There’s much talk about the decline of retail and the high street, and starting any business is never without its challenges. But with a larger supply of vacant shops than ever, and with cheaper rents, there’s arguably never been a better time to open a business in your local high street. We asked Mark Isherwood from Guildford-based property surveyors Wadham & Isherwood what advice he would give to local entrepreneurs looking to start their own retail business.
Probably the most important aspects of opening your own shop, café or restaurant are: have you researched your market and have you made financial arrangements?
Putting together a good business plan is essential. You can predict the sales and profit in the knowledge of the property costs, set-up costs and ongoing overheads, including marketing and staff costs. A firm of management consultants or a good accountant can help put a plan together but the more you are involved and the more visibility you have of every aspect of your business, the better.
How are you financing your new business? Are you self-financing or do you need help from a bank? These days with all the bank procedures in place it’s not a simple exercise. You can’t just turn up at your local bank, open an account and expect an instant loan or overdraft, so make sure you arrange your banking and finances well in advance of your intended start date.
Deciding on a location for your new business is vital. Research this thoroughly and choose somewhere where competition is both complementary but not too fierce. Visit at different times of the day, on weekdays and at weekends and in all weathers to get a good feel for the town and its footfall.
Looking for a suitable property will entail a mix of checking various websites and walking through locations where you want to be and keeping an eye out for surveyors’ ‘To Let’ boards. If you ‘Google’ commercial shop property in say Surrey you’ll see a variety of sites for both Commercial Surveyors and specialist commercial listing websites such as Completely Retail who, as the name suggests, focus on shop availability throughout the UK.
Once you’ve decided on an area where you want to set up shop, many retailers retain a firm of retail surveyors to help with the search and negotiate with the landlord. Local surveyors will know where all the current availability is, advise on rental values and current market conditions, have a working relationship with many of the local landlords, and will often know about available properties before they become vacant and are openly marketed. This involves you paying them a fee if they find and negotiate something for you, but by benefitting from their experience it can save you a lot of time and hassle and should prevent you from making mistakes in the process.
If you want to save on that expense and find and negotiate something on your own then here’s some advice from an experienced local retail surveyor:
1. Make sure the property fits your requirements in terms of space. Don’t take something that is bigger than you need or you will pay rent on space you aren’t using.
2. Check the Rateable Value and make sure you can afford the 10 monthly commercial rates payments. Also check with the Local Authority if the rating assessment has been appealed or if it needs to be.
3. Most leases being offered on the market are what’s known as a Full Repairing and Insuring lease (FRI). This means you are liable for all repairs to the property, so make sure the property is in good order throughout before you sign anything. If you are concerned about the condition it is probably best to commission a structural survey to double check the fabric of the premises. This may cost around £1000 but it’s often money well spent. If the survey reveals problems then get the landlord to sort them out, or exclude them for your liability.
4. An alternative to the FRI lease is an Internal Repairing Lease which leaves the landlord to deal with structural and external repairs. Sometimes these come with a service charge (such as in shopping centres) payable by the tenant on a monthly or quarterly basis, so in effect it’s FRI but it means you don’t physically have to do anything.
5. Think about insurance for your new premises. A tenant pays for building insurance by reimbursing the Landlord either directly or though the service charge if there is one. The Tenant needs to insure their own contents including stock.
6. Check the EPC (Energy Performance Certificate) rating. If it’s unsatisfactory insist the Landlord carries out work to improve the rating, saving you money on bills and saving the planet!
7. Check if the property has had an asbestos survey. If not insist one is carried out and ensure the Landlord deals with any findings at their expense.
8. In negotiations ensure the lease will be a ‘protected lease’ and inside the security of tenure provisions of the Landlord and Tenant Act. If the Landlord doesn’t offer this then you will have no automatic right of renewal at the end of the term.
9. Check the planning use you intend conforms with the consent granted for the property. The use classes order was amended by the government last September and retail businesses are now in Class E along with office use and restaurants. Take away food and pubs are now in a category called Sui Generis (in a class of their own).
10. If you plan external and internal shop-fitting works then you will need the Landlords consent and possibly planning consent (especially for external works). Air conditioning and vent/extraction systems will need planning consent so if you plan to sell hot food watch out for this. Again you will need a licence to sell alcohol if you open a restaurant, wine bar or a pub/nightclub.
11. To protect your property and stock you will need to install a good quality alarm system and although the Landlord should make sure there is a fire alarm system in the building it is worth checking this is the case and that it is tested regularly.
12. Also have regard for the Disability Discrimination Act and where appropriate install a compliant WC.
13. Check the current electricity supply and ensure it is adequate for your requirements. Certain businesses need a 3 phase supply so take account of your needs and the costs of supply in this regard.
14. Remember long before you’re ready to open the doors of your new shop you need to have a plan for marketing your business. This could be through local press and radio advertising, an engaging and user friendly website (a must!), social media platforms like Facebook, Instagram etc., and even exhibitions and consumer shows. Local marketing support is often on hand from organisations like Business Improvement Districts and may be covered as part of a service charge within a shopping centre. Put yourself out there, get noticed, and earn yourself a loyal customer base.
Reading all of this you might think that opening a shop, café or restaurant seems like a daunting task, and this is by no means a comprehensive ’to-do’ list either! But with a good idea, a thoroughly researched business plan and by taking good advice where necessary you’ll quickly get to grips with things, and there’s nothing like being your own boss.
Mark Isherwood is a Director at Wadham & Isherwood http://wadhamandisherwood.co.uk
To start your search for shop property and to find local property experts in your area search for shops to let on CompletelyRetail.co.uk here.