For any entrepreneur, starting a new business is an exciting leap of faith. Even those with previous experience can struggle – especially if they’ve never run a business in London before.
Running a business in the capital can mean more customers, but also more costs because it’s more expensive. It’s a diverse, fast-paced city in which to do business. But it certainly brings its own unique challenges, many of which are not obvious or predictable.
In this article, we’ve put together some tips to save your new London business some money right from the beginning.
Begin with a bullet-proof business plan
This is obviously not unique to businesses in the UK capital, but competition in London is fierce. Whatever you do, don’t try and wing it if you want to stand any chance of success.
Writing a business plan doesn’t need to be complicated and you can always update it later (in fact you should).
The important thing is to set out your business goals, plans and financial milestones, and how you will achieve them. If you manage to hit your targets quickly you can always adjust your business plan to be more ambitious.
Where you don’t quite achieve your goals, you can tweak it to be more realistic. It’s constantly evolving.
Choose the right property…
Whether your business is bricks and mortar-based retail, entirely online, or you need workshop space, you’ll need the right property for the job. But as we all know, property and rental prices in London are fairly eye-watering.
Make a list of all the things your business premises must have which are non-negotiable.
Then make a list of ‘definitely nots’ and ‘nice to haves’ too. Your list should be based on your requirements in terms of location, layout, size and anything else you need your business premises to have. What kind of contract will be you be tied in to? And what about your plans for growth?
…In the right location
Where your business property is located is just as important as the property itself. London varies massively in ‘desirable’ and ‘not-so-desirable’ areas, but obviously the price of property reflects this.
So until you become a world-dominating multinational (well why not?!) you might need to stick to the cheaper spots. What’s important here is finding the balance between a suitable property, in a location which is appropriate for you, your customers and your staff, whilst still sticking to your budget.
Cheaper London areas include Bexley, Havering, Sutton, and Bromley, whilst the likes of Westminster or Kensington and Chelsea are by far the most expensive.
Buy or rent?
Deciding whether you need to buy or rent your London business premises is another important consideration. Working out what you can afford is similar to calculating the costs of buying or renting a home.
Choosing to rent your premises might be more accessible, but leaves you at the mercy of landlords and other influences.
Mortgage or rent both involves regular payments, though mortgage payments tend to be fairly static during the mortgage term. Rental prices can fluctuate time and with little notice. So even if you’re getting a good deal, it doesn’t mean you always will in future.
And don’t forget, London is pricey in other ways, too. Your wage bill, business rates, and a whole range of other costs are going to be higher than elsewhere in the country as well.
Look for any business grants that may be available to you
At any given time, there are thousands of grant schemes on offer across the UK – which is why it’d be impossible for us to direct you to each and every one. There are local grants, international grants and government grants constantly becoming available.
A good place to start is actually with your local council. Many of the London Boroughs offer funding which the local authority administers, and they’re not always freely advertised.
Claim all your tax reliefs and allowable expenses
Like grants, there’s a huge range of tax relief available, whether that’s to encourage start-ups, to stimulate investment, or to offer training to help the workforce. It can be extremely hard to know what tax relief is available, and the criteria often changes.
A good accountant will signpost you to any schemes, as well as making sure that you’re structured in the most tax efficient way. Some tax relief, like R&D Tax Credits, you may not have ever even heard of.
Many of your business expenses will also be reclaimable when tax time rolls round. If you don’t claim all the expenses and tax reliefs you’re entitled to, you could literally end up hundreds or even thousands of pounds needlessly out of pocket.
Shop around for suppliers – and outsource where you can
The fact is that suppliers based in London are likely to be more expensive than those found in cheaper parts of the country. Shop around, and don’t be afraid to haggle the price down. Any money you save now will make all the difference to your bottom line later.
Outsourcing is also a good way to save serious money. Contractors based outside or London and freelancers working remotely for you on a project-by-project basis can be a far cheaper option that reduces your overheads.
Move around or expand (once you’re fairly well established, that is)
Once you’ve built up a robust business with a decent client base, consider if expanding to another location – moving elsewhere, or even out of London altogether – would be a viable option. It might depend on your business, or you might realise that there’s a lot you can do elsewhere.
After all, some of the world’s biggest brands started life in back bedrooms and garages: Apple, Google and Amazon to name just three. And with COVID-19 still hanging around, more of us are working remotely from home than ever – a trend that’s likely to continue.
Find more help and support for your London-based business in our information centre.