COST CUTTING - 31.10.2011

Should you move premises or store the problem?

Growing in size

In the past few months the directors have all noticed that the company needs additional space to house its current stock and equipment. It also has some promotional material which it must store and documents that need to be kept safely. At the last board meeting it was suggested you look towards relocating to bigger premises, but this is going to swallow up lots of cash, not to mention the fact it will be a logistical nightmare. So why not hire a self-storage facility instead?

What’s self-storage?

There are many providers all over the country which will allow you to rent a secure unit within a large warehouse for a set fee (see The next step). You can usually do this on a month-by-month basis, although there may be good deals available if you pay up-front for a year. The cost is calculated based on the exact space you’re hiring, and units come in various sizes. For example, one provider we looked at in the South East was charging £60 per month for a 65 sq ft unit and its prices went up on a sliding scale.

What can you put in there?

You will have to agree to comply with the provider’s own storage rules - each one is different - and there will be some things they probably won’t allow you to keep in your unit, for example, flammable substances, gas cylinders, perishable foodstuffs and stolen goods! Other than that, you can pretty much have what you like in there. Most facilities also allow access 24/7, so your business activities aren’t restricted if you use this option.

Tax-deductible expense

Provided the unit is used “wholly and exclusively” for the company, all the rental charges incurred will be a tax-deductible business expense. All travelling to and from the unit, including any undertaken by your staff, is also claimable. The same goes for any storage options you purchase, e.g. cardboard boxes, shelving etc.

Think about insurance

One other factor you will need to consider is insurance; most providers won’t let you enter into a unit rental agreement until you prove that you have this in place. It’s unlikely that your current business cover will extend to any items kept in there and you’ll generally have two options available: (1) extend your existing cover; or (2) select the provider’s own.Prices for the latter vary, but when we looked into it they seemed to be around £3 to £5 per month for every £1,000 insured. Again, these costs are all tax deductible.

Tip 1. When you rent the unit, one of the directors will probably have to attend. They must personally authorise the other people who can access it. Our advice here is to keep this list as short as possible without inconveniencing yourself.

Tip 2. Finally, make sure your rental option is flexible, i.e. you can change to a bigger unit if necessary without any cost, and always ask about the provider’s security arrangements, e.g. do they have CCTV and/or a full-time security presence?

For further information on self-storage facilities, visit http://companydirector.indicator.co.uk(CD 13.03.05).