Britain is finally pulling itself out of a difficult couple of years in financial terms and while in many ways the recession resulted in financial loss for a great deal of businesses, other adventurous entrepreneurs saw opportunities to launch their own businesses.
One of the first things new business owners have to contend with is acquiring office space – and the market for this can seem like a minefield. Legal contracts between a commercial tenant and a landlord or letting agent are much more complex and much less flexible than between a residential tenant and landlord, and initial financial outlay and duration and conditions of the lease can often be crippling to a fledgling businesses.
The number of businesses that fail within the first year is rumoured to be anywhere between 50 and 80 per cent, depending on which source you listen to, but whatever the exact number may be, for a new business the risks of failing are often too high to enable the signing of a two-year, fixed-space lease agreement.
A new business could hit the ground running and need to expand rapidly, and traditional office space may be too inflexible to accommodate these needs, resulting in a very inconvenient situation. On the flip side, a business may not do as well as projected, and may need to scale back its number of staff, leaving empty office space which goes to waste and costs the company money.
Thankfully, serviced office space is becoming more readily available. A serviced office is one that’s located in a building managed by a facility management company, and in general, companies that offer this kind of office space have highly flexible terms of rent, which is ideal for anyone starting a new business.
The first quarter of this year, compared with the first quarter of 2009, according to the results of a survey by officebroker.com showed that there was a 35 per cent increase in enquiries from new businesses about renting serviced office space, and there was a 24 per cent increase in signed tenants. This indicates that entrepreneurs are much savvier to the fact that new businesses can fail, especially in the current economic climate, and they are taking no chances.
Serviced office space works very well for the needs of a new business. Some companies allow businesses to rent-as-they-go for very short periods of time, such as a month or even a fortnight. This is fantastic for any business that wants to add people to its staff as and when the need arises, and takes away the burden of worry that should a business collapse within the first year or so, the owner will not be saddled with another year’s rent to pay.
Space is often available with very little notice, offering greater flexibility, and there tend to be standard, simple license agreements rather than time-consuming and complex lease agreements.
All that is usually required from a tenant of serviced office space is a deposit that’s refundable when the license agreement ends, rather than a huge deposit and directors guarantees often required by traditional commercial landlords from a tenant with no proven track record or trading history, which is again ideal for new businesses trying to get off of the ground.
Flexible serviced office space is, therefore, often ideal for any new business because, no matter how good an idea and ethos it has, is under risk in its first year simply due to the nature of the business world.
Tags: business, businesses, financial, market