If you're thinking of starting your own business, you've probably got a long to-do list to work through. But if your business has a physical presence, then you'll have even more to think about. When choosing the location for your store or offices, you will need to take many more overheads into consideration than you might if you had an online presence only. Overheads will make up a large portion of your outgoings and you want to make sure that you're using that money wisely.
When choosing your premises, you're likely thinking about footfall and competition before you think about other things. However, you might want to take business rates into consideration too. There has recently been a call for a reform of business rates in the UK, as retailers argue that they are to blame for the decline of the high street.
You want to ensure that the business rates reflect your profits, and therefore you don't want to take on a huge unit; business rates are calculated based on your rateable value. This is calculated by the local authority, who look at how much your business is worth based on its location and how big it is. A large building on the high street will cost much more than a small unit out of town. If your business relies on footfall, then you might want to opt for a smaller unit in town, in order to balance your rateable value.
Another point to consider is whether you might rent or buy your commercial property. As a renter, you have the flexibility to close up shop and leave if necessary, although you don't want to be going into business with a defeatist attitude. If you buy your property, however, then you will have more control over how you use the property as you will not be contending with the whims of a landlord, who may decide not to renew a contract, or raise rent prices when you least expect. Granted, it can be difficult to find property to buy on the high street; however, with major shifts happening within the retail industry, this could change in the next few years.
If you decide to buy your commercial property but you are unsure about what your options might be, the Funding Options website has lots of useful information, including tips on where to get your commercial mortgage, and the difference between being an owner-occupier or buying to let. As an owner-occupier, you will own your business premises and invest in your property as an asset for your business. This gives you an advantage over renters for when you decide that you want to expand, or even an additional source of income if you decide you need to move anyway.
Owning your premises will give you more leverage with lenders when you are seeking capital, and you may be able to sub-let a portion of your property to another business, ensuring income for leaner times. This is especially important if you are on a variable rate mortgage.
Although these questions may not feel as exciting as choosing your branding or building your online shop, your premises make up a large portion of your overheads as a retailer. Whether you're on the high street or off the beaten track, it is important to consider the role of your premises in your business aims; they will become increasingly important as your business grows.
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