Moving from home working to a shop (eeks) - advice please

Olly1_2

Hi,
Can anyone tell me what I should look out for or budget for when opening a shop/premises instead of working from home? Have seen a shop I like, am very cautious person so scared to make the leap from home working to shop, but business partner says is only way we can expand. We sell via the internet only so would not necessarily be using it as a shop, more storage and office space (although lease says we can trade as shop if we wanted to). I cannot move at home just now with 3 out of 4 bedrooms being used for office & stock and rolls of bubblewrap blocking hall etc - I know I need more space but its a huge leap and I am worried about tying myself to a lease for 5 years for something that could only be used as storage as for personal reasons I could not go to premises every day - perhaps every second day so would still need to run business from home on some days. Partner says it would allow us to grow as we could look into getting staff in time (even that scares me as whole new ball game, health and safety, employee insurance, sick pay etc :eek: ), and we could also expand our ranges as more room to stock items.

So far rent is £70 per week, buildings insurance is £4-5 per week (set up by landlord and we would pay in with monthly rent), rates he says only £4-5 per week. We know we will have to insure stock, install alarm, and pay for elec etc but are there any other costs we are not thinking about? I want to make sure I cover all the bases before working out if this is something we can use to increase profit etc.

Ohh and a helpful little 'i leased a shop and it changed by life and made it wonderful' story would be helpful lol

Pennywise

Here are a few...

Contents insurance (to cover stock and equipment)

Waste disposal (you have to buy your own bin bags or pay for wheelie bin)

Public liability insurance (for customers/suppliers/delivery drivers on your premises)

Signage

Decoration

Shelving, equipment, lighting, power

Ongoing cleaning ahd hygiene costs

Telephone line rental/calls/broadband

Property maintenance and repairs (look at your lease for what you're liable for)

Insurance excess for damage to shop windows (very frequent occurrence for most shops)

And some that aren't necessarily costs but inconvenience...

You need someone there most of the time to accept deliveries from suppliers and sign for recorded/special items of post.

Parking/Petrol costs for travel from home to shop.

You have to undertake a fire risk assessment

You have to undertake a H&S risk assessment

If you decide to open it as a shop, you'll need more staff that you think as you must be open at the published opening times which means cover for breaks, lunch etc.

When you get staff, you have higher insurance, employers NIC to pay, SSP and SMP, staff training, paid holidays, soon you'll have employer's contributions to pension schemes, etc.

Whatever you think it is going to cost you, double your estimation and then make sure you can afford the doubled figure.

Olly1_2

Pennywise wrote: »

Here are a few...

Contents insurance (to cover stock and equipment) Sorting quotes out just now

Waste disposal (you have to buy your own bin bags or pay for wheelie bin) Thank You - will look into this

Public liability insurance (for customers/suppliers/delivery drivers on your premises) Internet/Mail Order only at present so thought this would not be needed but did not think about delivery drivers etc so thank you very much for this

Signage No idea on costs but will look into this as did not consider it

Decoration Nicely done just now but will bear in mind for future costs

Shelving, equipment, lighting, power got shelving etc from home office

Ongoing cleaning ahd hygiene costs me with a cloth to begin with i suspect

Telephone line rental/calls/broadband around £30-40 per month basic rental it seems so far

Property maintenance and repairs (look at your lease for what you're liable for) Someone is going to look this over for us incase anything weird in there

Insurance excess for damage to shop windows (very frequent occurrence for most shops) Shop we like has lattice grills with only 50p sized holes in them so hopefully broken windows wont be a problem unless someone is really determined

And some that aren't necessarily costs but inconvenience...

