6 Ways To Reduce Your Premises Costs in a Post-Covid Future
Before Covid, there were already strong trends towards both online shopping and working from home. An increasing number of us were working remotely on a regular basis, and online sales were consistently higher those on the High Street.
But the last twelve months accelerated these trends and have transformed the way we now work and shop.
All the indicators point to these changes becoming long term, with a move to fewer office-based staff and many more customers shopping almost entirely online. And as rent and rates are often the biggest overheads, companies are having to review the way they function and how they utilise their offices and retail premises.
There are number of options when considering how best to reduce rental costs including:
1) Downsizing: Moving to smaller premises or reducing the space leased will cut overheads dramatically. Less staff working in the office every day means less desk space is required, so companies are now looking at hot desking solutions. For retailers, a smaller shop front premises may be preferable, with stock stored off-site in cheaper units.
2) Relocation: High rents for shops and office premises have already driven many away from the city centres, sometimes out to more semi-rural locations. Industrial and office units can be much more affordable in these areas, but mean the businesses is still within easy reach of the nearest large town.
3) Sublet: Although this is an increasingly popular option that works well for both retail units and offices, it requires mortgage provider/landlord approval, can give rise to security issues and may result in further costs such as additional insurance premiums.
4) Virtual: Switching entirely to remote working for all staff is perfect for some industries, especially in the computing and technology sector. For others, moving to online only with no physical premises will mean reinventing their business model entirely.
5) ‘Buddying up’: Retailers and office-based companies can benefit from buddying up with another business. Joining forces with another firm (from a similar industry or offering a complimentary service) to jointly rent premises, can reduce costs for both parties.
6) Diversifying: Where the above options are not viable, diversifying may be the answer. Moving into different markets or pivoting part of the business will create a ‘portfolio’ of customers, meaning less reliance on one particular sector.
The last year has proved difficult for many companies and as we adapt to a changing working environment, businesses need to explore every avenue in order to turn the challenges into new business opportunities.