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Appraising Premises

Tue, 09 September 2003

There are a number of factors to take into account when appraising potential premises, some of which are covered here.
There are a number of factors to take into account when appraising potential premises, some of which are covered here. The importance or relevance of any one aspect will depend on the type and nature of your business; a manufacturing business, for example, will have very different needs and priorities from a retail business. Use your common sense when appraising premises and try not to get too carried away with the excitement of signing the lease and putting your name above the door; this is arguably the most important, most costly decision you will make during your start-up activity and it is important that you get it right.
Location is key to the success of your business. With some businesses, it is so critical that you should not consider accepting second best; wait until you can take premises in your ideal area – in some cases, in your ideal street.
Your ideal location is determined by the requirements of your business. Ask yourself what is most important to you: it might be good transport routes, proximity to a large population or access to a specialist labour force. Once you have the answer to that question, you are a step nearer to identifying your ideal location.
Do you need to be close to a motorway, major airport, rail terminal or shipping port? i.e. import/export, direct selling via sales force, delivery of product.
Do you need to be close to a large centre of population? i.e. to sell high-volumes of product, or to a specific market, eg a bookshop in a university town or city.
Do you need to be closer to your sources of supply? i.e. raw materials available locally, therefore cheaper, and better relationship with supplier.
Do you need particular types of labour or skill? i.e. specialist skills available in certain parts of country, or pool of unskilled labour (possibilities include high unemployment areas).
Do you need grants, cheap or rent-free premises etc? i.e. incentives to businesses moving into certain areas.
Remember to take into account all costs. Set a budget and stick to it. Check agreements for any hidden costs that may be lurking within the text: are there common charges, for cleaning or security, for example? Also, in addition to your rent or mortgage payments, there will be business rates and utilities to pay. Consider carefully whether you can afford to take on a particular premises once all costs have been calculated.
Consider the type of access you need for your premises. Will you need to take in large deliveries of stock? Will customers visit you at your premises? Is the parking sufficient? How good is public transport, or other transport routes? Is access easy for any staff you may wish to employ?
Loading bay
Consider the type of deliveries you will be receiving or dispatching. How large will the transport be? Will you need to accommodate an estate car, a transit van or a wagon? Take into account your requirements before committing yourself.
Customer access
Customer access should be clearly signposted, attractive and welcoming.
Disabled access
Whilst there is currently no legal requirement, it may make good business sense to try to ensure that disabled access is clearly signposted, free from obstruction and reasonably accessible from public transport/parking areas. From 2004, a business must make ‘reasonable adjustments’ to physical barriers that make access difficult for disabled people. This may mean, for example, that ramps need to be fitted to steps. If you are planning ahead to have alterations made to premises, then you should build this into your plans if necessary.
Image/customer care
Remember that your premises present your business to the outside world. At the very least, they should be clean and tidy at all times. If customers visit your premises, think very carefully about the image they project. If necessary, spend some money, and provide customer seating, pleasant surroundings and a reception area, as necessary. For retail businesses particularly, this is arguably the most important factor to take into consideration after location.
When appraising your premises, check what utilities are available and also exactly what you will be responsible for paying.
In the case of electricity and telephone services, check the number and location of sockets. Are they sufficient? Will you need to add more? What will the cost of this be?
Check that the premises has gas, if you need it, and also that it is connected to the mains water supply.
Confirm all charges for services and factor them into the overall cost of your premises.
Check the types and levels of light in all areas of your premises. Is the existing amount sufficient? If you need to increase levels of light, how easy will this be? Look at alternatives; do you need to add desk lamps or increase wall or ceiling fittings? Do you require more sockets in order to follow your chosen course of action? What are the cost implications of any changes you wish to make?
If heating has been installed, check the type and extent. Is it sufficient to keep everyone comfortable? What will it cost to run? Remember that minimum heating levels exist. If no heating has been installed, what will it cost you to address this?
Also consider if it will be necessary to provide a method of cooling the workplace during the summer months; whilst no legal upper limit is in place, it makes sense to ensure that people are comfortable when working.
You should also consider ventilation, especially if you use a lot of machinery and/or chemicals.
Check whether the premises has been fitted with a burglar alarm. If not, do you need one? Also, are there security shutters/grilles at windows and/or doors? If you are on an industrial estate, for example, find out whether the area is patrolled. If you have a retail outlet and do not have a roller shutter over your shop window, remember to leave on ‘police lights’ overnight, so that anyone in your premises may be seen from the street.
As well as having a direct affect on your business, any and all of these factors are likely to affect your insurance premiums, so pay close attention. If in doubt, take advice both from your insurers and the police crime prevention officer.
Check that you have access to kitchen and toilet facilities. Are they communal or do you have your own areas? If they are communal, who is responsible for keeping them clean? Check whether there is a charge levied by your landlord for this.
N.B. If no toilet facilities exist, then you must provide them by law, along with access to drinking water.
It is essential that your premises are big enough, with perhaps a little room for growth. Do not pay for space you do not need. You need to check the total floor area, layout and shape of each area to assess its suitability for purpose. If you are looking for an industrial unit, is there sufficient office space? Do not forget to take into account which areas have windows; whilst a windowless room may be fine for storage, it is unlikely anyone would choose to work in such a space.
Consider carefully what stocks of goods you will carry. You may need to store raw materials, consumables, work in progress and finished goods, for example, and so will need sufficient storage to accommodate everything. Ensuring that you have room for a little growth may be prudent, but do not pay for space you do not and are not likely to use.
Some types of business can benefit from being near the competition. If you are opening a restaurant, for example, is there an area of town where customers would expect to find you?
Alternatively, by setting up apart from the competition, can you attract custom from people who would otherwise have to travel?
Your market research should indicate which is best for you.
Environmental concerns
Consider the impact your business will have on both the local and global environment. Take whatever steps are necessary to minimise any negative effects you can foresee.
Safety issues
You need to be confident that your premises are safe not only for yourself, but also for customers, visitors and staff.
Fire safety
Fire regulations exist to which you must adhere. If in doubt, or for more information, contact the Fire Officer at your local fire station.
If the premises are substandard, you will have to make the required alterations. The types of things that you will have to take into consideration include escape routes, emergency lighting, fire doors or walls, safe storage of hazardous or flammable substances, and fire and smoke alarms.
Health and Safety
You will need to assess the health and safety risks that exist as a result of you carrying out your business. It will be necessary for you to keep an accident book to record any mishaps.
Risk assessment
You are required by law to undertake a risk assessment. What it means is that you must identify any potential hazards created by the act of you carrying out your business and then ensure that you have taken sufficient precautions to minimise the risk. If you are using machinery or chemicals, for example, you may wish to engage a specialist to carry out the assessment; otherwise, you may conduct it yourself. Use your knowledge and common sense to guide you and do not assume that staff or visitors will have the same knowledge that you do when putting into place procedures to minimise risk. You are only required to keep a written copy of your assessment if you employ more than four people.
Minimum standards
Minimum standards exist to which you must adhere. For example, your premises must have clean, working toilets with hot and cold water, soap and either towels or a hand dryer. Mains or bottled drinking water must be provided.
There is a minimum temperature requirement, although not as yet a maximum, and a recommended minimum amount of space (floor area) per employee.

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