Image by Candid_Shots from Pixabay
By Henry Brown
As a result of lockdown restrictions, many stores and commercial buildings have had to temporarily close throughout the pandemic. Others have voluntarily closed, choosing to continue work from home to keep everyone safe.
While restaurants, gyms and event spaces have suffered due to this as a result of relying on footfall, other types of companies have realized that they can operate effectively without a store or an office. Some independent shops have started picking up customers online, while many professional services have been able to keep running using teams of remote employees. This has started to get some companies thinking: is it really worth continuing to rent or own a physical office or physical store open after the pandemic?
The answer may not be as obvious as you think. Below are some of the big things to consider when deciding whether or not to continue renting or owning physical premises.
Does your business benefit from physical interaction?
You should consider whether your business has performed better or worse without physical premises.
If you’re a physical shop now operating as an online shop, you should consider whether you’ve been able to make more sales. Are you able to sell more online/over the phone or were you more successful in person?
If you’re an office-based company with a team of employees, you should meanwhile consider whether your employees are more engaged at home or in the office. The lack of office distractions may have improved productivity. Alternatively, you may find that communication and collaboration has been difficult.
What money will you save by leaving?
A big reason for abandoning your office or physical store could be the costs that you may be able to save. On top of saving money on rent or a mortgage, you may be able to eliminate costs such as property insurance, energy bills and maintenance costs. It could save you thousands per year.
Of course, moving to fully a virtual company could require upgrading software and communications tools, which could cost some money to implement. However, in the grand scheme of it all, you’ll likely save a lot of money without premises.
Is exiting your lease/selling up an option right now?
If you’re still paying a lease for your building, you may have to wait until the lease term is up before leaving. Negotiating an early exit could be difficult and may require you paying a large exit fee. This is something to weigh up against the savings you may make.
For those that own physical premises, you should meanwhile consider the likeliness of selling up right now. Office space and retail space has become a lot less popular and you may struggle to find buyers (or at least buyers willing to pay a worthy amount). There could also be tax to pay when selling up.
Can you acquire extra funds to cover premises costs?
It may be possible to acquire extra funds to help you stick it out, helping to make your business premises worth the expense.
Right now many companies are having to look into financial aid such as loans. The likes of Stephen Ellsworth and Valley Capital Bank have been offering finance to companies to help temporarily cover bills – companies that were otherwise coping well before. Such a loan could give you the option to stay if you feel that you could benefit from keeping your premises.
Alternatively, you may be able to find ways of upping your income or making cutbacks to compensate in the long run. If you own an office building, you may be able to rent out a part of it to another business to make some extra cash. There could also be upgrades that you can make to your premises to make it more economical, such as better insulation and solar panels to cut energy bills. By making better use of your premises, you could make it more financially viable.
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Henry Brown is an online marketing executive. When he isn’t talking shop, he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.
