Planning to start a new business will involve spending money. Sometimes a lot of it. Now you’re planning to spend money. You’re planning all the material goods you may possibly need – from a pencil to your premises – and everything in between. This is the time to be conservative…and smart!
- Start-up expenses for a business can add up quickly, and almost always exceed projections. This is the time to be conservative. Wildly extravagant expenditures on everything from office leases to the latest and most expensive IT toy is clearly a potential disaster in the making.
- Minimise your costs – and your risk – by making a hard, cold analysis of what you really need and being ruthless when it comes to crossing things off your list. You can always upgrade when your new business has started to make a profit.
Your location should be your number one priority. Signing a lease and paying rent is a financial burden – but a part of doing business. Signing a lease and paying rent on the wrong location is a financial disaster – and can signal the end of doing business. There are certain criteria to consider when you are selecting a location. Ask yourself:
- What exactly does your business require from its location?
- Are you convenient for your customers? Can they get to you easily? It’s no good being located in a place that is cheap to rent but inaccessible.
- Parking is a vital consideration.
- How about employees? Can they get there easily?
- Have you room for inventory storage?
- Does the location comply with laws such as zoning, safety or health, etc.?
- How’s the security – for your business, your customers and your employees?
- What about future growth? Will the present location still be appropriate?
List any negative aspects of your location that can affect sales. Try to find solutions. Reconsider if you cannot resolve the negative aspects.
Resist the glamour of high-profile buildings and locations! In most cases it is better to rent less expensive premises in another area – then move up to more up-market premises when your business starts to turn a nice profit. However, the opposite – getting too cheap a place – can also cause a problem. You might save money but find it doesn’t suit your business image or appeal to customers. If you are renting make sure you have a good, written contract lease agreement. It must specify all the details: length of the lease, rent increases, due date for rent, conditions, etc. it’s well worth running it by a lawyer before you sign.
Also think about the length of your lease. The cost of having to move (both financially and with regards to losing customers) if you have to relocate at the end of a short lease may be enormous.