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choosing commercial premises

Choosing commercial premises: another crucial step for your business

Mistaking the choice of location in which to conduct business can be a move that can sink your entrepreneurial venture and your business model . Indeed, this decision has an impact on the costs you will have to bear, but also on the number and type of customers you will be able to attract. Fear not: you are about to find out now what are the requirements of a business premises that you should consider in order not to make mistakes.

It is first of all necessary to point out that while there are several factors to examine, the choice depends first and foremost, of course, on the type of business you are about to start. In some cases, such as in the event that you will be operating from home and/or your sales will be made mostly online, this aspect may appear less relevant: be careful, however, not to underestimate the needs (and expenses) related to renting, storing and transporting goods.

It is the type of business you are about to launch that will, therefore, establish the basic criteria that will guide your choice. Before you throw yourself headlong into your search for a business premises, however, you would do well to ask yourself a number of questions.

 

Do you really need a venue?

We have mentioned it before: you may not need a physical location for your business. If you can run your business from home and operate online, buying or renting business premises may prove to be an unnecessary expense, although you may still need premises for storing goods.

Remember to weigh all the factors involved, including and especially the legal aspects: you may need to change the space in your home, and if so, you will have to comply with what is stated in the local zoning regulations. Keep in mind, too, that there are specific health and safety regulations and certain sanitation requirements for those who intend to cook food at home and then sell it.

 

Requirements for a business premises or venue

That the cost required to buy or rent business premises for your business is low and profitable is only one of the requirements to be considered. We have already emphasized several times that it must be the nature of your business that guides your thinking about the requirements that a business premises must have in order to prove suitable for your specific business.

In fact, the type of business you are about to start and your target clientele requires you to pay attention to a few aspects in particular: do you need ample space for storing goods? The business premises you choose, in this case, should be sufficiently large and, if necessary, include the possibility of further increasing the space available.

Another useful question is: Is your business based on visits from clients and customers? It may be necessary, then, for the location you choose to be close to the station, as well as consistent with the style of your business. One tip, in this regard, is to look at the location through the eyes of your customers-types and prevent any possible obstacles to success. Remember the words of Larry Page:

“Always do more than what others expect of you”.

We will deal more extensively later on with the issue related to choosing the best location for your business premises. At this time, in fact, it may be more useful to dwell on another aspect in particular, which is more “technical” and no less important.

 

The intended use

The commercial premises that you choose for your business must also have a whole series of technical requirements necessary to be able to conduct your business activity inside it. The intended use of a property, identified on the basis of cadastral categories, is what clarifies whether or not a room is suitable for conducting a particular economic activity.

It may happen, then, that the business premises you have identified, although having all the perfect features for your business, does not have a suitable use for your chosen business activity. What can you do in this case? Consider applying for a change of use, a procedure that, to be fair, does not always prove easy and inexpensive.

The following are the intended uses in Italy with coefficients for calculating value for IMU (Single Municipal Tax) purposes

 

