FAQ: Single question

How To Open A New Premises

The premises from where you operate your business can have a significant impact onitsperformance.There are several important aspects related to your business premises that individually andaccumulativelydetermine the success of your business.

Ownership of Premises

The afore-mentionedaspects are quite dependent on each otherand this further increasesthe complexity of making a decision. For example,a parameter as important asthe nature of ownership isquitedependent onthe location ofthepremises.

Office spaceslocatedin prime marketareasare often out of small businesses’ reach.To run a business fromsuch a prime location,businesses have toeitheraddrent asanother recurring expense to their listofoutgoings,orarrange for therequiredfinanceto buy the space.

If as a business owner you find yourself compromising oneitherthe location or ownership of thepremises,weat Nucleus Commercial Financecan provideyouwith the necessary asset finance. Depending on your requirements,you canuse the finance toeither pay for thelease or buy the spaceentirely.

Following are the threemostpopular ways in which you can set up new premises for your business:

License

• Leasing offers greater security but less flexibility.Compared to a licensed property,the tenure of a lease is more secure which is generally between three and 25 years.
• The increment of rent is pre-determined and is reviewed at fixed periods, which has its own advantages and disadvantages. For example,if the real estate market performs well, fixed rent increments offer a lot of scope for savings. On the otherhand,if the market falters, the rent would be higher than that prevalent in the market.
• A property that you havebought on lease can be altered,but only with the due permission of the landlord.

BuyingAPremises

• Usually businesses buypremiseswhen they are looking to make along-terminvestment or have a large cash reserve.
• The benefits of owning an office space are quite similar to that of owning a house. It places no restriction whatsoever on the durationfor which you wish to occupy the premises.Also, you do not needanybody’sconsent to alter the premises.
• Even if you no longer operate your business from the office space you have purchased, you can earn money byrenting it out to other businesses. For thetimes when your business faces cash flow troubles.you canalwayssell the premisesor use it as collateral to generate positive cash flow.

Location

Most of the advicethat is dispensed to start ups stressesthe importance of setting upabusinessin close proximity toitstarget audience.It is not without reason that business owners find themselves perplexed when confronted with the question of where to set up their business.

The location of your business depends onmany factors other than finance,such as the nature of your business. A restaurant needs to be located in a prime commercial or residential area or any such area that witnesses a high amount of footfall.

Amanufacturing business which depends on its suppliers for raw materialsneeds to be located in close proximity to its suppliers, so as to minimise theexpenseson logistics.

As an employer,you should also take into consideration theamount oftime that your employees would take to commute totheoffice. This can be minimised by setting up the office in a location which is easily accessible to everyone.

Requirements

Besides finance and location,there are various other aspects that need to be considered such as yourbasic businessrequirements.

When looking for an office space,it is important to have clarity regarding the amount of space that is actually required. The area or size of an office has a direct relation with the cost or rent value of it. It is quite likely thatyourfinances will be strained when moving into a new office. In such times, paying for an unnecessarily big office space can increase the financial burden on your business, which may end up catapulting your business into a huge cashflow crisis.