You need someone there most of the time to accept deliveries from suppliers and sign for recorded/special items of post. May get these to home address for a while until we get more organised at shop but thanks again as we did not think about this

Parking/Petrol costs for travel from home to shop. Thankfully is only 10 mins from house and lots of parking (boy was I glad about that lol)

You have to undertake a fire risk assessment - eeks, worried about £1,000 bills now - had no idea about this as thought having working fire extinguishers would be fine (really dont know about this stuff)

You have to undertake a H&S risk assessment - eeks as above

If you decide to open it as a shop, you'll need more staff that you think as you must be open at the published opening times which means cover for breaks, lunch etc. Will just be internet etc to begin with - may do shop at a later time but not sure if added costs, shop units, staff wages, insurances, shop lifting risk etc is worth it just now

When you get staff, you have higher insurance, employers NIC to pay, SSP and SMP, staff training, paid holidays, soon you'll have employer's contributions to pension schemes, etc. Again something that very much worries and concerns me - looks like accountant will do payroll and paperwork for not too much more money but paying someone SSP or SMP and having to employ someone else during that period could be a problem

Whatever you think it is going to cost you, double your estimation and then make sure you can afford the doubled figure.We can afford it and shop costs all included should account for about 1/8 of current monthly profit, I am just worried we are doing something that we will use as storage and still mainly work from home, also cant see how it could expand/improve our sales, but partner (the ever optimist who never deals with insurance and legalities of things) is all 100% for it - can you tell he is the one who does wind-surfing and rock-climbing whereas I prefer emmerdale and a book lol

Thanks for your help - very much appreciated - some things I had not even considered and others I thought did not apply now do it seems.

Also as a final question the lease is for 5 years with rent review in 3 - would I be cheeky asking for the lease to be 3 years? Is this something that people renting do - i.e. are the terms haggle-able or are they normally to be accepted or not accepted? Is a small shop out of way and even although we dont need passing trade as not being used as a shop I am worried about tying ourselves to something for 5 years that we may not need (am mortgage free now but you should have seen how long it took me to decide to buy a house ten years ago lol - half a dozen people had to virtually frog march me to bank lol - I am a worrier and not much of a risk taker so this is like jumping off a cliff to me lol)

Pennywise

Olly1 wrote: »

Thanks for your help - very much appreciated - some things I had not even considered and others I thought did not apply now do it seems.

Also as a final question the lease is for 5 years with rent review in 3 - would I be cheeky asking for the lease to be 3 years? Is this something that people renting do - i.e. are the terms haggle-able or are they normally to be accepted or not accepted? Is a small shop out of way and even although we dont need passing trade as not being used as a shop I am worried about tying ourselves to something for 5 years that we may not need (am mortgage free now but you should have seen how long it took me to decide to buy a house ten years ago lol - half a dozen people had to virtually frog march me to bank lol - I am a worrier and not much of a risk taker so this is like jumping off a cliff to me lol)

Everything is negotiable. If you are dealing with an agency they may be less flexible, but dealing directly with a landlord should be very flexible indeed. My first premises were initially offered on a 5 year lease, but I negotiated them down to a three year lease with a "break clause" at each anniversary, so I could get out of it at each year end. My second premises were even better - a 1 year rolling lease where I had the option whether to extend or not for another year. Just remember that it also works the other way - if you get a shorter lease, the landlord sometimes has the right not to renew and effectively throw you out.

Pennywise

Olly1 wrote: »

Thanks for your help - very much appreciated - some things I had not even considered and others I thought did not apply now do it seems.

Also as a final question the lease is for 5 years with rent review in 3 - would I be cheeky asking for the lease to be 3 years? Is this something that people renting do - i.e. are the terms haggle-able or are they normally to be accepted or not accepted? Is a small shop out of way and even although we dont need passing trade as not being used as a shop I am worried about tying ourselves to something for 5 years that we may not need (am mortgage free now but you should have seen how long it took me to decide to buy a house ten years ago lol - half a dozen people had to virtually frog march me to bank lol - I am a worrier and not much of a risk taker so this is like jumping off a cliff to me lol)

Everything is negotiable. If you are dealing with an agency they may be less flexible, but dealing directly with a landlord should be very flexible indeed. My first premises were initially offered on a 5 year lease, but I negotiated them down to a three year lease with a "break clause" at each anniversary, so I could get out of it at each year end. My second premises were even better - a 1 year rolling lease where I had the option whether to extend or not for another year. Just remember that it also works the other way - if you get a shorter lease, the landlord sometimes has the right not to renew and effectively throw you out.

