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Post Info TOPIC: New business venture


Master Book-keeper

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New business venture


I am at the moment contemplating taking on some offices, and would like a bit of feedback, if anyone would be so kind.

The offices comprise of 4 small rooms, and 2 large rooms.  1 large room I'd like to keep as my office and then rent the other rooms out on a daily/weekly basis, sort of hot desks but one in each room. The other large room could comprise of a meeting/training room which I would rent out by the hour with a reduction for the whole day.  After deducting my own office cost, I would need 27% occupancy to cover my costs. (£800 a month inc bills - my contribution £200)

In addition to that I would be looking at offering a virtual office service. The only drawback to that is the address sounds a bit naff.  (think Duck Lane) although I don't think Local businesses not wanting to use their home address would be put off by that.  Parking could also be an issue but there is a long stay car park between 5-10 mins away, and a short stay car park less than 5 mins away.  I have a dedicated space for my own car.

I have enough money to pay 6 months rent without taking a penny on these services and the idea would be for it to pay for itself with a small profit.  The estate agent who showed me round today said it was the ideal time to start something like this, but I took it with a healthy dose of cynicism.   

So I'm looking for pitfalls I haven't considered, and possibly opportunities I may not have considered.



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John 

 

 

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Forum Moderator & Expert

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Hi John,

its a sound idea I expect a lot of people are going to be wanting to start their own busineses as unemployment looks set to surge.. Hopefully temporarily.

Things to consider would be whether the lease allows you to sub let and also the considerations over telephony. If every desk is a pseudo business in its own right then each desk needs to have seperately identifiable telephony / internet charges. Bit different to rent an office where the telehony is down to the business coming in. Your operation would be simply rent a desk and all charges need to be able to be associated to that desk.

Your rental agreement will need to make it clear that the persons equipment is their responsibility and will need to be insured.

Insurance may be problematic if you cannot define the businesses that will operate from the premises.

Just a few ideas off the top of my head. Good luck with the venture matey,

All the best,

Shaun.



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Shaun

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Master Book-keeper

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Thanks Shaun.

No problem with the lease, have already discussed that with the Estate Agent.  Telephony would be through VOIP, although I haven't looked into the full logistics of how that would work yet.  Insurance a good point, I'll look into that this week.  Superfast broadband would be inclusive.



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Veteran Member

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Sounds like a good idea to me. I'm at the point where I might be looking to rent meeting rooms for client meetings (rather than having to tidy my house every time!) so renting a conference room by the hour would be ideal.

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Master Book-keeper

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Rachel -instead of tidying your house - go to theirs! Works for me every time. Although I have used a couple of hotel chains in the past who have a 'business hub' which is free to use (coffee included). Not so good at the moment given the current situation, so its a stand up meeting out in the sun on my drive as I self isolate.

But seriously...

Hi John
Couple of random thoughts - I read an articles yesterday about the 'death of office working'. My first thought was - I do hope not, purely on the back of listening to my son wishing he could go back from furlough into the office rather then back to work as in working from home. He loved his job before this all happened. But a massive part of that was the interaction with his clients and more so his work colleagues. He is so like me, a social animal, albeit Ive learnt to adapt JUST to avoid the commute as you know.

It was an interesting article non the less. Im not sure that it was completely correct in the main, certainly most people Ive spoken to who are working from home are dying to get back to their proper offices for the same reasons as my son.

Anyway, I do have a client who does exactly what you are considering doing. He has been doing it for over 3 years now. Key is the sub-letting issue and the forebearance of his landlord. It did become a bit of an issue last year when their were complaints from the retail unit beneath his. The complaints were unfounded, but it gave the landlord cause to re-consider the sub letting issue and wouldve made a big dent in his income.

That said, EVERY single one of his tenants have moved out since the lockdown. To my mind it was entirely feasible and manageable for them to continue to use the property, social distancing was not an issue, yet not one has remained. He is of course hoping they will return.

Issues Ive seen him have and other things that pop immediately to mind, as well as those mentioned already, in no particular order (and I will no doubt think of more):-
- deposits for keys
- how to restrict access when someone has left
- room booking software
- invoicing - in advance/arrears
- insurance
- contracts for x months?
- costs of sorting the above/below?
- rates
- who will deep clean once someone has vacated (each visit in case of meetings rooms/office for longer lets)
- how long is your lease? Is there a break clause?
- VAT
- other facilities (kitchen/bathroom)
- general cleaning

(Sorry had a pile of other stuff - gone out of my head!)

NEVER EVER take the word of an Estate Agent. Bit like the warnings about HMRC Guidance.
-

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 Joanne 

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Master Book-keeper

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Cheshire wrote:

That said, EVERY single one of his tenants have moved out since the lockdown. To my mind it was entirely feasible and manageable for them to continue to use the property, social distancing was not an issue, yet not one has remained. He is of course hoping they will return.


Hi Joanne

Most of your list I've already thought about, but there were a couple of things I hadn't considered, thanks.  I'm going to do a full costing of both running and set up costs later this week, then make a decision from there.  

Re, the comment above.  I could have continued working from the office, but the rules are to work from home unless you can't, so have followed that.  I haven't really minded to be fair, but I think I will return to the office environment sometime next month, as things slowly return to the new normal.

 

Thanks Rachel, would have clicked like had there been a button to.



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John 

 

 

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Master Book-keeper

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Just as an update I didn't go for the offices in the end, I would have needed a 40% occupancy rate, which was probably do-able but I didn't want to chance it.  The landlord had a suite of 3 large offices available further up the hill which is even closer to the town centre with both  long stay and short stay parking no more than 5 mins walk.  I've decided to opt for that and will be renting the biggest room out as a meeting/training room by the hour or day, keeping one room for my business and also running a sign and promotional products business in the other room.  The beauty of this is I get a basic wage whilst working on that side plus a 20% share of profits.  It's not going to cost me a penny to set up as the 80% shareholder is funding it, so I've got a pretty good deal.

 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Veteran Member

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Well done John, hope all works out for you.

I have an empty office space and have contemplated renting it out or alternatively set up a separate business for myself something not in the bookkeeping world maybe !!

Julie

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Master Book-keeper

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Thanks Julie, I would rent it out or utilise it if you can.

 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.

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