Location, Location, Location: The importance of premises for growth
The wrong location cost Broadband Choices growth. Michael Phillips reveals why you make the mistake at your peril
The first ‘proper’ office we rented was out in Zone 2 in North London. Our main agenda for this location was more space for our growing team, but ‘affordability’ was my top priority. The office we chose was significantly cheaper than comparable offices in more central, accessible locations. It was also “serviced” so there was less administration to worry about.
In retrospect I wish we had considered the wider implications of this move much more carefully as the savings we made by renting an office in a less desirable location were overshadowed by wider costs to the business for the following reasons:
1. Recruitment In the early days we focused our recruitment on the graduate market where we could find enthusiastic and intelligent staff without the price tag that career experience brings. However, as we continued to scale we also needed to attract a range of high-quality, experienced staff to channel our rapid growth and give us structure – and it was here that our office location started to work against us.
Our location was a long walk from the tube adding an unattractive amount of time to the daily staff commute. We were in an area that didn’t offer any lunchtime amenities (save a greasy spoon and a sandwich van that was always late) and absolutely no banks, shops or decent bars. This was damaging to staff morale and did nothing for team-building; I think it’s vital that your troops want to bond together at lunch and after work to create a team where the whole is greater than the sum of the parts.
In short, our location was both off-putting for potential recruits and was a significant downside for our existing staff. As someone working long hours and worried about the bottom line, I lost sight of the fact that for ambitious, driven individuals – the kind of individuals we wanted to hire – location is almost as important as the package and role offered.
2. Commercial imbalance The relative inaccessibility of our location meant we would usually have to visit our business partners’ offices rather than have them visit us, skewing the working relationship unfavourably. For many businesses there is still an added kudos to having a city centre postcode and we began to feel that the external perception of us by current and potential commercial partners was negatively impacted by our location.
3. False economies As the company continued to expand at a rapid rate, the original rent savings we gained were eroded as our service charges increased for each staff member that was recruited. It also cost us time and money having senior staff spend significant amounts of time sat on hot tube journeys to meetings; there is nothing that says professional like the “glow” of 30 minutes in a suit on the tube before a client presentation. We quickly found we needed to move again and incurred all the costs that come with relocating offices.
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However, this time we had our priorities right. We found un-serviced offices in the Holborn area, five minutes from the Central and Piccadilly lines close to a hub of businesses similar to us and an array of agencies that service our sector.
Moving here has helped us harness the buzz and momentum of our industry, driving us to the point where we now have 50 members of staff and annual turnover of £10.8m. If we had our time again, we would be more ambitious in terms of office size and location.
All companies need to make a location judgement based on their priorities and the staff they are trying to attract – a city centre location isn’t necessary for all businesses. However it is advisable to think about where your business aims to be in a few years time – can you rent additional space to scale? A saving now may cost you more in the long run if you are forced to move again in a short period, as, unfortunately, we found out.
Michael Phillips is managing director at Broadbandchoices.co.uk and in 2010 was named the haysmacintyre Top Gun , meaning he was chosen as the outstanding member of the that year’s Young Guns group. Follow his tweets here: @gustavlemmy