Slinky

If you are just looking for more room as storage, would it not be possible to rent storage at somewhere like Big Yellow, or even a lock-up garage nearby?

marmite76

Slinky is right. If what your business needs is storage and an office, why are you taking a lease on a shop? Because it is there? Because that is the first thing you came across?

The storage unit would be the better option. there is lots of choice and the other option if you need storage and an area to package and receive goods and an office, would be a little industrial/warehouse unit which will have everything you need and a (WC!). I don't know where you are but most areas across the country have a load of that kind of thing and particularly at this time in the economic cycle.

send me a private message if you want to know more.

lease negotiation is not all about the rent and it is not enough just to have a break clause. you need to ensure that it is worded in a way that will actually work for you when you come to need it. many do not.

Good luck.

Marmite 76

bylromarha

Just taken on a shop premises-landlord offered me a 5 year lease with a break clause every year. Rent review year 3.

Other properties I'd put offers in on previously were turning my offer down because I asked for a break clause after a year. Princes trust insisted I had this, so couldn't refuse as they're my funders.

TOTALLY_SKINT_MARE

My Husband Just Went From A Lock Up To A Shop Just Over A Year Ago And We Were Too Scared Of The Leap, But It Has Really Paid Off, The Company Has Gone From Strength To Strength. But It Does Take A Lot Of Money Out Of You..... And It Does Have Pitfalls, You Get More People Sniffing Around For Example :- Health And Safety, And Council Officials!! Top Tip:- Use The Businesseye Website And Get A Waste Licence For Definate. ( Sore Point)!! But Apart From That The Usual Expenses:-

Rates/electric/staff/paye For Staff- That Zaps Your Money When You Employ People) Advertising

Olly1_2

Hi,

We looked at lock-up/storage first - containers are out as they are only around 100sq ft and also some of our products are heat/cold sensitive. The inside storage units are around £250 for 250sq ft per month and although they have lighting there are no electrical points so we could not get a member of staff in properly and I doubt they would be large enough unless we went to a much larger unit which unfortunately increases the monthly price a fair amount (and still be no electricity or net access).

With a shop the rents are around £200-£350 for the perfect size and this is around 4x or more of the storage rooms. It also means we can eventually get staff in to help and also have elec and net access etc.

A lot of our work involves pc and also packaging - both of which would not be ideal in a storage unit unfortunately. We have spoken to health and safety who will come out and give the premises a once-over before we sign a lease so hopefully wont be any huge surprises or expenses involved there and as we are operating as an office/storage instead of a shop thankfully the regulations appear to be less imposing (phew)

I think the shop is definately the way to go - warehouse/industrial unit is our ideal choice but there are very few around here for rent or to buy and the ones that are available are huge with a huge price to match.

Have looked at a couple of shops so far including one to buy (works out about the same at 8 years paying rent) but I am wary of buying instead of 'trying out' a proper premises based business first (Mr Olly is all for buying to save money but I am the one who deals with bills and problems lol so a little more cautious).

Thanks so much for all the help - its very much appreciated

Olly1_2

Pennywise wrote: »

Everything is negotiable. If you are dealing with an agency they may be less flexible, but dealing directly with a landlord should be very flexible indeed. My first premises were initially offered on a 5 year lease, but I negotiated them down to a three year lease with a "break clause" at each anniversary, so I could get out of it at each year end. My second premises were even better - a 1 year rolling lease where I had the option whether to extend or not for another year. Just remember that it also works the other way - if you get a shorter lease, the landlord sometimes has the right not to renew and effectively throw you out.

They refused to even consider a break clause or reducing rent period to 3 years. I felt 5 was too long to commit to for first premises and on top of the fact they were charging £5 more per week than their advert in the window said (only £250 or so a year but does not install trust) and they said one day that they would remove anything we did not want with no problem (incl partition wall, third sink, old tenants belongings etc) then next day said we would be charged for everything they removed. All in all combined with the rent increase in 3 years but tied in for 5 minimum made us very wary of this deal so we're still looking. Looked at one to buy - is a mess but great size - I think I would prefer to rent first though so still looking, council looking for us as well now so hopefully our perfect place is just around the corner lol.

Thanks again for help