rics.org – 23 Sep 2013
Charles Smith FRICS, Founder of Boston Fieldgate Commercial Property Advisors, tells you what to consider.
Location, location, location. “Not that old mantra!” I hear you cry, but location is one of the main ingredients in the recipe for successfully choosing your new commercial premises. However, it is not the only one and as a business owner you need to consider a number of factors.
Selecting the right property so it increases your profitability and reduces stress requires early and detailed assessment and planning. In my experience there are some key themes you need to factor in to your thinking so you can make an informed decision.
Choosing the right location
Location is a many-faceted issue that impacts upon not only your staff but suppliers and customers.
For staff it isn’t just how easily they can get from the bus or where they can park. It is also about the immediate environment of the building and its access to facilities that your employees like to use as well as how easily can you get to your customers or vice versa.
Location also has a significant impact upon your ability to retain and recruit the best staff which directly impacts your bottom line as the cost of recruiting is considerable. Besides, happy people are more efficient and productive and a stable business in terms of employees is always going to be better.
Getting this right adds value direct to your bottom line and it costs you little.
What are your space requirements?
Built space is expensive and it is not just the rent but business rates, service charges, costs in use that all start to impact. Even in off-prime, city centre style locations.
In Birmingham the cost per sqm would be around Â£320/sqm a waste paper bin could cost you Â£30 a year!
To get an idea of what you need, look at the number of staff you have, their roles, and any future expansion planned. An initial calculation might be up to 10sqm for each member of the team. To that you add boardrooms, storage areas, kitchen and staff areasthe numbers add up very quickly.
As property is generally inflexible you need to factor in any growth or downsizing that is reasonably predictable.
Technology advancement and changing working practices (hot desking, working from home) continue to allow an element of ‘flex’ in any event and this may be sufficient for 10-15% variation in staff numbers.
Taking too much space could prove terminal for the business and provide it with unsustainable overheads. This is where the advice from a chartered surveyor is invaluable.
What can you afford?
Set a budget and stick to it. As a very rough rule of thumb property rental and associated rates should be less that 15% of your turnover.
If you’re outside of that then you should consider what the impact is on your bottom line and business sustainability. Every business is different so this is not a definitive line in the sand more a guide. Projected growth in turnover will then help inform your budget going forward. We would all love really plush offices with all the whistles and bells but it is about a balance.
Does it match your brand image?
Expensive finishes are great but not if your clients feel they are paying for them!
You want it to signify success not failure but more broadly, what do you want stakeholders to see their first impression from the outside and then from the inside. From the reception area through to the space you will occupy?
There is plenty to think about but be realistic. You can be quirky, provided it is interesting and well done, it can be a real wow factor and differentiator.
A client of mine recently created a sound proof box, within their space, for video presentations and screenings. They pasted an enlarged photograph of No 10 on the entrance so you actually feel like you are going somewhere important to see the PM, perhaps. I’ve not seen that before so it resonates positively.
Property can be an asset or a liability. Keep you profits up, your stress down and talk to the professionals RICS members can guide you through the process as we have seen it all before and our knowledge can save you lots of wasted time and effort. We also know what is available through our own experience and our network of contacts.
Download the RICS Small Business Property Guide for comprehensive advice on common property decisions and actions you may need to take – from acquiring a lease to challenging a dilapidations claimalong with vital property-related issues such as valuations, planning permission and the business rates system.
Boston Fieldgate Commercial Property Advisors offer hands-on, pro-active commercial property advice tailored to client needs. They specialise in property strategy to delivery, acquisitions, disposals lease advisory, rent reviews, renewals and restructuring, business rates reviews and development consultancy.
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