The $1000 Startup: Part II (The Office Space Quandary)
Posted on | August 16, 2007 | No Comments
Last year I premiered The $1,000 Startup as a holiday gift idea for that special entrepreneur or small business owner in your life. I’m revisiting the concept due to a conversation with one of my coaching clients. We’ll call her “Lisa”. The conversation was about Lisa’s new business venture, a debt collection firm. Lisa’s business began as a one-woman show, but has grown to the point that she believes she is ready to hire her first employees. But, she has one problem as she sees it, no office space.
Lisa works from a home office in her condominium. It’s a nice space, but not ample enough to share. What’s a home-based business owner to do? Lisa was not sure that she’d be comfortable having a stranger in her home, and she wasn’t sure a prospective hire would be comfortable with the setup either.
The obvious answer would seem to be “lease office space”. I asked Lisa if she was financially ready for that. She was hesitant about committing her cash flow to a hefty lease payment. And wasn’t sure about giving up the lean and flexible operation she’d been able to run, and didn’t want to give up working in her PJ’s.
Understandable.
On to Plan B. What options are available to Lisa if she is not ready or able to lease a proper office space to house her business and her new employees?
Here are the options I presented to Lisa.
Share the load – Partner with another small business owner to share the expense of leasing a space.
Fill to capacity – Sublet a space from a larger business. Frequently, businesses rent more space than they need because they are planning for future growth. Offer to rent a vacant office space on a temporary basis.
Flex Office Space – Several companies offer flexible office space and meeting room rentals on a daily, weekly, monthly and even hourly basis. Most rentals are bundled with a package of administrative, communications and IT services, including voicemail and an administrative assistant. Monthly packages that include IT and admin support and an office for 16-20 hours/month cost as little as $75 in some markets. They’ll even put your name on the door for a few hours.
Co-Working – What if you could office in your neighborhood Starbuck’s cafe? That’s effectively what co-working spaces offer: Shared office spaces in a community of like-minded socially-deprived freelancers and entrepreneurs. Co-working spaces rent for as little as $10 per day and as much as $300 per month.
Business incubators – Business incubators offer below-market rental rates on office space to small businesses and startups during their young, lean years. Most offer admin and IT support, in addition to other business resources, and require an application for admission; some require equity in lieu of rental payments and won’t accept businesses after they’ve reached a certain revenue level. Office spaces rent for as little as $50 and as much as $500 per month in some markets.
Telecommuting/Managing staff remotely – Other people like to work in their PJ’s too. Why not advertise the new position as a work at home position?
Hotel business centers/meeting rooms – Hotel business centers and meeting rooms are not just for out-of-town travelers; local business owners can use them to hold weekly meetings with their telecommuting employees.
Lisa is mulling over the options, but seems most interested in either the “telecommuting with weekly face-to-face meetings” option, though she is concerned about her ability to manage the productivity of someone she won’t be able to see regularly.
Lisa’s not the only client I’ve asked to consider these options; Cindy, a prior client, chose the flex office space option in order to take advantage of the meeting rooms (she frequently entertained clients and held brainstorming sessions with her staff of four), and business identity (name on door, prime office location and mailing address), admin and IT services.
The point here is that Lisa and Cindy both chose office space options that maximized their flexibility and minimized their cash flow commitment. They also chose the options that played to to their management styles and met their client needs.
All too often, new entrepreneurs and executives commit to long-term leases on far more space than they’ll need in the immediate future. They bank on success. That’s a great attitude but a bad business strategy. When starting or growing your business, conduct an objective analysis of your office space needs with the goal of determining how much you can do with how little.
Here’s what I suggest.
6 THINGS TO CONSIDER WHEN YOU’RE READY FOR OFFICE SPACE
1. Do you really need an office at all? If there is no need for customer walk-up access, you don’t need an office space; a post office box and periodic meeting room rentals or meetings over lunch or dinner will suffice.
2. Why do you NEED office space? Focus on NEED, not want. It’s nice to have a 25th floor office overlooking a lake, but if your business is actually handled on client sites or online, you don’t NEED office space. If you are too easily distracted by your fridge-raiding duties at home, you might NEED office space.
Needs include:
- Selling products/services (i.e. from a sales floor or shop)
- Meeting with clients (only if there is no other more appropriate place)
- Housing employees who must use specialized equipment (i.e. manufacturing equipment or a chemical lab)
- Effectively managing staff (If you know that you cannot manage employees that you don’t see daily, get an office; managing remote staff is an art.)
3. How often will you be in your office? If you intend to work in the office only a couple of 8-hour days per week, consider a flex office space or a co-working space.
4. How much space will you need? Basic office equipment, computers, phones and faxes. What else? If you are considering renting office space in order to store inventory or to house an industrial-sized copier, consider renting warehouse space or storage unit for your inventory. Consider sharing office space and equipment with a partner or other members of a co-working, flex office or incubator group (Why pay for the super copier and coffee maker alone?).
5. How many and what type of employees will you have? If your business requires that you work with mostly unskilled employees who require lots of supervision, you’ll likely need an office; if you are working with executives or contractors, you likely won’t. If the work your employees perform requires oversight or verification (i.e. a visual inspection or count), you need an office space. If your business is a proof-in-the-pudding business like sales or consulting, you don’t need an office space (unless that whole meeting with clients thing is an issue).
6. You can always upgrade!
RESOURCES
Flexible Office Spaces (Hourly, daily, weekly and monthly office and meeting room rentals):
Ready Offices
Barrister Suites
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