Business rates for pop up shops

There’s a campaign been started to stop pop up shops paying business rates. After some thought, I have chosen not to give this my support. For one thing, I think it’s a PR stunt, not a considered attempt to steer government policy. But in any case…

A pop up shop may be a real enterprise, in which case it should pay, the same as any other local shop.

It may be testing a new business, in which case it should pay – so it provides real evidence for a future shop.

Or it’s a charity, community or social project, in which case it should pay or use the business rate relief that already exists.

The case for the creative reuse of empty shops has been made, so far, on the basis that those of us who are fighting are serious about the High Street. We’ve argued that our approach is as business-like as the local shops we’re mixing with. We’ve made the case that we’re doing this to support local shops. That we’re complimentary, not competition. Special rules for pop up shops take us away from those arguments.

Such changes could also create a loophole which other businesses will exploit; how long, if the financial incentive was good enough, before the big multiples took advantage – a Tesco Metro pop up shop, maybe?

There is a wider issue about the fairness of business rates, and clarification of how they’re applied locally. In fact in Pop Up People, based on work with people tackling the problem of empty shops around the country, we proposed a three month period free of business rates for any new business moving into empty shops. It would benefit shops opening up – and any occupants that were only around for a short time. That’s considered, reasonable and a fair change that brings benefit to everybody working on the High Street.

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7 thoughts on “Business rates for pop up shops

  1. Hi Dan,

    Thank you for your thoughts.

    I’m not sure I fully understand the point about the potential damage of offering the 3-months free for Pop-ups. Pop-up in this context is intended more as a catch-all for the purpose of the initiative. Which is: to offer independent businesses (sole-proprietors, SMEs and startups) an opportunity to get into commercial spaces at no rental cost for a short period of time, with the hope that they can make the conversion to full time tenancy.

    We have a number of great independent businesses on-record explaining that business rates were a major barrier to their ability to establish or maintain trade in shop-space. We literally have thousands of shop ideas logged on our site, most of which cannot afford the additional costs of business rates. I, personally, am often the one making the costs of spaces clear on our site, and see how the price per month goes up – sometimes by over 30% – for short-term lets.

    We have not heard this complaint from larger or multi-national brands, so the problem does not seem to apply in the same way to ‘all businesses’. This is our attempt to bring relief to the businesses we see to be in most need.

    Regarding your point about a loophole whereby any business could take advantage of the offer – this is why we are attempting to have the government sit at the head of verification for qualification, rather than a commercial entity. Do you not feel that this is good enough?

    It would be great if you were prepared to work with us to help make this a success, and I will genuinely take on board your ideas. I appreciate your viewpoints but feel that perhaps I do not understand how they are mutually exclusive to this initiative.

    Any/all feedback much appreciated,

    Mike Salter
    Creative Director
    We Are Pop Up
    mike@wearepopup.com

    1. Hi Mike,

      I would have to agree with Dan here. I’m 24 and opened my shop on Barnes High Street using a very small legacy and a family loan as no bank would touch me at my age. That was year and a half ago and at the moment it seems increasingly likely that my bill for rates will be the thing that cripples me and closes the shop. I am all for Pop Ups but my initial reaction when I saw this petition was frustration and panic.

      I felt frustration because I think the petition alienates the small business’s that have already been brave enough to take the plunge and are struggling. It sounds like a very short term solution as it still doesn’t address the real issue which is that rates on our High Streets are too high. I think by giving 3 months relief it would give a false sense of security as to whether their business will succeed if they decide to stay for a longer period of time. After those 3 months they will have to pay the full amount which in my case is an unaffordable 50 % of my rent which will be a massive jump and in reality they may not be prepared for it. The rates do not reflect the high street performance and it is not something that you can pass on to your customers.

      I also felt frustrated because why on earth with all the backing from these great companies why not use this petition to help bring business rates down for all small businesses? Do you not think that if in the end all shops whether pop up or not have to pay rates at some point it would be better to get the rates down in general? The federation of small business have said that rates used to be only 15% of the rent, I don’t imagine it would get down to 15% but even 20-25% would be more manageable.

      I also think that the only way pop up shops work is if they have a shop which an organisation runs and every 3 months someone new is in. That is when you get increase in footfall because you are giving a reason for people to come back. I say this because in the last 4 months we have had two shops open on the high street and it has not made one jot of difference to the street footfall, in fact the footfall has still been declining. With things like this it takes time and 3 months is not enough, so I think what you will find is people will open the shop and in 3 months will think no and leave, and high streets could still be left with empty shops. Will they then take their pop up shop somewhere else for another free rate period.

