Getting the right people

You might think that setting up a sandwich-coffee bar is a small venture in the great scheme of things. Maybe so. However, to turn the dream into reality any new business, large or small, needs the expertise and support of a team of people with a variety of skills. What’s more, it’s important to have most of them in place before you make an irrevocable commitment to a particular unit – their roles are too important for them to be engaged at a later date when there is insufficient time to make properly considered choices.

One of the hard facts of small business life is that quite a lot of professional and other advisers tend to prefer dealing with bigger clients and customers. They make more money out of them. It’s as simple as that. It follows that you should do all in your power to ensure that those people to whom you entrust your valuable business specialise in working for operations of your size.

Here’s a list of the key players:

• Solicitors
• Accountants
• Architects
• Surveyors
• Bank Managers
• Insurance Brokers
• Environmental Health Officers
• Refrigeration Advisor
• Shopfitters, decorators, plumbers and electricians.

Some of them will become important components in your ongoing business even if you only need to consult them occasionally. It is very much in your interests to have good working relationships with all of them.

Instructing a solicitor

Do you already have a solicitor? Is it the one who bought your house for you a few years ago? It could well be that he or she doesn’t know a great deal about the ins and outs of setting up small businesses. This really matters because it is a specialist area. Make contact, explain your plans and ask quite openly if the solicitor has much experience of handling the affairs of small businesspeople. Of course solicitors will not be keen to turn away business so you might find yourself having to make a judgement about his or her suitability. This won’t be the last time you have to make important decisions about matters you don’t necessarily know a lot about.

Remember that personal recommendations from other people with small businesses can be invaluable. You could also contact the Law Society (see your local telephone directory for details) which keeps a register of solicitors with expertise in particular fields.

Once you have made a decision, have a meeting and discuss your ideas in detail. Your solicitor should be able to give you initial thoughts and advice in areas such as:

• purchasing or leasing properties
• acquiring going concerns
• the legal structure of the business
• finance
• employment law
• preparation or updating of wills to take account of your new asset
• (and, if you’re lucky) insights into good and bad locations based on years of being involved with the commercial life of your particular area.

In addition, an experienced solicitor should be able to recommend other advisors in the areas of accountancy, architecture and insurance. If you’re going to be running a business for the first time you may not have any contacts in these fields.

When you have a particular property in mind your solicitor will play a pivotal role in tying up the deal. You will probably be on the phone every day. The more he or she understands your vision the less explaining you will have to do when you are going through the critical phase of trying to secure a deal.

Instructing an accountant

Put simply, your accountant’s job is to ensure that you pay as little tax as legitimately possible. He or she is therefore a very important person in your universe. Whilst it’s not absolutely essential it’s highly desirable to instruct an accountant as early as possible. Your accountant can give you advice on a wide range of matters which may well need to be decided or acted upon prior to or very soon after you commence trading. These matters include:

• the most advantageous constitution of the business from a tax point of view
• the tax implications of you or your partner continuing to work as an employee
• registration for VAT
• keeping records; the aim here is to provide the accountant with as much information as possible in a form they find easy to process – this will save them time and you money
• suitable book-keeping systems
• PAYE and National Insurance
• tax, tax rates, allowances, returns, dates of payment and self-assessment
• capital gains tax (when you come to sell the business).

As with your solicitor it is most important that your accountant should be used to dealing with small businesses and keen to do this kind of work. Apart from anything else, if you instruct someone who is used to dealing with larger companies you will receive larger bills. A personal recommendation is always a good idea but if this is not possible then you can contact the Institute of Chartered Accountants (see your local telephone directory for details).

Helping them to help you

One of the most common complaints accountants have about their clients is that they don’t respond quickly when asked to provide financial information for the completion of accounts and tax returns, and when they do the information is often incomplete. This, of course, means that reminders have to be sent out and more work done. The irony of this is that the people who are trying to save money for their clients end up charging more because those self-same clients are too busy making sandwiches to bother with paperwork.

Building good relationships

The hope is that your solicitor and accountant will get to know you and your business well over the years. This will be most important when there are new developments such as the acquisition of a second outlet. It will be equally true if you run into problems in your business life, such as a dispute with your landlord or a tax inspection. It is unlikely that you will go through a career in business without some such trauma. They will be on hand to give prompt and appropriate advice and assistance. The more they know about your business history the better able they will be to achieve this in the shortest possible time.

The legal and accountancy professions have become much more market-oriented and competitive in recent times. This has led to considerable differences in fees from firm to firm. As a result you do hear of people who regularly switch from one professional to another to save a few hundred pounds.

Whilst I well understand the objective of saving money I think it is more advantageous to the small businessperson to build up a good relationship over the years.

Talking about fees

Bear in mind also that most solicitors nowadays are perfectly happy to discuss their likely charges at the outset. Don’t be afraid to ask. If a solicitor or accountant is not prepared to do this I doubt if they will be appropriate to look after the interests of a small business. Obviously they are not able to give an exact figure for a particular transaction because unpredictable things can happen. However, there should be no reason why you cannot be given a good idea of the likely costs – apart from anything else you will need these figures to help you put together your business plan.

