Guide 5 min read
1. The importance of premises
Your business premises form the base of your entire business operation - they should facilitate the smooth running of your business, help attract customers, enable interaction with staff and suppliers, and support your future growth.
Your premises should help you to operate effectively and compliantly, without excessive costs. It’s important to avoid being tied to premises that might not suit you in the future.
2. Specifying your premises requirements
Before you begin your search, it’s important to take into account all the relevant factors, including legal issues, so that you can identify suitable premises.
Drawing up a list of what you need from your premises is a great way to start your search. Your list could include the following points:
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your location requirements, in particular access to customers and staff, and proximity to competitors (see section 3 below)
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size and layout
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structure and appearance, both internally and externally
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any special structural requirements, such as high ceilings
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facilities and comfort for employees and visitors - including lighting, toilets and kitchen facilities
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utilities, such as power and drainage, and any special requirements - e.g. three-phase electricity for heavy machinery
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accessibility and parking - for deliveries or customers, including disabled customers
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whether you need the flexibility to alter or expand the premises
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your long-term business plans.
3. Choose the right location for your business premises
The location of your business premises can be critical to the success of your business. A good location can help you attract customer footfall and sales, boost your brand image and make you more attractive to potential staff and suppliers, whilst a poor location can cost you money and sales and effectively stall your business.
Factors to consider include:
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the level of passing trade - depending on the nature of your business, this can have a huge impact on success
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the number of competitors - although some businesses, like estate agents, can benefit from being located in a cluster of similar businesses, for others, having too many close competitors can have a severe impact on sales and profitability
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transport links and parking - good public transport links and local parking facilities make it easier for employees and customers who don't live within walking distance
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delivery restrictions - these can cause problems for your suppliers, so you'll need to make sure that your premises are accessible if you expect to have regular deliveries
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Low Emission Zones (LEZs) - potentially impacting both your customers and suppliers, and your own business vehicles
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local authority charges for services such as waste collection - these can add greatly to the ongoing costs of locating in a particular area, which may make the premises less desirable from your point of view
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local amenities - employees generally prefer working in areas with good local facilities, and you may need to make regular trips to the bank or a postal depot
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what sort of area it is - the image of your business may well be affected by the nature of your location.
4. Considering costs
Your choice of premises will depend on your budget, both in what you can afford upfront and in ongoing costs.
Location has a major impact on costs such as purchase, rent and rates. If you need premises in a prime location the extra costs may be justified, but make sure you go in with your eyes open.
Whether you rent or buy, costs can include:
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initial purchase costs, including legal costs such as solicitor's fees and professional fees for surveyors
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Land and Buildings Transaction Tax (LBTT) is payable on property purchase and commercial leases
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business rates which are taxes on business property to help pay for local council services and don't reflect the turnover or profits of your business
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any structural alterations required to meet building, health and safety and fire regulations
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fitting out and decoration
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ongoing rent, service and utility charges, including water, electricity and gas
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costs of security measures
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continuing maintenance and repairs
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building and contents insurance.
Sellers and landlords are obliged to provide prospective buyers or tenants with an Energy Performance Certificate (EPC). An EPC indicates how energy efficient a building and its services are and can act as a good indicator of likely energy costs.
It's also worth investigating any grants or incentive schemes available to you, such as non-domestic rates relief.
5. Legal considerations when choosing business premises
If you own or occupy business premises, you need to understand the legal obligations and restrictions that affect you. For example:
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the premises must be permitted to be used for your class (type) of business and if you are changing its use in any way, check with your local authority if planning permission is needed, for example changing a residential house to be used as a nursery, or an office to be used as a hotel
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you are responsible for the health and safety of employees and visitors and must comply with all applicable building and fire regulations. You also need to provide a suitable working environment for employees, including:
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maintaining a reasonable temperature
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providing enough space, ventilation and lighting
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providing toilets, washing facilities and drinking water
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if you provide goods or services to the public, you must take reasonable steps to make your premises accessible
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you need to comply with the terms of any lease or contract
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you may require a licence to operate or to sell certain products
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there may be restrictions on times when deliveries are allowed, noise and pollution levels, and how you or your customers dispose of waste.
In leased premises, responsibilities are often shared between the landlord and the tenant and you will need to comply with all of the terms of your lease.
Whatever premises you choose, you need to ensure that you are properly insured.
To fully understand your legal obligations, you should take advice from your business adviser or solicitor.
6. Search for premises
After you have considered your requirements, costs, budget and legal obligations, you can distinguish between essential and desirable attributes to inform your search.
Engaging estate agents and surveyors to assist your search
Many businesses work with commercial estate agents or property surveyors to help them find suitable premises and navigate the process. You can search for estate agents and surveyors that handle commercial properties in your area and send your spec to them. You can also search for a surveyor using the RICS Find a Surveyor search function.
Your local authority, Chamber of Commerce or trade association may also be able to help.
Self search
You may also decide to search for suitable premises yourself. Commercial property is often listed online, for example on:
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specialist commercial property marketplaces such as NovaLoca and LoopNet
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the commercial sections of online property marketplaces such as Rightmove and Zoopla
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commercial estate agents’ websites
Some local authorities also maintain a register of available commercial property
When searching yourself, check any potential premises against your spec and eliminate any that don't at least meet all your essential requirements. Then you can draw up a shortlist of properties to visit.
At this stage, you may want to involve professional advisers. For example, a surveyor can assess the condition of premises and give you an idea of their value and future costs. The RCIS website allows you to search for a surveyor in Scotland.
When you're ready to make an offer or agree the terms of a lease, your solicitor can help negotiate the deal and complete the legal work.
As a next step, read our guide on Renting business premises or Buying business premises.