Should you base your startup business from home
or find your own premises?

When you’re starting a new business, you might feel like the money you’d saved up to get your company off the ground is stored in a leaking bucket.  If you haven’t got a steady income from it yet either, you might also feel like that bucket is sat in the middle of the Sahara Desert – with no tap to fill it back up with.

From paying for a designer to create your new brand and stationery to buying IT equipment, even if your business will take the simplest form initially, consisting of just you, your phone and a laptop, there are costs you’ll be incurring before you might have even secured your first sale.

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One of the biggest potential costs is premises which poses a big question - should you base your startup business from home or find your own?

Here at Business Solutions Centres, we will debate your options in this month’s startup blog.

Basing your startup business from home

Before getting your slippers on and making yourself comfortable at home with a cuppa, ask yourself the following three questions:

First and foremost, you may need various permissions from your mortgage provider, local council or insurances before you can officially run a business from home. For more information, check the ‘Running your business from home’ section on gov.uk.

Sometimes your accountant can act as your registered business address or there are specialist offices designed for startup businesses where you can get your post delivered to instead.  Here at Business Solutions Centres, Hereford Business Solutions Centre, the e-Innovation Centre in Telford and SPARK, the University of Wolverhampton’s Science Park business incubation hub can all offer your business a professional postal address for free if you are a regular user of their hot desk facilities.

The answer to this will be very dependent on the nature of your business.

For example, if you’re a budding self-employed mechanic, living in a house without a driveway or a garage, starting small at home simply might not be feasible.  Likewise, your neighbours might not be too keen if you’re running a sandwich shop from home with regular deliveries and customers arriving either.  However, if your business is relatively desk based such as freelance consultancy, home working could be the perfect fit.

If you can work from home, buy a desk. Or a home office.  Or a shed.  Or if budget can stretch to it, one of those pretty summerhouses down the garden that will take you all weekend to assemble because it arrives flat packed with the instructions missing.

Whatever works best for you, physically separating yourself from the kitchen table or the sofa will help you to differentiate between home and work, so that at 5pm (if you’re lucky!), you can log off and relax with your family and friends without feeling like you’re still at work.  Likewise, if you’re easily distracted, having a distinct work area might also help you to focus on the task in hand.

As long as costs are reasonable, you should be able to claim for any initial office furniture outlay and a proportion of the cost of things like council tax, heating, lighting, phone calls and broadband through your business.

An image of a new business start up female director sitting have a coffee

Finding your own premises

However, for some people, working from home simply isn’t an option.

If you’re too easily drawn into ‘Homes Under The Hammer’ (or you can admit it, ‘Jeremy Kyle’) and reach for the biscuit barrel in place of human contact, finding premises might be a better solution.  But aren’t premises expensive?

The answer is, it depends on the complexity of your business and more importantly, where you see your business heading in the long term.

Before you make any big decisions on premises, ask yourself the following three questions:

Just like your home, rent or a mortgage on commercial property is a fixed cost. This means that whether you have revenue coming in or not, you’ve still got to pay for it every month.  In our first startup blog, we talked about a cashflow forecast – dust that off and really question whether you have (or will have) the regular income to cover this cost.  In our second startup blog, you’ll remember we also talked about unlimited liability – if you’re self-employed or in a general partnership, you’ll be personally liable for maintaining rent or mortgage payments and it could impact on your ability to personally get credit in the future if you fail to do so. 

Remember, the cost of premises doesn’t just stop at the rent or mortgage either.  Additional costs such as heating, lighting, insurances and business rates will also need to be taken into account.  You can find out more about business rates on the gov.uk website here.  On the whole, renting offers you more flexibility than a mortgage so even if you have money to invest upfront, consider renting first to test out your business before signing up to any long term commitments.

If so, why not look for premises in a cheaper location if you can afford a short commute each day? In the same way as residential property, business premises in Birmingham City Centre will inevitably be more expensive than in the surrounding areas so be prepared to be flexible in order to find an affordable solution for you and your business.
Yes they can look impressive and might make you feel like ‘I’ve made it’, but why not take something smaller on a shorter lease and work up to your dream premises instead? After all, we bet you don’t know a first time buyer looking for a mansion for their first home (and if you do, we need to know their secret!).

So what do we think?

We believe working from home should always be your first option in the short term.  It’s not for everyone but if you can make it work initially, it’s a great way of getting your name known before committing to any regular costs.

If working from home isn’t a viable option from the off, ask yourself, do customers or clients need to come to you? Why not go to them and make it part of what sets you apart from all the rest? Take the example of the budding self-employed mechanic we discussed earlier – as long as relevant insurances cover it, they could hire a van instead and go out to people’s homes to do their repairs rather than making customers come to their business premises to drop their car off.  Thinking creatively around the problem could save you a lot of money.  Once you’ve established yourself and a customer base, then you can expand and take on premises if your budget allows.

Finally, do your research and look for cost-effective solutions before jumping head first into a costly contract.  If you simply need a desk away from home or the use of meeting room space in a professional environment, don’t forget that Business Solutions Centres can help.  Monthly use of a hot desk in Hereford Business Solutions Centre, Telford Business Solutions Centre and SPARK, the business incubation hub based at the University of Wolverhampton Science Park start from just £50 + VAT per month. SPARK also offers studio space, co-working offices, single offices and even virtual membership! For more information, visit the SPARK website here.

The contemporary spaces allow you to meet and network with other like-minded startup businesses – whether it’s just at your desk, at the coffee machine or at an event, in turn, helping to accelerate your business’ growth further.  Whilst these facilities won’t be suitable for every type of business, they act as the perfect bridge between working from home and taking on more permanent premises if you’re currently sitting on the fence about what to do.

Still unsure? Don’t forget that Business Solutions holds free, impartial monthly business startup seminars at its dedicated business support Centres located across the West Midlands.  For more information or to book your place today, click here.

Free Local Business Support

If you’d like to find out more about setting up your own business, Business Solutions holds free, impartial monthly business start-up seminars at its dedicated business support Centres located across the West Midlands.
Alison McKenna
Alison McKennaBusiness Solutions Centres Marketing

Ali McKenna is a CIM-qualified marketer with over 9 years experience.  She is currently contracted to the University of Wolverhampton Business Solutions Centre Team as a Knowledge Transfer Development Officer.

With five physical Centres located in Wolverhampton, Hereford, Sandwell, Telford and Wyre Forest, the Business Solutions Centres team provide regional business support across a range of specialisms including finance & funding, business startup & growth, knowledge, skills & training and manufacturing, innovation & technology; all delivered through a series of regional programmes, topical seminars & workshops and one-to-one mentoring where appropriate.

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This blog is accurate as of information available to the writer in May 2017 and are the views of the resident Business Solutions Centres (BSCs) blogger only. BSCs accepts no responsibility for any decisions you may make on the basis of the content in this blog and advise that you always consult a professional if you are unsure.