data is handled there.
Bear in mind that working from home needs a particular attitude and skills – especially time management, motivation and communication. You might also find it difficult to manage employees remotely.
If you run your own business from home, you’ll also need to check how this affects your tax situation. For example, you might need to pay business rates instead of council tax if part of your home is exclusively used for work.
This article is provided only for general informational and educational purposes. It is not offered as and does not constitute legal or other professional advice on the subject matter in question. You should not act or rely on information contained in this website without first seeking professional advice on the subject matter in question.
