A growing property market is generally a strong indicator that the UK economy is heading in the right direction. What’s good news for investors, however, may not necessarily be ideal for small business owners. When falling vacancy rates and strong returns hit the headlines, it shows that it’s no longer a buyer’s market – which means small businesses are faced with even greater challenges when it’s time to relocate. If you decide to go abroad, advice from www.kobaltlaw.co.uk can be invaluable.
Here are some of the key issues entrepreneurs and startups need to consider when sourcing and choosing a new property…
Keep your business goals at the forefront…
When a business needs to relocate, it’s usually for one of two reasons: either a current lease or licence has expired with no viable option to extend, or else expansion means the business has – or is about to outgrow the current premises. In either case, choice of new premises cannot be separated from the organisation’s overall strategy.
Do not leave this until the last minute – otherwise there is a risk of ‘settling’ for an option that fails to tick all the right boxes. Especially if the premises are going to be used for industrial or specialist commercial purposes, careful thought has to be given to the exact specifications. Remember that floor area is only part of the story: the precise layout of that floor space determines whether you are going to be able to use the premises in the way your business requires. For instance, are you looking for a mixed office/warehouse facility? Your growth predictions may indicate a requirement for 50% increased storage capacity – but do you really require the same increase in office space? Rarely is it as simple as simply multiplying your existing floor space in line with your growth predictions.
If you are looking solely for office space, avoid the temptation to look for the most fashionable address you can afford – just for the sake of it. Remember that kudos only counts if your customers actually care about where you are based. If your online sales are predicted to grow exponentially but footfall is virtually non-existent, do you really need to be based in the city centre? Conversely, if your business involves face-to-face contact with clients, how are those clients going to react to having to travel to an out of town Business Park to see you?
Affordability: more than just the purchase price
On top of lease or mortgage repayments, allowance also has to be made for a range of other necessary outgoings – including insurance, service charges, utilities and maintenance. Business rates are a particular sore point for many small businesses. Rate bills are currently based on 2008 property values (i.e. the peak of the market). There is currently a huge backlog of applications from businesses looking to appeal their tax bill and the level of repayments is expected to cost the Government £4.2 billion. Don’t forget to factor in costs, and also if you decide to go abroad you can get advice on this with www.kobaltlaw.co.uk.