New premises

You don't have to move into commercial premises to run a business. Significant numbers of sole traders operate happily from offices, spare rooms or garages in the family home. The same is true of some early stage businesses. At a time when revenues are short, co-opting the back bedroom or study is a useful way of keeping costs down.

However, most businesses that employ more than one or two staff make it a priority to secure dedicated premises. It can be a challenging task, but it is vital to find the location and building type that will put you in the best position to achieve your business objectives.

In brief

• Choosing the right location
• Finding the right building
• Renting or buying?
• Rental agreements
• Charges
• Areas of concern
• What to do next

Location is hugely important and every business will have its own list of criteria. For example, at the top of the list for a café owner would be a space on or near the high street where there will be a great deal of passing trade. A financial services advisor would also likely favour a town centre location, preferably in an upmarket office block with a welcoming, well-maintained façade.

On the other hand, a logistics company would look for something different, namely a central location (either nationally or regionally) with good access to the motorway. It's no accident that Northampton and the Midlands play host to high concentrations of transport companies.

Usually there is no single criterion that will define whether a particular workplace is right for you or not, but when weighing up your options, you should consider the following:

• Proximity to the market Is the building close enough to the market that you are aiming to reach?
• Staff issues Will staff be able to get there easily? Are there sufficient skilled staff in the area?
• Building Type Are the premises in question fit for purpose? For instance, an industrial building may be fine to house a warehouse or small factory, but it probably wouldn't be suitable as a space in which to set up a childcare business
• Cost Can you realistically afford to buy or rent the premises?
• Image/BrandWhat does the building say about you and your business?

Probably the most straightforward way to find premises is to find an estate agent that specialises in either letting or selling commercial property. They will take note of your requirements and present you with a shortlist of suitable options. Alternatively, your local council's economic development unit or your nearest Business Link will also be able to provide you with information. If you decide to research the market yourself, you should check out:

• Local newspaper classifieds
• The internet
• Estate agent boards outside properties in the area you have in mind.

One of the biggest questions that you'll have to ask yourself is whether to rent or buy premises. Most companies, particularly young businesses, choose to rent, but there are pros and cons to each.

One of the biggest advantages of renting is that you don't have to raise a large sum of money up front or take out a commercial mortgage. Equally important, renting allows you to be flexible. In the early days, you can rent a small office and, if and when, the business grows you can move on to a larger square footage, without the added stress of buying and selling.

On the other hand, if you buy property, you acquire a valuable asset, which could grow in value over time. Such an asset can be useful when you need to raise bank finance and if you decide to sell the business it adds to the payout. It can also provide an additional income stream should you decide to sub-let. In the retail sector, many shops are sold with residential property as part of the deal, providing the buyer with both a place of work and a place to live.

It must be noted, however, that most commercial property is rented, so finding premises to buy can be difficult.

Traditionally, commercial property has been leased to businesses over long periods, usually three to ten years. Long-term leases have certain advantages, not least in terms of providing an assurance for you that you will be trading in the same location for some time. However, these don't always suit young or fast-growing businesses, which may want to move on quickly as circumstances change.

An alternative is serviced office space, often available on much shorter-term licensing agreements. Serviced offices generally provide not just the space, but also the telecoms and IT infrastructure, enabling staff to plug computers and phones into an existing network. Short-term serviced accommodation is most widely available in London and the South East.

Before entering into an agreement you should be aware of all the costs, including:

• The monthly/annual rental
• Service and maintenance charges
• Charges for use of additional facilities, such as boardrooms
• Utility bills and office network charges
• Deposit (which can be as much as six months rent).

It's also important to check whether you are expected to pay for buildings insurance and if the unit has the necessary planning permission for your type of business.

Finding the right premises is certainly about identifying a location and building type that is conducive to business success, but you should also think of the nature of the deal on offer. If you're looking for flexibility then a long lease is probably the wrong move. Even if a shorter-term agreement seems to offer greater flexibility, you should always check the small print in the contract.