Member Article

It’s back to the future for property costs awareness!

Recent reports on the various parts of the economy have been confusing. The British Retail Consortium reports a dip in footfall this August (surely everyone was simply on holiday?) while the Federation of Small Businesses tells us that confidence amongst members is at a three year high!

There is one area, however, where both of those respected bodies agree and that, by sheer coincidence, is with my own professional body the Royal Institution of Chartered Surveyors (RICS).

This week the RICS has launched a new guide – the Small Business Property Guide – to help SMEs take better control of their finances through managing their property assets differently.

Property costs – such as business rates and rent – are one of the most significant expenses incurred by SMEs and failure to take professional advice as to how to manage them can cost businesses thousands of pounds.

The guide, which is available free of charge online at www.rics.org/smeproperty, covers all aspects of the property process. It has been endorsed by the Federation of Small Businesses as well as the British Retail Consortium – and for good measure by the Association of Town and City Management too.

Despite what many of the pundits are currently suggesting, theUKeconomy, especially in the North East, still faces many challenges. Times are especially hard for many small businesses and property costs are both one of the biggest overheads and one of the most complex assets to properly manage.

It’s not a new problem. Back in 2002 the ‘celebrated’ economist Roger Bootle was a co-author of a report for RICS entitled ‘Property in Business - a Waste of Space’. In this he identified thatUKbusinesses were throwing away up to £18 billion a year through inefficiency in their use of property. Cutting this out would improve gross trading profit by up to 13%.

When investment was available and banks were almost falling over themselves to fund business deals, for an individual company that sort of waste in those days would not have been terminal. The 2007/2008 global financial crisis was a wake up call – if any good has come out of the past five years it is that more companies now understand much better how to leverage value out of their property assets.

More but not all! So this guide from RICS is – by luck or good judgement I’m not certain – being made available at exactly the right time. Companies are today looking at the more positive economic indicators and asking is now the time to expand – so property should be high up on their board room agenda.

Bosses must respond professionally to these challenges. In managing and delivering change, it is essential that property is fully considered. Not only is property a key cost area but finding the right property solution can be essential to long-term business planning and profitability.

I would urge all property professionals to use the guide to raise awareness amongst North East businesses so that we do not repeat the mistakes of the past. The business property cycle, from finding the right premises and taking a lease to rent reviews and dilapidations, needs to be managed and if we can raise our game in the North East we can be more competitive than our competitors.

This was posted in Bdaily's Members' News section by JK Property Consultants .