CHOOSING a home for your company is a major business decision.

Property is a large overhead and for smaller firms, in particular, it is one which can be difficult to manage.

For many companies looking for their first property, or expanding, finding accommodation which is the correct type, within budget, in the right location and with room for growth is proving difficult.

A recent report reveals that nearly one in four small and medium-sized enterprises (SMEs) in the north west have had problems.

Findings in the Spacia Small Business Property Monitor 2003 show that 24 per cent of small businesses experienced difficulty, compared with 22 per cent in 2002.

The survey also found there were problems in finding the right lease terms, while three-quarters of SMEs asked for more information to be made available on the Internet or via small business organisations such as Business Links.

According to chartered surveyor Ian Campbell, a director of small business landlord Spacia, small firms need to prioritise the essentials and identify areas where compromise can be achieved.

He says small firms need to ask themselves:

• In-town or out-of town property?
  
• Ready to move in property or one with potential?
  
• Buying or renting?
  
• Is it important to be in a prestige area?
  
• Do we need access to a skilled workforce?
  
• Do we need car parking facilities or to be near motorways or public transport networks?
  

Once key criteria have been identified, firms then need to select the type of contract which best meets their needs.

A range of property solutions have been designed to cater for companies, from one-person start-ups to well- established businesses. It is important to recognise how these property solutions fit the business to get value for money and find the right premises.

Leasing property

Leasing property on the right terms can have the benefit of a short to medium-term contract - offering flexibility to expand or reduce property requirements as necessary - and requires little capital. Rental payments are typically fixed for a set term, between one and five years and, so, problems of hidden costs are avoided.

Remember, however, other property costs such as rates, service charges and utilities. In 2002 the government, alongside industry partners, introduced the Code on Commercial Leases, which allows greater flexibility for both sides when negotiating lease terms. The range of options for tenants is, thus, now much wider.

Serviced offices

Primarily targeting small businesses and start-up companies, serviced offices provide short-term, ready-made office solutions. There are a large number of providers in the market and a wide range of offices to select from which vary in quality, price, style and location.

Serviced offices can be a good option for companies who want to focus on getting their business up and running.

The responsibility of managing services such as telecommunications, IT and administration support can be handled by the serviced office provider. However, these are usually billed on a pay-as-you-use basis, so being aware of all costs from the outset can avoid problems further down the line.

Purchasing property

Purchasing property is often viewed as the preferred option. However, raising sufficient capital to purchase is often prohibitive for many companies. Large deposits can be required and this capital could be better used elsewhere. Interest rate rises can also be unpredictable and large shifts in monthly payments can result.

SMEs opting to buy also need to be confident that they can sustain the size of the property and the length of contract, even during economically uncertain times.

While there can be a temptation to go for cheap properties, understanding the condition and value of the premises (by taking advice from a chartered surveyor) and talking to other occupiers in the area about the region is important.

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