How to Select and Set up Business Premises? Guidelines and Considerations

Ryan Patrick

• 6 min read
How to Select and Set up Business Premises? Guidelines and Considerations

A business premise is a brick-and-mortar establishment your company calls home. After company formation, choosing the ideal business premise is exciting yet daunting, whether setting it up for the first time or moving the business premises. There is a lot to weigh before deciding and committing yourself to where you will set up your company.

When choosing premises, ensure that it will help you run the company effectively without incurring excess costs. Avoid business premises that might not suit your business in the future. Remember, a suitable premise for one type of business may not be ideal for another. Consider relevant factors such as legal issues and premise location that will suit your business needs.

This blog unearths every guideline and consideration you must make when choosing a suitable business premise.

Considerations when Setting up a Business Premise

You need a list of what you expect in the potential workspace before you start your search.

Here is a list of what you should look for in a premise:

  • The size of the workspace
  • Structure and appearance of the premise internally and externally
  • Structural requirements like high ceilings
  • Facilities that ensure employees' and visitors' comfort, such as toilets, lighting, and kitchen facilities
  • Utilities like water drainage and power
  • Permission, including permission to use a premise and planning for your type of company
  • Parking space and access for easy deliveries or all types of customers, including disabled
  • Flexibility when you need to expand the premise
  • Long-term business plans

Create a Budget

Depending on your projected income, how much are you willing to spend on renting or purchasing the business premises without breaking the bank? After rent or property purchase costs, expenses like utility bills and insurance constitute the second-largest overhead for most UK companies. Staff wages represent the largest company overhead.

You will still pay local authority business rates and deposit and service charges. Sometimes, you may need to renovate the premises to make them habitable or realise your vision. Once you've estimated your monthly or annual expenditure budget, consider other factors unique to your company that will influence your workspace selection.

Other factors to consider based on your budget are:

  • Ongoing upkeep and repairs
  • Insurance for building and contents

Location

When selecting a premise, accessibility should be considered, such as local transport links. Ensure there are main roads and motorways if your company deals with frequent deliveries. If your company depends on customer footfall, choose a location accessible to everyone. The most profitable and busiest business is the one located on busy streets.

Accessibility is also vital for employees; for example, if an employee is offered several jobs and picks the one that fits their budget, they will weigh the transport fee and rent. If you're looking for a prime premise, you will spend more on rent.

When choosing the location, you must consider the following:

  • Number of competitors: While some businesses, like real estate agents, may do well near similar businesses, having too many close competitors can hurt sales and profits for other companies.
  • Congestion charges
  • Planning restrictions: before renting the premises, ensure you inquire if you're allowed to use the workspace for the purpose you envision
  • Local authority charges like water collection: the local authority charges can add to your ongoing costs of operating in a specific area, making the premise less appealing
  • What kind of place it is: your business's reputation can be influenced by the type of location it is situated in.

Security

The security of the location where you're setting your business matters. Your business may be running well, but the insecurity of the area will hinder its growth. Many people make decisions based on the information gathered, so research the area's security before making that place your business home. Employ security measures to protect your company if there are criminal activity risks.

Business Rates

Cash flow in a company is essential because a business can pay its bills. That's why you should search for a business premise with average rates like taxes, utility bills, and rent. The business rates of a location will help you weigh whether you can afford the workspace. Research hidden costs like parking fees and deposits before choosing the premises. Do an area rate estimation to prevent you from selecting a workspace outside your means.

Potential Growth

Will the business premise accommodate business growth in the future? Moving your company can be daunting, time-consuming, and expensive. That's why you must weigh if the premise can accommodate growth, regardless of whether you choose it for a short- or long-term plan.

Location flexibility is a vital factor when choosing a business premise. Ensure the business workspace has room to accommodate expansion of all types, from new product development to new employee hiring. If the premise is ideal, outgrow and expand it quickly. The more you grow your business, the greater your chances of beating your competitors.

Skill Base in the Location

Research the skill pool in the area to ensure it meets your local employment rate company requirements. If your business relies on skilled workers, locate an area with a strong talent pool. Employees are crucial assets in every industry, so acquiring a premise without necessary talent could result in company failure.

You can use recruitment agencies to assess the market and facilitate employee recruitment. They will help you conduct interviews and hire on your company's behalf.

Choose to Buy or Rent the Business Premise

You must determine between buying or renting the premises that suit your business needs. Weigh between the pros and cons of buying or renting a commercial property. This will help you decide whether to rent or purchase a business premises.

When choosing a business premise, you must understand the legal responsibilities and constraints that apply to you. Let's look into the rules and regulations examples:

  • The commercial property must have planning permission allowing them to be used for your business type
  • Ensure you comply with building, health, fire, and safety regulations
  • Stamp duty is required for commercial leases, and you may also have to cover business rate expenses, although the landlord might cover these costs in leased properties.
  • You must be responsible for your workers' and visitors' safety and health.
  • Provide an appealing working environment.
  • Ensure your company is accessible if you provide products or services to the public.
  • You must comply with the lease or licence agreement terms
  • Acquire a licence if your business needs a permit to sell specific items
  • There could be limitations on delivery times, noise and pollution levels, and waste disposal methods for you and your customers to follow

On leased business premises, you will share responsibilities with your landlord. Additionally, when choosing a commercial property, ensure you're insured.

What are Start-up Incubators and Accelerators?

Many start-up businesses in the United Kingdom opt to set up independent business workspaces. However, numerous organisations nationwide provide small business owners with suitable space to nurture their businesses and start trading.

Business Incubators

These types of organisations offer start-ups a shared working space. Setting up your business in a shared commercial property occupied by other traders enhances a collaborative work culture that helps generate new ideas and innovation.

Business incubators also offer numerous funding supports, start-up mentoring services, and access to courses for start-up business owners. Some UK incubators also provide:

  • Professional accounting services
  • Integrated marketing and analytics assistance
  • Legal advice

Many incubators have been established in coordination with universities in the UK, meaning you will enjoy courses at discounted costs or access library resources.

Gaining a tenancy at a business incubator is easy; you only need to complete an application. The application could also require you to submit a business plan. For example, when choosing a business premises independently, consider all your business workspace needs and preferences before applying to join an incubator.

Accelerators

Business accelerators are organisations tailored to give start-ups mentorship, supply chain resources, and office space. The primary difference between accelerators and incubators is that accelerators ask for equity in exchange for capital access. This means your business will start with a workspace and capital. However, you might be requested to sign over shares as compensation for the promising start.

Remember, incubators and accelerators cannot be permanent homes for your start-up. In incubators, you can be a tenant for only a couple of years, whereas in accelerators, they only host your business for a few months. To learn more about accelerators and incubators, check out UK Government research.

Form Your Company with Incorpuk Today

At Incorpuk, we will help you through the company formation process and file your confirmation statements to help your business stay compliant. Whether you're a UK resident or a non-UK resident, our team is ready to provide guidance and help you establish your company in the UK. Contact us here today.

Winding Up

Choosing the correct business premise is vital for your business growth. Start by listing the premise requirements. Do you need a brick-and-mortar location? If yes, create your wish list. You must also research and know the legal requirements to fulfil when opening your premises. If you own a start-up business, you may consider setting up your business in a UK incubator or accelerator organisation. Although these organisations are not ideal for every business type, they may offer you a suitable temporary home for your business. If you would like to speak with an expert on business type that is suitable for your business in the UK, kindly contact one of our experts here.