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Property acquisitions

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Finding the right property for your charity shop.

Finding property

It's important to find the right building to house your charity shop as this will be the public face of your charity.

Location

The right area for your charity shop is likely to be:

  • mixed-income: the neighbourhood will need to be home to both potential stock donors and purchasers, so a mixed-income area often works best
  • fairly busy: the shop should be passed by at least 300 people per hour (pedestrians aren't shoppers, but they're a good start)
  • accessible by car: donors will often choose a shop that's convenient for them to drop off goods
  • near to other charity shops: provided the area is not saturated with charity shops – say with no more than six within a half mile radius – as this can encourage custom
  • near to your parent organisation: hospice and church shops may need to be set up near their parent charity.

Interior requirements

There are other key features your shop will need, beyond a good location:

  • good management: a good manager can help increase customers and grow the reputation of your shop
  • sufficient size: 500-600 square feet (46-56 square metres) of selling space is usually enough, although furniture stores will need additional space
  • a backroom: for storage and preparation of stock: a minimum of 300 square feet (28 square metres), ideally on the ground floor immediately behind the sales area, with separate access from the rear
  • a layout: that conforms to both health and safety legislation and the Disability Discrimination Act (DDA): the shop should be well lit, free of asbestos and, ideally, accessible to those with disabilities - ventilation, position of steps and door/corridor size are all key issues.

Terms of occupation

Depending on your resources and budget, there are several options open to you:

  • temporary let, for low or no rent: the charity takes temporary occupancy on a shop that is on the market or about to be demolished, to gain an immediate understanding of what it is like to run a shop and how profitable it is in that area. To find temporary lets, you will need to approach local estate agents specialising in retail properties, the estates departments of local authorities and those corporations which manage retail premises such as shopping centres.
  • longer let: the charity takes a fixed term of occupancy on a shop, with the most favourable lease terms possible (ie low rent, responsibility for repairs, break clause etc). You should explain your requirements to an estate agent who specialises in commercial property. Once a site has been found, you will need a property surveyor to survey the property and negotiate on your behalf. You will also need a solicitor for the conveyancing.
  • purchase of property freehold: the charity buys the freehold of the premises, as an investment. If sold, the property could still be leased back to the charity shop. You will need an estate agent, surveyor and solicitor, as above.

Set-up costs

Your prospective budget will need to take into account:

  • professional fees: surveyor, solicitor etc.
  • shopfitting: public space and backroom/storage areas.
  • building repairs and modifications: the premises need to be safe and compliant with health and safety and DDA legislation
  • staff: recruiting and paying for staff.

Running costs

When preparing a budget, do not be over-optimistic. Set a minimum acceptable level of net contribution and profit margin: for example £10,000 of net profit in a full year’s trading plus a profit margin of no less than 25% on sales.

When calculating running costs, you will need to take the following into account:

  • rent/mortgage
  • payment of staff: this includes wages for a shop manager and volunteer expenses
  • staff costs to parent charity: running a retail arm will have an impact on a charity’s HR, finance and secretary’s/legal departments, beyond paying salaries and expenses
  • rates, including water: charity shops selling ‘wholly or mainly’ donated goods are eligible for mandatory 80% relief from business rates but not from water rates
  • electricity and/or gas
  • insurance
  • repairs and maintenance
  • telephone and postage
  • driver and vehicle costs, if you make deliveries/collections.

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Page last edited Apr 13, 2017

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