Moving from a home office, where occupancy costs are effectively zero, to rented space is a big decision.
Obviously, monthly expenses will increase. You’ll have to pay rent. If it’s not included in the rent, you’ll have to cover utility costs. In some circumstances, there may be other monthly fees for services such as cleaning and grounds maintenance. There will also be one-time costs. You may need to hire movers or purchase furniture, office equipment, or phone systems.
However, there are solid reasons to set up shop in a location other than in your home.
1. Not a home-based business. Regardless of expense, there are certain businesses that cannot be run out of your home for legal, regulatory or infrastructure reasons. For example, you cannot operate a business that produces large quantities of toxic chemicals in most neighborhoods. Similarly, if the equipment you use in your business requires large amounts of three-phase power, the power delivered to your home is likely to be insufficient. Clearly, some enterprises are simply not meant to be home-based.
2. Revenue benefits from moving out of your home. Consider a business where prospective clients routinely visit you before making a decision to purchase your product or service. There is a perception that rented space is more professional than a home office. Moving may attract additional sales. In fact, the increase in monthly revenue may be greater than the extra cost associated with renting space. In such a situation, you should move the business out of your home as soon as you can cover the one-time costs.
3. Hiring employees. When you decide to hire your first non-family-member employee, a move to rented space may be justified. You may not be comfortable having your new employee come to your home every day, particularly if you have to spend considerable time out of the office. Alternatively, you may find that it’s difficult to hire the type of employee you want while working out of your home. In the employment market, there is a bias against home-based businesses. For instance, many colleges and universities prohibit home-based organizations from advertising positions on their job boards.
4. Space limitations. If you have employees and your business grows, physical space may become the limiting factor. As your enterprise expands, the time may come when you can no longer operate effectively out of your home because there simply isn’t enough space. Still, in these cases, we advise staying in your home office as long as it’s feasible. Moving will mean higher costs with limited corresponding benefit. If possible, allowing some employees to work virtually can slow your need for additional space.
5. Productivity boost. Perhaps your home provides too many distractions that keep you from staying on task. If you find that the ability to work at any time creates a casual or informal relationship to your work, you may need to move. An informal attitude can promote procrastination and other habits deadly to entrepreneurs. Sometimes physically leaving home to go to an office may help you to be more effective. The different environment triggers a “now-I-am-at-work” mindset that will improve your output.
6. People interaction. Working from home can be a lonely experience, especially if you are used to having colleagues. While interaction with vendors and customers can provide some contact, long days spent working alone can wear on your creativity. Co-working space can provide a low-cost, low-commitment option if you are feeling a bit like Robinson Caruso. Co-working spaces often supply printers, internet, copiers and coffee -- essentials for most entrepreneurs. In addition, co-working spaces allow collaboration, interaction and support for startups and more established businesses.
Moving your home-based business into rented space will increase expense. However, there are good reasons to make this decision. Make sure you know when the time is right to give up your very short commute and move out of the spare bedroom.