Text: Nicole Canning. Article from February/March 2012 issue of Your Business Magazine.
Here’s how to find a successful location for your business…
Whether you’re starting up or simply looking to relocate your business, finding a suitable space to work from is a crucial decision for entrepreneurs. While cost considerations are often the main factor at play, it’s important to look beyond this in order to find the solution that best supports your business’s current and future needs. Here are some tips to formulate your approach…
On the move
A good starting point is to ask yourself why you need a new office space. There are many reasons, particularly if you’ve previously been home-based. Maybe you’ve got to the stage where you want to receive clients more professionally, or your spare back room can simply no longer accommodate your growing employee base. Even if you’re still a one-man show, working from home can be very distracting, depending on your family environment. If you’re relocating, there are most likely cost and suitability factors that have prompted your decision; and it’s important to use these as a benchmark to decide where to next. Be sure not to over-capitalise on renting a space that your business’s income can’t really justify – even Google started in a garage.
Size does count
If you’re looking to rent space, as opposed to buying a commercial property, your space only really needs to accommodate your current staff, with room for some short-term growth. If you plan to stay there a while, take into consideration your medium to long term needs. According to Officefinder.com, each employee needs about 200 square feet in order to work comfortably, though this will vary considerably depending on the nature of the work. Then you’ll need space for a reception area, meeting rooms, a kitchen and filing and storage.
A space that works
Often your office reflects the culture and identity of your company, so you’ll need to think about more than just providing enough square meterage for each staff member. Assess how you are currently working and how you want your employees to work in future. A more collaborative environment will lend itself to open plan working, whereas if you have a hierarchical structure you will want separate offices for more senior staff.
If you have a lot of clients visiting, you’ll have to have a spacious reception area – and don’t forget about convenient parking space. If your clients stay for extended periods of time you may need a few meeting rooms so that your employees can have their own project meetings at the same time.
Now is the time to think about every function the space needs to serve – from whether you need some central, non-assigned workstations for staff who travel extensively to how to manage noise issues between employees who engage in lengthy phone negotiations versus those whose roles requires quiet concentration. You can also work out environmental preferences – do your employees value natural light? Are they air-conditioning averse or is it an essential? Incorporating your staff’s opinions into these kinds of decisions is an important part of selecting and developing a space that supports your business goals.
Select your services
Services such as reception, post, IT support and kitchen space can offer additional value to you if the complex you are leasing from provides them as part of your contract; so you need to weigh up what these facilities would cost if you had to provide them out of your own budget.
Carey da Silva of Flexible Workspace Centres, a provider of both serviced and virtual offices in KwaZulu-Natal and Johannesburg, says that serviced offices are ideal for new and small businesses as well as branch offices for larger companies and temporary office solutions. “Because a serviced office comes fully fitted, furnished, decorated and cabled, there’s no stress over organising desks and chairs or finding an internet connection and your new business can hit the ground running,” she says.
“Day-to-day facilities management of the premises is taken care of, and additional services like printing, secretarial services, catering etc are available but only paid for when used.”
Location, location, location
While this is the mantra of most property agents, locating your business in a popular, high-cost area is a mistake unless you’re in an industry that relies on people passing by. Indeed, if you own a sandwich deli you’ll have to take lunch-time traffic, nearby competitors and convenient access into account, or if you are setting up a retail outlet it’s important that the building you’re in will attract your target market, and that the surrounding shops will do the same. But if you run a business that doesn’t depend on foot traffic, then a reasonably-priced location makes more sense than an expensive trendy one.
As Da Silva points out however, the right address does add to excellent corporate presentation, particularly if clients come through your doors regularly. Also important to take into account is the commute that your employees will have to make, and whether or not the location is serviced by public transport.
Billy Rautenbach, CEO of Seeff Atlantic Seaboard, says that the safety of the location is a primary concern for business owners looking for commercial property to rent or buy, and that good security is an essential. Less vital (yet still important) are facilities like lunch spots, banks and nearby shops.
Lease lessons
Regardless of what location you choose, never sign a lease without checking that you have permission to set up shop there. Depending on your whereabouts, all sorts of contractual restrictions can apply – from zoning rules to limits on certain types of businesses in a specified area.
Rautenbach gives prospective clients the following advice before signing an agreement: “Do your due diligence. Use a reputable agent, check out the landlord or property owners and speak to other tenants; how a building is managed and run is very important and tenants will give you this insight.” When it comes to the fine print, he recommends making sure all promises and sales pitches are reduced to writing and included in the lease agreement.
“If it is a long-term agreement, ensure that rental escalations and renewal clauses are clear. Do a little research to make sure you are agreeing to market-related terms.”
Da Silva says it’s important to find out what is and what is not included in the rental – parking, municipal charges, fit-out allowances etc. Also look out for anything that might limit the hours of use for the property, or on alterations and sub-letting. And don’t hesitate to negotiate on anything that you feel needs re-wording.
Despite the limitations that leasing might impose, most start-ups prefer this option to buying a commercial property; although it depends entirely on the nature of your business, your cash flow and the property market trends. While leasing gives you the freedom to move location and less hassle and expense in terms of maintenance and administration, buying a property enables you to make the changes that you want to, sub-let as you please, and ultimately benefit from the ownership of an asset as opposed to increasing rental costs over the years.
While emotional factors do come into play – you need to feel happy about the space you are working in – don’t let them override the hard facts that will ultimately affect your business’s success.
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