Over the past few issues, I’ve talked about “big picture” issues like the economy, changing shopping habits and how leases work, and also tried to put local issues like new property developments into some sort of context. But of all the things I’ve covered the most important ongoing issue in terms of our area’s retail offer is something that so many people have told me they love most about this part of North London – the vibrancy and distinctiveness provided by independent retailers, be they clothes shops, restaurants, specialist or “destination” offers…
Many of you reading this will already have established yourselves in your location and market, and will know how much hard work is needed to start up a business, grow it as far as you can, and survive, particularly during difficult economic times and a period of change in the way we shop.
For those, though, who are looking to open a new business, expand into a second outlet in a new area or even relocate an existing business “lock stock and barrel”, I thought it might be helpful to set out some points (it’s not an exhaustive list due to space considerations) to consider when doing so. A number of the topics I’m about to discuss may seem obvious, but it has struck me over many years of residence in the area – having a keen eye for all things retail as a shopper myself and also due to my profession – that too many businesses have opened and then closed in what seems like the blink of an eye without apparently having thought things through properly in terms of whether they could actually sustain a business by selling what they do, where they do. I’ll be asking a lot of questions, so bear with me!
Where do you want to trade?
Would one location be more suitable than another in terms of demand and competition? Have you thought about where would be the best location in terms of exposure but without exposing yourself to the penalty of a high rent you can’t afford for a “prime” location (see below)? Or is it not critical that you operate from a particular location because you’re a specialist “destination” offer?
Have you identified your target market?
Have you worked out whether there’s a demand for the goods or services you want to sell, in the location you want to sell them? Have you “cased out” the local competition, if any? Have you worked out what will set you apart from the competition – your “unique selling point”?
Do you “know” your merchandise?
Have you identified the best quality brands? Are you keeping up with changing trends in your retail sector to ensure that your merchandise isn’t “so last year”? Do you know the best, most reliable and – vitally – cost effective suppliers for the items you’re looking to sell? If the merchandise you’re selling is “self-manufactured”, do you have the resources to keep up with the – hopefully – heavy demand for your goods? Have you assessed the stock levels – both minimum and maximum -that you need to maintain in order to avoid either running out in busy periods or – the bane of so many businesses – committing money to stock that you can’t shift?
You know the best location – but what type of premises would be suitable?
Have you worked out what size and type of premises you’re looking? How large a sales area do you need? Do you need a large “back area” to accommodate the amount of stock you intend to keep on the premises? Do you need a nice big “floor to ceiling” glass shop front in which to display your merchandise to its best effect?
You’ve worked out the type of premises you want – are you able to afford it?
Have you – or a surveyor acting for you – done some research into rent levels in the area? Two things come into play that will make a very significant difference to what you will have to pay out both in terms of rent and Business Rates:
- The demand for premises in the area – is the high street (or area immediately surrounding it) a thriving retail “hub” in a fashionable area with a very high “footfall”?
- The position of the premises – are they in the thick of the action, so to speak, in a “prime position” or are they located in a road off the high street in what’s termed a secondary or tertiary location?
In the business plan you’ve put together, have you factored in “premises costs” like your annual rent, Business Rates (which, very broadly and in case you were wondering, are based on the Rateable Value of your property as assessed every five years or so based on the rental value at the time of assessment- you will pay a set percentage dependent on the size of your business ), buildings insurance (which your landlord will take out but you’ll pay the premium for), a proportion of the cost of repairing the building and any areas used in common with other occupiers?
The above is, of course, all on top of running costs like stock purchase, staff salaries, utility charges, repair and maintenance (nor forgetting to check your lease – see below), Employers and Public Liability insurance – not to mention the cost of fitting out your premises, purchasing equipment etc. etc!!
Do you “do commitment”?
Basically, having worked out that you can afford the premises, have you read your lease, or at least had it fully and clearly explained to you? It’s vitally important to remember – and I have come across business people who don’t choose to, believe me – that when you’ve signed your lease you have committed to occupy the premises for a certain period of years, paying a certain rent that will be reviewed by the landlord every few years if your lease is longer than c. five years and can increase. You may also have restrictions on what you can sell from the premises. So – are you clear on all of this?
Quite a lot to think about isn’t there?? Good luck, and if you need any help or advice, Becky and I will always be delighted to hear from you.