Topic overview

Business premises

Business premises

Business premisesDecisions about premises can make or break a business. The first big consideration, of course, is whether you actually need them, at least to begin with, when you're trying to get established and keep your costs down.

Limiting your overheads

Premises provide the second-biggest overhead for many businesses (wages are usually the largest). If you can start your business from your home, it will be much easier to break even.

Some new business owners take on cheap premises because working from home is impractical or because they want clear lines of demarcation between home and work. As well as freeing you from domestic distractions, having premises can create a better perception of your business in the minds of potential customers.

Logistically, many small businesses can't be run from a house. And as you grow and perhaps begin to employ people, running a business from your home might no longer be an option, for health and safety reasons and others.

Counting the cost of premises

Only ever take on premises if there's a genuine business reason for doing so – and only then if you can afford them. You need to be aware of the full financial implications taking on premises will have.

This means taking into account all costs. As well as paying a deposit, rent or possibly a commercial mortgage, there are business rates, utilities and the cost of insurance. There may be service charges, too. You might need to invest in the look of your premises, including décor, furnishings, equipment and signage.

Finding suitable premises

There are many considerations when searching for premises, including type, size, layout, appearance and location. Being in a busy place is vital to businesses that rely on footfall. Generally, being close to your customers is best (even though it can be more expensive). People don't tend to like to travel too far to buy, especially when they can buy online from home.

Being too close to competitors isn't recommended, of course. It can bring disastrous consequences. Additionally, if your premises are in a remote location, badly served by public transport, you could struggle to attract staff and customers.

Once you have a budget and know what and where you want your premises to be, the search can commence. Local newspapers, trade press and property websites are worth checking. Talk to other small businesses or simply ask commercial property agents what they have available. See as many properties as you can before deciding – and negotiate hard.

Keeping premises safe, secure and legal

Adequately insuring your business against potential threats gives peace of mind. It might also provide you with a way of carrying on should the worst happen.

Crime potentially threatens all businesses, so there are a few practical steps you should take to protect your premises.

You also need to make sure they comply fully with health and safety rules. When you take on premises you become legally responsible for the health and safety of any employees, visitors and people nearby who come into contact with your business. Apart from causing someone's death, injury or illness – and having it on your conscience – getting it badly wrong could cost your business dearly if you lose in court.

RICS Small business property guide

If you're taking on business premises, you will face a few key decisions - from choosing premises and negotiating a lease to challenging dilapidations claims and sub-letting.

RICS (Royal Institution of Chartered Surveyors) has produced a comprehensive guide to:

  • Finding the right premises
  • Taking a lease or licence
  • Property valuations
  • Business rates
  • Property valuations
  • Rent reviews
  • Construction, alternations and planning permissions

Download the RICS guide here.

Please note: This guide is no substitute for professional advice. You can find a professional surveyor on the RICS website.

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