17/07/2008
Your Business Section in association with BT Business
Don't underestimate the importance of finding the best premises for your company, writes Jayne Atherton. A wrong decision can cost time and cash.
Choosing business premises is a bit like buying a house - it's one of the biggest decisions you will ever make and it can be costly.
But most growing companies will have to face it one day and making the right choice can really affect their bottom line.
After the wages bill, the costs of running premises are often the second biggest expense for any small business.
Mistakes cost time and money and can also lead to a loss of productivity if employees aren't happy in their new environment.
Efficient space
A report from consulting firm Gensler this week showed that London's key business districts are haemorrhaging £10.5billion a year on unoccupied office space because they use only 55 per cent of what they pay for. And as companies brace themselves for an economic slowdown, it's even more important that your premises pays its way and is fit for purpose.
Gary Wheeler of Gensler says: 'Companies need to do more than simply house their people in a workspace. Instead, they need to turn their attention to supporting innovation, collaboration and flexibility through the workforce.
'Agile organisations use office space efficiently to foster high performance and productive working but their opposites typically have bloated layouts with inflexible and poor use of space.'
But where does the small business owner start? As usual, it's with money, says commercial property expert Robert Leigh of Devono, which specialises in acquiring office space in London for tenants to rent.
The starting point is the total budget for fitting and moving and to decide the maximum monthly or annual rent that a business can afford,' he says.
'You also need to think about how much space is required now and in the future. In working out the size required, it's vital to factor in the growth potential and allow for meeting rooms, communal space and storage of office essentials.
Think it through
Consider how the space will reflect the image of your business and what facilities you will need. Larger organisations also need to ask whether the building complies with disability access laws.
Few companies buy a building to move into. Instead, they prefer to lease their premises for six months or more. For start-ups and new enterprises, acquiring premises on licence from councils or enterprise organisations can be a preferable option than leasing because they can pay monthly and, if the workspace does not meet their needs, they can pull out of the commitment early.
It's even possible to simply rent a workspace or even a desk in shared offices from enterprise organisations. One of the drawbacks, however, is that you will have no long-term security if you like the space.
Size does matter
Leasing premises provides extra security but companies must mind how much space they commit to, as they can wind up out of pocket, especially if they overestimate how quickly their business is growing.
A modern business park, for example, can charge costly administration services or impose a minimum-term rental or lease arrangement, which benefits the landlords rather than the renters.
You must also consider your location and how accessible it is for your customers, transport links and communications and power supply. Once you have chosen a building, you'll need to check if there are any outstanding debts on it or if there are any restrictions that may affect your business, and then haggle with the landlord for the best deal.
But take care when arranging your deal, Leigh warns.
When it comes to negotiating a lease, you need to arm yourself with expert information or appoint an agent to do it for you. Otherwise, there can be serious cost implications if you haven't met rules and regulations or accidentally exclude something from the lease documents.
Find the best space
Things to consider when choosing your premises:
* Organisations that are flexible with their assets are more likely to survive a downturn.
* Green buildings also can be more effective, productive and better value for money.
* Know how much space you need.
* A higher proportion of shared space is a feature of a high-performance organisation. It's better to focus on this than on personal space.
* Choose your office space on the basis of its operational rather than historic merits.
Source: Gensler