Is London Too Expensive for SMEs?

As the British capital, it’s only natural that London is the largest business hub in the country, with many believing it to be the ideal location to set up a new venture. But due to its demand pushing up property prices, could London be too expensive for a new company?

Read more: A Complete Guide to Buying Commercial Property in London

Property Investment Around the M25

The Cost of Building an SME in London

According to a recent YouGov study, 70% of London SMEs have been struggling to expand their business in the capital. This is due to factors such as high business costs, high priced property and a skills gap.

The study surveyed 155 middle managers in London-based SMEs and found that more than half didn’t believe the city would be home to the next Google or Facebook. 45% also said the government is too focused on Tech City – the East London tech business cluster.

So, what’s holding it back? 24% said there were not enough qualified people to hire, 25% cited a lack of affordable office space and half said the overall cost of running a business in London was too expensive. When compared with the recent news that property rents in Tech City have risen by 46% and vacancy rates have lowered to just 5% in the last year, this appears to be true for many business owners.

Maintaining Maximum Cashflow in London: Top Tips

In order to maximise profits and growth in the capital, there are a number of things you can do. These may include:

Careful Consideration of Location – Before putting a deposit down on a commercial property it is important to consider location and the zone you want to set up shop in.

As a general rule, the further out you go, the cheaper property gets. However, depending on your industry, clients/customers may not want to travel out of the city if there is a closer alternative. It’s all about balance. You may like to pick premises that lie on the border between two zones in order to maximise the amount of visits you get.

Choosing the Right Team – Employing people who are qualified and truly believe in the strengths of your business are essential as staff play a huge part in the success and profitability of a business.

Applying for Commercial Finance – Commercial mortgage lenders and financial providers will be familiar with your circumstances and may be able to provide you with a loan to help cover the cost of your start-up or expansion.

Alternatives to the Capital

Other major cities outside of London are now starting to draw business. Birmingham and Cardiff are leading the way in the digital sector, whereas Oxford and Cambridge are known for publishing, and Leeds and Sheffield are mastering medical technology.

These areas can offer much lower costs, however do not have the same pull as the capital.

Read more: How Many SQ ft. Will Your Money Buy?

Wherever you decide to base your business, if you require financial help to establish your new base, please contact our friendly team of financial brokers on 02920 766 565 to arrange an appointment.