Starting your own business is an important stage in an entrepreneur’s life. The choice of premises where your business will operate affects many aspects: productivity, convenience for clients, rental costs, and even the success of your brand. In this article, we’ll review all the essential points to consider when choosing premises for a small business or startup. Our goal is to help you find the perfect location without unnecessary expenses or mistakes.
Understanding Business Needs
Before searching for a premises, it is crucial to clearly define its purpose. This will save time and avoid unnecessary costs. For instance, you need to understand how much space is required, whether additional infrastructure is necessary, and what specific business features must be considered.
If you’re opening a café, you need to account not only for client seating but also a kitchen, storage area, restroom, and even a small staff room. For a shop, you’ll need a spacious retail area and storage for goods. Startups, especially in IT, require workspaces for employees, a meeting room, and possibly a relaxation area.
Calculate how many people will work in the premises and what processes will take place. For example, an office for a team of 5 people requires 30–50 square meters, whereas a shop with high customer traffic needs at least 100 square meters. Also, consider whether specific conditions are necessary, such as a ventilation system, high-speed internet, or parking space.
A clear understanding of your needs allows you to select optimal premises fully suited to your business activities.
Location: The Key to Success
The location of a business is crucial. It influences not only customer flow but also convenience for your team. For instance, renting an office far from the city center may cause commuting issues for employees, affecting their mood and productivity. On the other hand, placing a shop in a low-traffic area can significantly reduce your revenue.
For customer-oriented businesses (cafés, shops, salons), choose premises with high foot traffic. These could be central city areas, shopping centers, or locations near subway stations. For businesses focused on employees, such as office spaces for startups, prioritize premises with good transport accessibility, parking, and proximity to cafés or supermarkets.
Pay attention to competition in the area. If several similar businesses are nearby, it may be harder to attract clients. However, if you have a unique offering, such a location might become an advantage. For example, a small artisanal store in the city center can thrive even if surrounded by large chain supermarkets.
Additionally, assess the area’s development prospects. Will it grow? Perhaps in a year, a new business center or shopping complex will be built nearby, increasing foot traffic. Such factors could be a future bonus for your business.
Budget: How to Avoid Unnecessary Expenses
Finances are always a sensitive issue for small businesses. The biggest mistake entrepreneurs make is renting a premises that exceeds their budget. This creates financial pressure and can lead to problems in business development. Therefore, the first step is to create a realistic budget.
Keep in mind that rent should not exceed 20–30% of your monthly income. This leaves enough funds for other expenses, such as employee salaries, purchasing goods, and advertising. For instance, if your business earns 50,000 UAH per month, rent should cost no more than 10,000–15,000 UAH.
In addition to rent, there are other costs: utilities (water, electricity, heating), internet, signage, furniture, and security systems. If the premises require renovation, include these costs in your budget. Also, be aware of hidden expenses often mentioned in contracts, such as extra fees for cleaning, elevator maintenance, or parking.
Carefully review the lease agreement. Entrepreneurs often overlook the fine print, which can lead to problems. For example, some landlords may require payment for repairs, even if it’s their responsibility. Others may include unfavorable early termination clauses. If in doubt, consult a lawyer.
Premises Condition: What to Check
Even if a premises seems perfect in size, price, and location, evaluating its technical condition is essential. This will help you avoid unpleasant surprises in the future. For instance, if the premises turn out to be cold in winter, you’ll have to spend extra on heating, which could strain your budget.
First, check the electricity and water supply. Are there any power outages? Do all sockets work? Is the plumbing in good condition? Inspect the walls and floor for cracks, mold, or other defects. If the premises are on the ground floor, check for moisture issues.
Safety is also a crucial aspect. Find out if there are alarms, security, or at least CCTV cameras. If the premises are in an old building, ensure the structure is safe and doesn’t require major repairs.
If the premises need to be adapted for your business, clarify whether this is possible. Some landlords prohibit remodeling or significant design changes. For example, if you plan to open a café, you may need to install an exhaust system or add kitchen equipment. All of this must be agreed upon with the landlord.
Growth Prospects
Choosing a premises today isn’t just about meeting current needs but also planning for the future. Businesses grow over time, and premises that seem ideal can become too small. For example, a startup with 3 people might grow into a company with 20 employees within a year. A store with a small inventory might expand and need more space for goods.
To avoid frequent relocations, choose a premises with room for expansion. This could mean a neighboring office or an additional hall you can rent when needed. Also, consider flexible lease terms. Some landlords allow tenants to increase or decrease space within the same building.
Practical Tips for Choosing a Premises
The process of selecting a premises for your business can seem complicated and even stressful, but it can be significantly simplified by following a few simple and proven tips. The right approach will help avoid costly mistakes in the future.
- Consider multiple options before making a decision.
The first premises you see might seem ideal but don’t rush to rent it immediately. Always consider at least three to four options to compare them in key parameters: price, location, lease terms, and conditions. - Consult real estate professionals.
Realtors or specialized agencies can be your best allies during the search. They know the market well and have access to listings you might not find on public platforms. - Factor in the seasonality of your business.
If your business is seasonal, choose premises accordingly. For example, summer cafés require outdoor seating, while holiday-related businesses benefit from high-traffic areas near shopping centers in winter. - Take your time.
Avoid hasty decisions, even if it seems like the premises will be taken by someone else. - Inspect everything personally.
Even if a premises looks perfect in photos or descriptions, always visit it in person. - Plan for the future.
Don’t limit yourself to current needs.
Conclusion
Choosing premises for a small business or startup requires attention to detail and strategic thinking. Understanding your business needs, evaluating your budget, analyzing location, and checking the condition of the premises will help you avoid unpleasant surprises and ensure a successful start. Remember, every decision made at the beginning can significantly impact your business's future development.