During the pandemic, I started a business selling handmade treats online.
Sales have gone from strength to strength to the point that I’m about to run out of space at home to meet demand.
The ideal would be to open a store with space in the back to expand it. However, since I have grown the business online, the costs of having a physical store (i.e. business rates) concern me.
It would be great to try it for a year to find out if it’s viable, but I’m struggling to see if there are any grants, aid or support for such a venture. That I have to do?
Expand: I want to open a store but I’m worried about the costs involved, what should I do?
Dave Fishwick, Business Physician at Money, responds: The pandemic was brutal and many businesses had to work harder and needed to adapt, adjust and overcome to survive.
It also turned out to be an excellent time to start some businesses, particularly those offering goods and services online, as social distancing and working from home accelerated the trend toward online retail.
Your idea found enough customers, and it’s no surprise during lockdowns: who wouldn’t want an occasional treat being stuck inside for so long?
It’s great to know that your business is thriving and that sales haven’t slowed down as people get back to normal.
It’s a natural progression to grow a young company. However, you are right to be cautious about increasing your fixed overhead.
You don’t want to go from a small but profitable company to a larger one that is struggling to break even and working longer hours to earn less than it does now.
You need to be confident that taking on the additional overhead will generate more than enough profits to cover the additional costs. Remember: turnover is vanity and profits are sanity.
Smaller business premises with a rateable value of less than £12,000 qualify for 100 per cent business rates relief, with gradual relief up to a rateable value of £15,000.
However, with larger premises, their business rates increase significantly, contributing to the growing number of empty shops in towns and cities across the country.
Unlike residential properties, most commercial leases are at least 3 to 5 years and usually require you to maintain the property yourself, so testing it for a year may not be possible.
However, if a premises has been empty for some time, you may be able to persuade the landlord to offer you an at-will lease, where you are not tied to the property for the long term.
In addition to rent and fees, opening a commercial premises involves many other additional costs.
For example, insurance, personnel costs and utilities, to name just a few. You will have to adapt and equip the building to your specifications before opening it, which can be very expensive for a restaurant business.
If you have room to expand your business while still working from home, you may still be able to be more profitable than with a retail location.
If you or a family member has a garage that doesn’t get much use, you might consider converting it. Perhaps you also consider an intermediate step before taking the step towards permanent premises, such as selling your products at fairs and food markets.
Having said all that, I wouldn’t advise against opening a store. It works for many businesses, just make sure you know all the costs involved.
I recommend that you contact your local council and ask for the Business Growth Hub department (there are thirty-seven throughout the country).
Ask to speak to your Economic Growth Officer who will help you with everything from business planning to finding funding, help with your accounts and marketing and, most importantly in your particular case, help with expansion plans!
Boost Growth Hubs can help you achieve your goals at any stage of your business journey. Grants are available for small and new businesses.
However, you must meet specific criteria or be based in a particular area to qualify.
I have just seen a hundred thousand pound grant awarded to a local manufacturing company in Pendle Lancashire.
I encourage people to think big.
However, in business, it’s better to be more or less right than exactly wrong, and I think you’re not in a bad position right now if you’re struggling to keep up with demand and making a decent profit; Many companies would like to be in that position.
Whichever direction you choose, I wish you and your company all the best for the future.
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