Wednesday, April 24, 2013

When is a startup not a startup..?

Imagine you are a designer starting up your own business. Its a great idea, all you need is some premises and some clients...Great idea, there are plenty of low rent office spaces available, lets take our pick.., some even specialise in creative industries too as well as acting as an 'incubation space' for developing business.

Sounds good doesn't it?

Well, yes in principle.

But in practice, it can have a massive effect on established businesses. Lets look at this way:

Any business competing for a speculative pitch will have overheads. These are set by things like rates, electricity, telecoms, rental as well as salaries etc. If an established company (who pays standard rates and overheads) has to compete with another who has significantly subsidised overheads then how can this be a fair and level playing field?

The answer is, it simply cannot.

So in an attempt to promote 'new' start-ups by providing advantageous overheads what actually happens is that established businesses are forced to either reduce their costs in order to compete or move into the similar premise under the guise of a 'new start-up'.

This is happening and has happened all over Derby and it has created a somewhat false economy. With 'start-up' companies being able to win business thanks to nominal overheads.

As an incubation start-up one would expect a company to get around two years of subsidised accommodation, but in many cases this has continued for over 5 years. How can a start-up a start-up after 5 years trading?

It is about time that these businesses got into the real world and started to compete on a level playing field. The outlook is not ideal and clients who benefit from these artificially low costs will have a shock at some point when the 'real' world catches up!

I fear that Derby will loose its established 'real' businesses if this trend continues. It's worth remembering who in fact is paying for these subsidies. Yes, its all the established businesses who have worked hard to get where they are...we are all adding nails into our own coffins if we continue this way.

Its a good thing that we have our own premises here at Parkhouse Evans Ltd and no rent to pay (we pay our rates and utilities of course!) So this allows us to compete effectively but I wonder how long we can sustain this before we have too have to take some action?

If you are looking for creative premises, we do offer desk space, parking and all the equipment you may need, plus a friendly environment too - give us a call on 01332 291141 to find out more.

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