One in three firms would consider relocating to cut costs
Entrepreneurs priced out of London – and into Wales
Britain’s entrepreneurs are being priced out of the capital city, where commercial property prices are around 40% higher than the rest of the country.
According to a study by Make It Cheaper and the Centre for Economic and Business Research, more than a third of the 750 small business owners polled would consider relocating in order to cut costs.
Unsurprisingly, London has the highest business costs in the country – however, Wales has the lowest, making it attractive to some start-ups. Cardiff-based Rocktails admits its choice of location was “purely a financial decision”.
Co-founder Naomi Kibble told Startups: “Not only does the Welsh Assembly support start-ups with a graduate cash bursary, but rental property was a quarter of the price compared to what we would be expected to pay in London.
“When starting up, my business partner and I had to be prepared to temporarily live on savings until we could take a wage from the business. Therefore, living somewhere with considerably less costs played a huge factor in our decision.”
However, despite the findings, London remains the most popular place to start a business, with 12 new start-ups in every 100 firms – compared with the UK average of 10 per 100.
Indeed, Kibble admitted that Cardiff does nor attract the same level of business innovation, networking and investment support as the capital, adding: “Having thoroughly enjoyed living in London prior to starting my business, I would jump at the chance of moving back. However it currently makes no financial sense to do so.”
Similarly, Paul Bagust, associate director at the Royal Institute of Chartered Surveyors warned of the expense of moving a business to new premises. He said: “Even if you move to a cheaper area with lower business rates, people often overlook other overheads, like rent, service charges and insurance.”
Instead he recommended being savvy with your tenancy. He added: “It’s still an occupiers’ market in most areas, so negotiate hard to get better terms. Aim for break clauses, a shorter lease, a rent free period, or could you share the space with another like-minded business to bring down costs?”
However for some, this may not be enough. Kibble added: “While such significant savings can be made outside of the UK capital, I won’t be moving back.”