Business premises - what are the choices?

Free Start-Up Articles
Free Start-Up Articles

Deciding where to run your business could be determined by the nature of your work, running a restaurant from home is probably not a good idea and a window cleaning business is unlikely to need swanky offices!

Office or workspace?

Starting in an office or workshop will involve higher set up costs than working from home but may be more appropriate particularly if you are planning to employ staff or if your customers come to you.

There are important Health & Safety Issues that you will need to be aware of if you are planning to work from any premises. The HSE (Health & Safety Executive) offer a range of free explanatory leaflets at http://www.hse.gov.uk/

Top tip - serviced offices or workspace may be an ideal first step. This removes the need for secretarial staff and will provide telephone cover when you are out of the building or on holiday.

Lease

A lease is a contractural agreement to rent a property. But do you rent or buy? Your financial situation could decide this for you, but if you chose to lease/rent, think extremely carefully about the implications.

1) Lord Forte is famously quoted as saying three most important considerations are LOCATION, LOCATION, LOCATION! However, the better the location the higher the rent!

2) Length of lease?

3) You may have to pay a substantial premium for a longer term lease.

4) Who is responsible for repairs?

5) Take legal advice!

Top tip - you want security, but do you want the legal obligation and for how long? Business success or failure may mean that you need smaller/larger premises in the future. Ask your solicitor about a break clause which could present an escape route at a defined point.

Purchase

If you area able to purchase your property, this could prove to be an attractive long term proposition. You will be giving yourself security of tenure, possibly an asset that will rise in value, and any repayments will be reducing your loan rather than simply paying rent to somebody else.

You will need to use a solicitor to conduct the purchase, but also take advice from Commercial Agents and definitely pay for a full structural survey!

Top tip - If you are purchasing a retail outlet that relies on passing trade, take time to sit somewhere near by at different times of the day and conduct a head count! Try not to look suspicious as an arrest at this stage would not generally count as good publicity!

Licence

With a license, the property owner is effectively saying "OK, you can occupy my property for a while, but I can interrupt at any time and ask you to leave." The advantage to the owner is obvious, but it can also be a flexible and inexpensive way for a new start to move into premises. Licences are usually relatively short term.

Useful Contacts

Health and Safety Executive. "Our mission is to prevent death, injury and ill health in Great Britains workplaces." We do this through research, information and advice, promoting training, new or revised regulations and codes of practice, inspection, investigation and enforcement. www.hse.gov.uk

Lawyers for Your Business. Lawyers For Your Business is a network of 1,000 solicitor firms in England and Wales offering specialist advice to small and medium-sized businesses. To help firms access business-related legal advice, Lawyers For Your
Business offers a free half-hour initial consultation with a solicitor in your area who is a member of the scheme. Advice can be sought on a range of legal issues including finance, taxes, employment law, contracts, company structure and health & safety. www.lfyb.lawsociety.org.uk

Leasing Business Premises. The Code for Leasing Business Premises in England and Wales 2007 is the result of collaboration between commercial property professionals and industry bodies representing both owners (Landlords) and occupiers (Tenants).

The Code aims to promote fairness in commercial leases, and recognises a need to increase awareness of property issues, especially among small businesses, ensuring that occupiers of business premises have the information necessary to negotiate the best deal available to them.

The Code consists of three parts: 10 point requirements for landlords in order for their lease to be Code-compliant; a guide for occupiers, explaining terms and providing helpful tips; and a model Heads of Terms (which can be completed on line and downloaded). www.leasingbusinesspremises.co.uk


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