Setting up an affordable business location
Your business needs a base, but how big and fancy does it need to be? Here are some options for services, retail and manufacturing.
A lot of consultants work remotely and use online digital tools to collaborate with their clients.
1. Set up an online business run from home or a co-working space
A lot of goods are ordered online and delivered by courier these days. And many services are delivered through a mix of video conferencing and online collaboration. You may only need a virtual office or online shop.
How to start a business without an office
Starting a business doesn’t mean owning real estate. A lot of consultants and online retailers work remotely from a virtual office. They communicate and collaborate online. In-person meetings may only happen at the beginning and end of projects, and can take place at someone else’s office or at a hired venue.
Here are the basic tools of a virtual office:
Video conferencing that allows you to have face-to-face meetings online.
Online documents which can be edited by multiple people at once, from anywhere.
Chat services that make it easy to send short messages back and forth.
Apps that make it easy to share work-in-progress and keep client feedback in one place.
Project management software that shows who's responsible for each step in a piece of work.
There are dozens of apps that can do some of these jobs. Avoid chopping and changing for different clients or it will slow you down. You’re better to learn a few core systems really well and ask clients to use your suite of tools.
Benefits of working from home
Working from home can be great for small business owners. It saves you paying for a work space and could save you an hour or two a day on commuting. But it’s not for everyone. You may go stir crazy being in the same place day and night. Or your home simply may not be a suitable space to work.
Two home office rules to live (and work) by:
Tax and the home office
If you use a room in your home for business purposes, you may be able to deduct a portion of your rent or mortgage payments from your income taxes. Check out the GOV.UK page on doing business from home.
Try a co-working space
Lots of places will rent you a workspace for short or long stays. Co-working spaces become hubs for startups and freelancers who often end up working together and referring business to their neighbours. They’re great for people who love the buzz of an office, and they often come with bookable meeting rooms. A web search will tell you what’s available in your area.
Business location becomes very important when you need a place for customers to come to.
2. Set up a bricks-and-mortar shop
If you need a place for customers to come to, then you’ll need to do some market research to figure out where the opportunities are.
Go toward competition or away from it?
If you’re near competitors, it’s easier to take business off them. And your general location will be more of a destination for your target market. But you can also win big by being the only option in a poorly-served area. Do some market research to see how much your target market values convenience versus choice. It can vary from one industry to another.
- Walk-past versus drive-up
It can be great when lots of people walk past your shop every day, but not if you sell big TVs and they can’t park near you. Do you want pedestrians, cars, couriers, or a bit of everything? Choose a place that is practical and accessible for your customers.
There are rules around where you can do manufacturing, so check with the local authorities.
3. Set up a space for production or distribution
Manufacturing and logistics can be complex businesses. Extra time spent in transit or unloading a truck can drive your costs up a lot over a year.
Before settling on an office near your clients, think about how often you meet them in person.
4. Set up an office
If you're starting a business in which people need to meet and work together, then location could require a lot of thought. It can be tricky to strike a balance between convenience and budget.
Do you need to be close to clients?
If you serve a specific industry and they’re all located in a particular part of town, then it might make sense to go there. However, face-to-face meetings are becoming less common. Weigh up whether it’s good enough to be accessible rather than nearby.
Is your location attractive to staff?
You could get less applicants for vacancies if your office is out of the way. You may also suffer more disruptions from bad traffic, public transport breakdowns, or difficult weather. That may not matter if you don’t have a lot of staff, or you allow them the flexibility to work from home occasionally.
You don’t have to commit to a long lease straight away. You could start by renting an office in a co-working space.
Budgeting and business location
Location can affect both the cost of doing business and the amount of revenue you earn. Do some budgeting when you’re considering options.
Commercial estate agents should be able to tell you the average lease cost per square foot per month for a given neighbourhood. Investigate a few areas to see what's affordable.
Estimate how certain locations and spaces will affect other costs. Will it cost more to get supplies there? Will a certain building cost you more to heat in winter?
Work out how location will affect your access to customers. A cheaper location might end up costing you more in lost income. People with experience in your industry will have good advice to help you understand the balance.
Do you have room for growth?
Most new businesses are on a tight budget, so it’s rare to lease more space than you need at the time. But don’t forget to factor in growth if that’s a goal. Look for places that could take a few extra desks or more equipment. Create some contingency plans. If business booms, where will you base new staff or extra supplies? Although they generally cost more, some landlords offer flexible leases which you can break if you outgrow the building.