      Lastly I felt panic because not only for the reasons above but because from my point of view I now see the pop up shop as a threat. Here I am struggling with my rent and rates when over the road they don’t have to pay anything? I think it would create unfair competition and given the fragile state of the high street I don’t believe this is the way to go.

      I do have other thoughts on this and would love to discuss them with you.

      Meanwhile, will my shop become a free rate venue for a pop up shop when I can no longer battle the cost of keeping it open, in these straightened times?

      Kind regards,
      Anna
      The Perching Post
      anna@theperchingpost.co.uk

      1. Thanks Anna – it’s great that you’ve gone for it, and sorry to hear you’re having trouble. Have you spoken to your local council about what business rate relief might be available to you? This might help: https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief

        There are lots of benefits to local traders from good pop up shops – but as with any shop, there will be some that aren’t so well run. I hope somebody can bring something inspiring to Barnes High Street.

        In any case, if there’s any way I can help (I used to have a small shop so know some of the challenges) just let me know – all my contact details are on this blog.

        Dan

  2. Interesting ideas, all, thank you very much for responding.

    Joe:

    I suppose rather than ‘insulating from the full costs of retailing,’ we are in fact supporting a change in what those ‘full costs’ are – so that real-shop retailing can become more flexible and viable as a way to do business.

    As an example, we use a number of software services for We Are Pop Up. One we depend heavily on is MailChimp for email newsletters. Before MailChimp, there was not a cost-free way to manage and send email, so ‘the costs of sending email’ were a barrier in themselves. With MailChimp, we were able to start on a free package when we first started our company and then graduated over time to a paid account – once we were able to generate revenue and afford the full service.

    We see that shop-space can (and perhaps should) operate more like a tool, or channel. And frankly, the current costs for starting up a shop can overwhelm before the idea, business model or a functional infrastructure has been established. Getting into a shop space for the first time confronts us with a lot of unexpected surprises. The 3-months free is intended to provide a safe space to learn and ‘get up to speed’ on how retailing in tangible space actually works.

    Anna:

    I agree with you about the importance of affecting change for all independent businesses – and indeed this is a long-term goal that we have set ourselves to as well. However, we do not have the infrastructure or tools internally to develop and create the framework of a campaign ourselves.

    For this specific campaign, Roger Wade came to us for support on the journey, and asked us for some very specific assistance, which we could give in the way of activating our connections and helping spread the word. We would definitely consider offering ourselves as a community to other organised campaigns – but frankly, we have never been asked to be a partner before.

    To your point about sustained activity vs pop-up as a ‘quick fix’, I suppose I see it more as a volume issue rather than a time issue. For example, if, say even 5 shops on a high-street were prepared to take on board pop-up shop programming (not just as a ‘one-off’ or ‘vanity project’), there could be a ‘destination’ effect by which the combined efforts of a variety of locations could start to shift the energy.

    I understand and agree that a single voice in the wilderness is not enough, and this is one of the reasons why we are supporting this initiative: to affect a large enough systemic change by offering real (financial) incentives to both landlords and businesses.

    We have spoken with hundreds of independent businesses that have done things ‘the hard way’ and struggled through the myriad issues in setting up a business that provides very little flexibility or support through the process. We focus on the questions like ‘what could have been easier at the start?’ and put energy into initiatives and tools that are helping solve those problems.

    It is clear that no single solution with bring the widespread reform to how commercial property works. The archaic attitudes that are degrading town centres and frustrating ambitious new businesses are stubborn and slow. However, there are serious efforts being made by so many thoughtful and industrious networks – and their number, size and impact grows daily.

    We look forward to seeing more ideas and initiatives sparked – whether with broader or more specific goals – and will stand behind any that request our support.

    Happy to hear more thoughts,

    Mike

    1. Mike, I ran a temporary popup shop. If I hadn’t paid full market rates for the shop, I’d have had no idea whether the idea was viable going forward. I agree with Anna, it adversely affects all those who have had to pay all the costs and I think it encourages people to experiment and over-reach themselves.

      Your mailchimp point is irrelevant. At some point, even if you have a pause in paying it initially, you will have to pay business rates. Nobody has to run a business in a shop, and it is perfectly possible to be an entirely online retailer where you probably do not need to pay business rates at all.

      But if you have a shop, it is an inevitable cost and expense. Avoiding those costs in the honeymoon period whilst you are finding your feet is not beneficial into the long term and may actually encourage people to think an idea is more viable than it actually is – and may lead to them signing totally unsuitable and over optimistic long term rental agreements.

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