Fast Business – Flexible Property
9th March, 2015
Securing and retaining the right property from which to expand your business is crucial to the success of any fast-growing company.
It needs to be on the right terms for you, and allow an exit route when the shape and size of your business changes.
Location remains important, even when more business is being conducted online. The right location can enable you to more efficiently deliver your goods and services and give you access to a larger, potentially better qualified pool of workers and services.
Locating at industry-specific ‘hubs’ can help to attract specialist staff and also stimulate potential joint ventures and information sharing with like-minded companies, and hubs often have more flexible arrangements for smaller yet growing businesses.
Once the location has been determined, you should examine the options when it comes to the management of your premises.
Fast-growing companies often need to take up extra space to accommodate their growth, but saddling yourself with oversized premises can drain cashflow.
Many businesses take premises from third party owners, whether by way of informal sharing, short term serviced accommodation, licences or more formal leases.
Documenting these arrangements correctly is essential to guarantee the flexibility fast-growing businesses require. Leave this to chance and it can carry great risks.
You could negotiate terms at the outset to include early termination in certain circumstances or at certain intervals.
However, these break arrangements often have pre-conditions which need to be satisfied in full before the break can happen. Get it wrong and the financial and operational costs can be severe.
A cost-effective way to secure future additional space that might not be needed immediately is to agree an option agreement or pre-emption with the owner/landlord over currently vacant areas to allow for future expansion.
With this priority, you could move quickly should a third party become interested. You will need to decide whether to fix the terms of occupation at the outset.
Seek input from your legal advisors early when settling the main terms for new premises, as this can help to clarify important issues and speed up the process, avoiding unnecessary negotiations later.
As a final point, you should ensure that your property arrangements fit in with any funding and operational requirements of the business.
This is where investment in the right professional advice can really pay dividends.
* This article first appeared in a special supplement on the Greater Manchester Fastest 50 Awards 2015.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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