REAL ESTATE FOR ORDINARY USE
GROUP A
CategoryDescriptionInformation
A/1Mansion-type dwelling.Formerly aristocratic dwellings with special fine finishes, also of historical character.
Coefficient for calculating value for IMU purposes: 168
A/2Civic-type dwelling.Normal dwellings, with simple finishing of facilities and services.
Coefficient for calculating value for IMU purposes: 168
A/3Affordable housing.Buildings made with economical features and finishes both in the materials used and technological systems but mainly small in size compared to the area of which they are part.
Coefficient for calculating value for IMU purposes: 168
A/4Popular-type housing.Very modest dwellings, in finish, construction materials and with limited facilities.
Coefficient for calculating value for IMU purposes: 168
A/5Ultra-popular housing.Dwelling forming part of low-level buildings, lacking facilities, toilets. This category is now in disuse, it is present only on old cadastre classifications.
Coefficient for calculating value for IMU purposes: 168
A/6Rural-type dwelling.Dwelling serving agricultural activities, referred to the characteristics of Decree No. 701 of 1994 of the Ministry of Finance.
Coefficient for calculating value for IMU purposes: 168
A/7Cottage housing.Dwellings with a minimum of private or communal green space or courtyard; they can be either single, terraced, or tiered.
Coefficient for calculating value for IMU purposes: 168
A/8Villa dwelling.Valuable home with high-end finishes with large gardens or parks for exclusive use.
Coefficient for calculating value for IMU purposes: 168
A/9Castles, buildings of artistic or historical value.Ancient structures with important historical references.
Coefficient for calculating value for IMU purposes: 168
A/10Offices and private practices.Real estate units intended for professional activities.
Coefficient for calculating value for IMU purposes: 84
A/11Typical local dwellings or lodgings.Typical houses that by their shape and structure identify the place where they are located, remember the trulli, stones or mountain huts.
Coefficient for calculating value for IMU purposes: 168
GROUP B
B/1Colleges, boarding schools, shelters, orphanages, hospices, convents, seminaries, barracks.Facilities intended for the care of the underprivileged, religious or state barracks.
Coefficient for calculating value for IMU purposes: Exempt
B/2Not-for-profit nursing homes and hospitalsFacilities for care of the sick that have no economic purpose.
Coefficient for calculating value for IMU purposes: Exempt
B/3Prisons and reformers.Facilities built and intended for the imprisonment of Law evaders.
Coefficient for calculating value for IMU purposes: Exempt
B/4Public Offices.Structures built or adapted for public office buildings.
Coefficient for calculating value for IMU purposes: Exempt
B/5Schools and science laboratories.Structures built and intended for education and scientific research.
Coefficient for calculating value for IMU purposes: Exempt
B/6Libraries, picture galleries, museums, galleries, academies that are not located in buildings in category A/9. Recreational and cultural clubs, and similar activities if they are non-profit.Cultural venues that have no economic purposes and are not already in historic buildings.
Coefficient for calculating value for IMU purposes: Exempt
B/7Chapels and oratories not intended for public worship.Facilities intended for the exercise of religion.
Coefficient for calculating value for IMU purposes: Exempt
B/8Underground warehouses for storage of foodstuffs.Warehouses that have the purpose of stock storage.
Coefficient for calculating value for IMU purposes: Exempt
GROUP C
C/1Stores and ShopsPremises for commercial activity for sale or resale of products.
Coefficient for calculating value for IMU purposes: 57.75
C/2Warehouses and Storage RoomsRooms used for storage of goods, clearing rooms, attics.
Coefficient for calculating value for IMU purposes: 168
C/3Arts and crafts workshops.Premises intended for the exercise of the craft profession for services, realization or processing of products.
Coefficient for calculating value for IMU purposes: 168
C/4Buildings and premises for sports exercises (non-profit)Facilities intended for the exercise of private sports activities.
Coefficient for calculating value for IMU purposes: 168
C/5Bathing and healing water establishments (non-profit).Private bathing establishments and facilities.
Coefficient for calculating value for IMU purposes: 168
C/6Stables, sheds, garages.Garages, parking garages or parking spaces and stables.
Coefficient for calculating value for IMU purposes: 168
C/7Closed or open canopies.Structures intended as a canopy or gazebo.
Coefficient for calculating value for IMU purposes: 168

 

SPECIAL OR PARTICULAR PURPOSE REAL ESTATE
GROUP D
D/1Factory.Shed, factory, facility where raw material is processed and transformed.
Coefficient for calculating value for IMU purposes: 84
D/2Hotels and boarding houses (for profit).Paid accommodation facilities.
Coefficient for calculating value for IMU purposes: 84
D/3Theaters, cinematographs, concert and performance halls and the like (for profit).Lodges intended for artistic performance having entrance fee.
Coefficient for calculating value for IMU purposes: 84
D/4Nursing homes and hospitals (for profit)Hospitals, clinics and private nursing homes.
Coefficient for calculating value for IMU purposes: 84
D/5Banking, foreign exchange and insurance institution (for profit).Banks, insurance companies and private lending institutions.
Coefficient for calculating value for IMU purposes: 84
D/6Buildings and premises for sports establishments (for profit).Units used for paid private sports activities, sports clubs, camps, swimming pools, etc.
Coefficient for calculating value for IMU purposes: 84
D/7Buildings constructed or adapted for the special needs of an industrial activity and not susceptible to different use without radical transformation.Facilities built specifically for that type of activity for which they are intended. An explanatory example are fueling facilities
Coefficient for calculating value for IMU purposes: 84
D/8Buildings constructed or adapted for the special needs of a business activity and not susceptible to different use without radical transformation.Large stores, shopping malls.
Coefficient for calculating value for IMU purposes: 84
D/9Floating or suspended buildings secured to fixed points on the ground, private bridges subject to tolling.Buildings that do not have their own soil.
Coefficient for calculating value for IMU purposes: 84
D/10Buildings for production functions related to agricultural activities.They would be the category to which old rural buildings must be stacked.
Coefficient for calculating value for IMU purposes: 84
GROUP E
E/1Stations for transportation services, land, sea and air.Railway stations, ports, airports.
Coefficient for calculating value for IMU purposes: exempt
E/2Municipal and provincial bridges subject to tolls.Public bridges with paid passage.
Coefficient for calculating value for IMU purposes: exempt
E/3Construction and buildings for special public needs.Coefficient for calculating value for IMU purposes: exempt
E/4Enclosed enclosures for special public needs.Coefficient for calculating value for IMU purposes: exempt
E/5Buildings constituting fortifications and their dependencies.Coefficient for calculating value for IMU purposes: exempt
E/6Lighthouses, traffic lights, towers to make public use of the municipal clock.Coefficient for calculating value for IMU purposes: exempt
E/7Buildings intended for the public exercise of worship.Churches, cathedrals, etc.
Coefficiente per il calcolo valore ai fini IMU: esente
E/8Buildings and constructions in cemeteries, excluding columbaria, tombs and family graves.Coefficient for calculating value for IMU purposes: exempt
E/9Special-purpose buildings not included in the previous categories of Group E.Everything in category E that could not be included in the previous categories can be included in this one.
Coefficient for calculating value for IMU purposes: exempt

 

Buying or renting

Another very important question you need to ask yourself when reflecting on the requirements of a business premises is: how much is the budget for this expense item? Keep in mind that the cost of your business premises is a fixed cost and will remain so both when business is booming and in the event that it proceeds less expeditiously. It is important, therefore, that you go about calculating your budget with a long-term perspective, based on realistic estimates and also taking into consideration the future needs associated with your business.

