When Should I Move Into Real Office Space?
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My wife and I own a consultancy which is registered as an LLP. We have been operating it out of our home for the past year, but we're starting to feel hampered by the lack of real office space. When is the right time to set up a dedicated office, and what are the steps that we should take toward this goal?
Good for you for considering the idea of expanding outside your home. Many new businesses never even make it to that point. There comes a time when working out of a home office becomes more of a hindrance to future growth than a cost savings measure.
When should I move into a real office?
The simple answer is that you should begin to explore moving into an actual office when you have the money to do so. This may seem obvious, but many business owners miscalculate the expense and their ability to pay for office space. For instance, office rent is just one of the expenses you need to factor into your budget. You’ll also need to consider office supplies, additional furniture, heating, electricity, transportation, phone, internet and more. The initial rental fee of $2,000 per month can quickly jump to $2,250–$2,500 when you consider all of the add-on expenses.
In addition to understanding the cost, you’ll also need to determine exactly what you can afford. You’ll need to include this additional fixed cost in your financial model to make sure you can afford the office space now and into the future. While it varies by industry, you generally don’t want to be paying more than eight to 10 percent of your revenue on office space.
What if you can afford business office space?
The next step is to determine the right office space for you. There are several options available in today’s market. You can choose to lease out a traditional office space, you can become a member of a business office network such as Regus or you can join a coworking space. The office networks and coworking spaces generally offer many benefits, such as affordable monthly rent at $500 to $2,000 per office/desk and common-area amenities such as concierge, mail, phone and internet support, office supplies and conference rooms. The main drawback is that they generally are not suited for companies that are growing quickly and will need to hire many employees in the foreseeable future. In addition, there are rules that you will need to follow and there may be additional fees for premium services.
The other route would be to search for traditional office space. This can be more expensive and time-consuming than working at a business office network, but you’ll have greater control over the space.
First, you’ll need to interview several real-estate brokers who have experience in the area where you’d like to rent. Second, identify exactly how much space you’ll need now and in the near future. Factor in growth, but be realistic in your estimate and don’t take on much more space than you need. Then you and the broker can begin looking for spaces that meet your space requirements, budget, location and office layout. Once you find a space you’d like to lease, then you should hire a real-estate attorney to review the agreement.