There was a rather dramatic headline this week declaring that we were at risk of turning our city centres into ghost towns if business did not return to the workplace. it is difficult to imagine the city with fewer workers and, as an accountancy business in Milton Keynes, we naturally want the city to thrive. We have all started to get used to the return to work now but as I was driving up to Intu the other day I was struck by how many of the offices that line the streets to the shopping centre were apparently empty. A lot of areas had that unusual, empty, feeling that you normally only see on a Sunday afternoon. It got me thinking and started quite a big discussion in the team around the issues of returning to work and what that meant for accounts, the businesses we help and keeping your company stable and profitable in the coming months.
We have a duty to ensure that we are hitting the financial goal for our businesses. Now, post lockdown, that is also even more intimately tied with the non-financial goals of your company and the continued well being of our workforces. The bottom line though is that your business is meant to make a profit. The stranger and more unpredictable the world becomes, the more important it becomes for you to focus on your balance sheet. You must be clear about you finances and that means approaching things like your running costs in the cold light of day. The truth is that premises are big hit on the bottom line and they should have a clear value to you.
Before you all label me as some sort of emotionless robot, there is more to your workplace than just a number entered in a ledger. I am not saying that you should simply judge the situation based on the cost alone. What I am suggesting is that you look at the value of your premises in relation to the cost. By which I mean now is a good time to ask the question about whether your workspace has enough value to your business to make the cost justifiable. We work with our clients to be more than just number crunchers and many of them rely on us to help with the accounting aspects as they set their business aims for the future. The following are a few of the areas we often find ourselves discussing when it comes to the cost of premises.
- Is there a cheaper option? At the moment, there are a lot of offices empty and, sad though it may be, if we spend time in recession then there will likely be more. That may well open up the opportunity to negotiate a lower cost or look to move to similar or better locations for a better rate. This is tied up to the next few points in the article, but you would be surprised how often we make significant long term savings by looking at the options around where you are based.
- Is your contract working for you? Many leases have break clauses or other options in them and there seems to be a trend away from long term commitments. Now is a good time to go back over the lease you have and familiarise yourself with your options. If you are considering new premises, take a good look at the terms. In many cases business centres are now offering semi-virtual options or quick in and out terms of a month or even a week in some cases.
- What are the premises actually for? This is a really difficult question to answer sometimes because traditionally ‘the workplace’ is part of our culture. It has been so much a part of our working lives that it seems sort of endemic. Like the need for a pen or dressing appropriately for work. If you have manufacturing needs than clearly you need a suitable place to manufacture so that is a clear choice. Often though we find that some business owners are making a more emotional choice where the workplace is a sort of badge of success. That is fine if that status of having a location has value but if not, if you are just using it because it is how things are done, maybe now is a good time to consider it.
- The additional value factor is important. Having been a little ruthless in the last point let’s soften up in this one. You do have an emotional attachment to your business as well as the practical one. If you don’t work as happily from home, then you need an office for intangible, non-balance sheet reasons. Some people need to clearly separate home and work life. In the case of some professions such as those who deal with personal issues, you need privacy. There is certainly a variance in the amount of face to face meetings involved depending your industry and what about team training? Then there is the social aspect of working life. All of these are factors you need to consider as value against the cost. If their importance is relatively high, then that needs to be considered as value against the physical cost of paying the rent.
I am not telling you the city office is dead and a really hope that never happens because many businesses rely on the 9 to 5 workers for their income. We want to see the city alive again and we all want to look down Silbury or Midsummer and see the restaurants full and the workplaces bustling. It may be that the nature of these premises will change over the short and long-term though, and now may well be a great time to consider how your premises can be shaped to match your long term business goals.
Call us if you want to discuss how we can help you with your accounting practice and business planning.