Buying the business premises is not always the best solution. On the contrary, most entrepreneurs opt for renting or leasing. If you, too, are thinking of opting for this option, you need to know some basics: for example, “lease term” means the minimum term of the contract, while the “security deposit” is the amount that the “lessee” (i.e., the user) pays to the “lessor” (the owner of the premises) at the time of signing and which is returned once the contract is over.

Evaluate the cost/benefit ratio carefully, and keep in mind that a long contract means extensive constraints and obligations, but also reflect on the fact that a short contract might indicate the risk of having to move out at short notice, with all that entails in terms of expenses and organizational problems. In this regard, you should check early on for renewal options within the contract, to ascertain when and under what conditions the agreement can possibly be extended. The willingness and responsiveness of the business premises owner to respond to your possible maintenance or modification requests is another aspect you need to consider.

 

Where to open a store: the importance of location

The time has come to return to an aspect already mentioned a few lines above: being in a good location is one of the main requirements of a business premises. But what does good location mean?

There are many criteria to consider when evaluating the location, starting with accessibility and parking availability. When reviewing an area for your business premises, check for any new business facilitation or development plans that could redevelop or, conversely, jeopardize the area. Also, make sure that there are no particular restrictive regulations that could jeopardize the success of your business.

As always, you need to put your business and your target clientele at the center of any consideration: a particular location may be a winner for one business, but prove to be a failure for another type of business. Don’t be superficial in your considerations: is it better to have a downtown location or a suburban one? The answer to this question is less trivial than you might think.

 

City senter or suburbs?

It tends to be the case that a commercial establishment located in the city center has a better chance of success than one in the suburbs. However, this is not always the case; what is certain, however, is that regardless of revenues, a commercial venue in the suburbs works with different dynamics and caters to a different clientele than a commercial venue downtown.

Even a commercial space in the historic center can fail. This depends on a number of parameters that, for obvious reasons, you have to keep in mind. Accessibility and availability of parking, as already pointed out, are very important criteria: even the best-looking commercial premises, with the best products for sale at super bargain prices, risks remaining empty if customers, in order to access it, have to waste an hour parking or, worse, risk a hefty fine. Pay attention to the possible presence of restricted traffic zones, assess traffic levels in the area, and make sure there is enough parking nearby (in case there is no parking reserved for your customers).

Other possible reasons why choosing a commercial space in a downtown area may not be a good idea are related to rents that are too high and the presence of any regulations that restrict activity in the name of greater protection of public order in that area of the city.

The type of stores in the vicinity is another aspect to consider: it is advisable to choose an area where nearby stores do not conflict with your business and, conversely, it is advisable to consider whether nearby stores can provide you with help in increasing your customer base.

Once again it is worth reiterating that the best choice is the one made with your business and target audience in mind. For a point of sale or a business that relies on passersby, it is important that the location be on a busy street, whereas if it is a professional studio or the like, it might “suffice” that the chosen location is in an area that is conveniently accessible even from the station and not degraded. Remember that consistency between the area identified and the style of your business, as mentioned above, is very important.

 

Seasonal activities

Have you decided to start a seasonal business? In this case (but also in the event that your business depends on trends and tastes that change rapidly over time) you’ll need to do some further thinking: most leases or leases are valid for a minimum of one year, but to get around this problem, you could opt for a short-term leasing solution or a “pop-up” service (i.e., a temporary commercial space, usually set up in areas that stand out for a high flow of possible customers). The latter option is widely used in recent times by those who sell products and want, for example, to celebrate a special event or launch a new line.

 

Evaluate the different options

Everything we have said up to this point has general validity but, we reiterate again, it is important that you apply these tips to your specific case. Take into consideration all the options available to you and choose the one that best suits your needs, even if it is not strictly conventional: in addition to the pop-up stores just mentioned, mobile venues are also gaining popularity in recent times, especially in the field of catering. It may be worth repeating: buying or renting a venue is not always the best solution.

 

What you can’t give up

Having reached the final considerations, it is time to give you some bad news: finding the perfect venue, in the ideal location and at an affordable price is not easy. In fact, it is very difficult. Be prepared, then, to have to compromise, at least on some of the requirements of a commercial venue. Again, however, there is a tip for you: make a list of the aspects you cannot give up and divide the list between those that are concrete needs and those that, on the other hand, are “only” your desires.

Nicola Zanetti

Founder B-PlanNow | Startup mentor | Startup consulting & marketing strategist | Leading startup to scaleup | Private angel investor

info@b-plannow.com

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