Develop a good relationship with solicitors and accountants but don’t be afraid to discuss matters such as fees and other charges.

Using an architect

You will probably need an architect no matter how straightforward you think your particular venture is.

• You will have to establish for certain what the current lawful use of the premises is.
• You may require permission from your local planning authority to change the use of the premises. This can be a lengthy procedure – even when apparently simple and non-contentious.
• Unless you have no plans to alter the layout of the shop at all then you will need authority for any alterations you intend to carry out. These can be as seemingly minor as installing a small wash hand basin. Such alterations must comply with building regulations.

An architect can advise and assist with all of these matters. I must stress again the importance of establishing that your architect has experience of smaller commercial units – and don’t forget to ask for an indication of cost at the outset.

Planning permission – change of use

One great advantage of sandwich-coffee bars with a limited amount of seating is that as a general rule they simply require retail use (‘Al’, or ‘Class 1’ in Scotland) which is effectively the same as a shop selling sweets. This is the most common use and is the easiest and least controversial one to obtain. There is a fair chance your chosen unit will already have it. What’s more A1 use generally carries with it permission to sell, in addition to sandwiches, hot drinks, soup, toasted sandwiches and a limited amount of food cooked in one microwave cooker. These things are regarded as ancillary to the main use.

A word of warning: the attitude of the authorities can vary from place to place and some take a stricter line than others. If you sell nothing but cold sandwiches, chocolate bars and cans of soft drinks and have no seating whatsoever then undoubtedly you will only require A1 use. The use of the premises would obviously be retail. But, once you start adding on ancillary items such as soup and toasted sandwiches, especially if you have some seating, then there is an argument that the nature of the use of the premises is changing to something nearer a café/coffee shop or a bistro/restaurant. In this case you would require A3 use (Class 3 in Scotland). There are also restricted versions of A3 which allow for a limited amount of cooking on the premises.

Over the years I have spoken to various people in authority about when you need A3 and when A1 will suffice. When you try to pin them down they almost invariably start talking about a ‘grey area’. The question really is what is the essential and predominant use of the premises. For many sandwich-coffee bars the answer is that it is a take-away selling cold food which also has some seating and a modest range of hot items such as coffee, soup and toasted sandwiches. In my experience the authorities will generally regard such use as falling within A1. They will probably insist that customers who ask should be allowed to use your toilet (assuming you do have some seating).

You should speak to your architect or contact the planning department at your local council offices and discuss your intentions with them. Do this sooner rather than later. What you must avoid at all costs is assuming A1 will be sufficient for your purposes and then being advised later, perhaps when you are up and running, that in fact you require A3. This could be a serious matter. If the planning department feel that the essential nature of the unit goes beyond a retail unit you will have to submit an application for A3 use. This may well involve the provision of customer toilets, observation of strict fire regulations, the installation of an effective ventilation system (if cooking food will be involved) and so on. The procedure is time-consuming and expensive and would certainly require the services of an architect.

Increasing the value of your asset

A3 use is appropriate for a wide range of catering outlets and potentially permits full-scale cooking on the premises. Such permission would almost certainly increase the value and desirability of your asset – whether or not you ever use the permission and whether you rent or buy. It would also mean you could expand the nature of the operation in the future without the hassle of an application for change of use.

This is not, however, a step to be taken lightly. Such applications involve the preparation of detailed architects’ plans. Neighbouring residents or proprietors might lodge objections because of worries over the possible impact on their late night peace of a hot food take-away in the future. You could find yourself embroiled in a lengthy and costly process. In addition such permission usually only lasts for a set period of time such as five years before it needs to be used or renewed. It will be more complicated still if the property is in a conservation area or is part of a listed building.

Using a surveyor

Everyone who acquires a business property will need the services of a surveyor. Their assessment of your chosen unit will be crucial in helping to determine some very important matters:

• the value of the property
• the appropriate level of rent/premium
• the amount you can borrow on the property, and consequently…
• the amount you will need to contribute from your own resources
• details of necessary repairs – which might limit resources available for equipment, etc.

Strange as it may seem though, remarkably few clients speak directly to this vital professional. Surveying is most often done through a solicitor or estate agent. This means that the expert report on the business and/or property which you are about to invest your money and dreams in is carried out by someone you don’t know and probably won’t even speak to. The report doesn’t come direct to you but via the solicitor who may or may not ask all the questions you would like answered. Having said all this the surveyor is not the most important person in the equation and the present system does seem to work reasonably well, so I don’t want to raise unnecessary concerns. It’s just something you should bear in mind.

If you have made the right choice of solicitor then they should be able to make sure that a surveyor suitable to your requirements is instructed – and that the report deals with any particular matters of concern to you.

Personally, I have got to know one particular firm of surveyors quite well over the years. When I am interested in a property I instruct them myself, discuss the findings directly and then arrange for a copy to be sent to my solicitor. I can only say that this approach strikes me as more reassuring. It has an added benefit: if I simply have a property in mind but don’t want to spend money on a survey I can phone them up for their thoughts on the place. If they have inspected the property in the past they are usually quite happy to give an indication of their findings. This all saves time and money and might be especially helpful later if you are interested in expanding your empire and want to check out potential second outlets.