High business rates are forcing many startups to abandon London, and leaving entrepreneurs to invest in the Caffe Nero loyalty card scheme instead.
Life for small businesses in London has never been more challenging. For example, the West End has seen rent, business rates and service charge costs increase by up to 16% to £217.75 per square feet per annum since 2014.
The 2017 business rates revaluation is aiming to help smaller businesses gain relief, or even exemption, from the tax altogether. However business rates experts are sceptical and believe the changes could lead to even more insecurity.
Smarter (less caffeine-fuelled) businesses are finding entirely new ways of working instead. Permanent office space in the capital is at a premium, and business itself has become truly global. Consequently, companies want the best of both worlds in a flexible working environment with all of the luxuries a permanent space would offer: fast wi-fi, reliable security systems, and most importantly, coffee.
Startups and entrepreneurs do not have the budget or experience of big businesses, and would struggle to afford the business rates they would need to pay on top of their rent, wages and utilities. However, independent startups have something big businesses don’t: the ability to be completely flexible.
So why not get flexible with your workspace? Coworking spaces offering serviced desks are becoming increasingly attractive to more new businesses in London. In fact, according to a recent forecast, 40% of us will be working remotely by 2020, and staff who currently work remotely are statistically happier for it.
Not only does coworking save businesses money on fees and rates, but it also encourages staff to work more effectively. According to Forbes, 62% of people felt they worked better in coworking environment. The same study also showed that 70% of people feel healthier for coworking, which goes to show the dangers of your office biscuit tin.
Naturally, businesses gravitate towards London. Unfortunately, the city is becoming increasingly expensive for startups, and even average rates outside of the capital came to over £15,500. A London address will undoubtedly attract prospective clients, yet those clients won’t be impressed if they turn up to a business that has had to sell all the furniture and whose employees are all drinking coffee from the same mug.
An alternative to that expensive workplace nightmare is to have a virtual office. These give you the advantage of a London address, without the sky high rent or crippling business rates attached to a prestigious postcode.
Virtual offices allow entrepreneurs and startups alike to work from home, coffee shop or anywhere else they want to. The added bonus is that they can also enjoy the infrastructure and the premium address of a major corporation, without the extraneous expenses and ridiculous rates.
If you are working remotely, but still need to connect with clients on a face to face basis, hiring a temporary meeting room for a few hours can be an efficient solution. These are usually equipped with comfortable seating, the latest technology and more coffee than you can shake a jittery stick at can be a perfect, cheaper stand in for a permanent office.
In most offices, meeting rooms lay dormant most the time, wasting a huge chunk of space and money on a daily basis. By booking these conference rooms by the hour, startups can do business in a professional space without breaking the bank.