Moving premises without killing your cash flow

Moving premises rarely fails because the maths does not work over the long run. It gets uncomfortable because of timing. Several large costs cluster together, and they tend to land before any money comes back in. Knowing where they come from is the first step to planning around them.

The usual pressure points are:

• The deposit. Buying premises means finding a deposit, typically from around 20 to 30 percent of the price, which ties up a chunk of cash from the moment you commit.
• Fit-out. Very few businesses can move into a new space and trade from day one. Racking, partitioning, IT, signage, and compliance work all cost money on top of the property itself.
• Overlap. If you take on the new site before you exit the old one, you are paying for two premises at once, whether that is a mortgage plus a rent or two sets of running costs.
• Money tied up early. The deposit and costs go out well before the old site is sold or the lease ends, so cash leaves the business ahead of anything coming back.

None of these is unusual, and none is a reason not to move. They just need to be mapped out in advance so none of them arrives as a surprise.

If you already own your current premises and plan to sell them to help fund the new ones, the order in which the two transactions happen shapes everything. In an ideal world you complete the sale and the purchase on the same day, so the proceeds from one flow straight into the other and there is no overlap to fund. In practice that neat alignment is hard to achieve, because two separate chains rarely move at the same pace.

That leaves two realistic sequences, each with a trade-off:

• Sell first, then buy. You have the cash in hand and no bridging cost, but you risk being without premises for a period, or having to move twice.
• Buy first, then sell. You secure the new site and move on your own timetable, but you need a way to fund the purchase before the old one is sold.

Which way round suits you depends on how tight your cash is, how quickly your existing premises are likely to sell, and how disruptive a gap in premises would be to trading. This is exactly the kind of thing to map out with your broker early, because the funding structure follows from the sequence you choose.

Where buying first is the better route, the common answer is bridging finance. A bridging facility is short-term borrowing that lets you complete on the new premises before your existing property is sold, and it is repaid from the sale proceeds once they arrive. It buys you time and control, so you are not forced to sell in a hurry or lose the property you want because your own sale is running slow.

Bridging costs more per month than a term mortgage, which is the trade-off for the speed and flexibility. As indicative figures, it tends to sit at around 0.75 to 1.1 percent per month, subject to status and valuation, so the total cost depends heavily on how long you need it. The shorter the bridge, the smaller the cost, which is why a realistic view of how quickly your old premises will sell matters so much.

Used well, a bridge is a means to an end rather than a long-term position. The exit, usually the sale of the old site or a refinance onto a business mortgage, should be clear and credible before you take the facility on. We would always want to see a sensible exit before arranging one.

Fit-out is where a lot of moves quietly overrun, because it is easy to try to finish everything before you open the doors. In many cases you do not have to. Splitting the work into what you genuinely need to trade from day one, and what can follow once revenue is flowing from the new site, spreads the cost and eases the squeeze.

A practical way to think about it:

• Essential first. The work you cannot trade without, such as core IT, safety and compliance items, and the basics of your operating space.
• Phase two. Improvements that add comfort or capacity but are not blocking, which can wait until the business is settled and the old premises are sold.
• Fund it deliberately. Decide in advance which parts come from cash, which from the mortgage where a lender will lend against improvement works, and which from later trading income.

Phasing is not about cutting corners. It is about not paying for everything in the single most expensive month of the whole move.

The single biggest mistake we see is a business pouring so much of its cash into the deposit and the fit-out that it has nothing left to trade through the move. Working capital is what pays your staff, your suppliers, and your VAT while the relocation is happening, and a move does not pause any of those. Protecting that buffer is often more important than shaving a little off the borrowing.

Practically, that can mean borrowing slightly more on the premises so you keep more cash in the business, rather than emptying your reserves to reduce the loan. It can mean using a bridge to avoid a double outlay, or phasing the fit-out so the spend is spread. The right balance is specific to your numbers, and it is worth modelling the worst realistic case, where the old premises take longer to sell than you hope, so you know the buffer holds even then.

A stronger deposit and cleaner accounts improve the terms available, but the goal through a move is not simply the lowest possible loan. It is completing the relocation with the business still able to trade comfortably on the other side.

Everything above comes together in the timeline, and the timeline is where a broker earns their place in the move. The aim is to have the finance, the completion, the fit-out, and the exit from the old premises dovetail, so cash goes out and comes back in a sequence you have planned rather than one that happens to you.

The parts we help line up are:

• Completion timing. Matching the business mortgage completion to when you can realistically move and, where relevant, to any bridge.
• The exit. Making sure the sale of the old premises or the refinance that repays any bridge is credible and on a sensible timescale.
• The gap funding. Arranging bridging or a larger facility where needed so the deposit, costs, and overlap are all covered without draining working capital.
• The whole-of-market view. Placing each piece with lenders whose appetite and speed suit your specific sequence.

Bring us in early, before you have committed to a completion date, and the funding can be built around the move rather than the move being squeezed to fit the funding. That is usually the difference between a relocation that stretches the business and one that barely registers on cash flow.