How much do you spend on business premises?

How much do you spend on business premises?

Regardless of the business you are in, the premises is part of your balance sheet and flow statement. But the total amount spend on premises differs large from one business to another.

The sector you are in, the kind of company you have, the location, status, etc. are all components that determine your costs of premises.

For example, if you have an industrial business and produce products, you need a factory, an office, a showroom, etc and evidentially the post premises will be an important and major component of your balance sheet and cash flow statement. But If you have a trading company and all goods find their way directly from producer to consumer, you could choose to make use of only  a small office and thereby keep your premises costs low.

But for companies working in the commercial service sector it can be different and more difficult to decide which amount to spend on premises. Take an , a layer or a consultant. How much do they spend on premises?  They want to be close to their clients, so location is important, but how much do they have to spend on status and luxury

And for the non-commercial service sector it is even more difficult to decide how much to spend on premises.  They face the same problems, like accommodating employees, etc.  only here it’s  not the client who pays the but it’s all paid out of income.

Let me give you one example.

The European Central Bank is building its new in Frankfurt, Germany. The total cost is estimated on 1,3 billion. In 2014 it will be ready to house its 1800 employees. It will be ranked in the top 10 of most expensive buildings in the world.

This example shows how difficult it is to decide how much to spend on premises.

Do we have to use common sense and calculate the total cost per employee?

The answer to that question is 722.000 EURO per employee

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