You cannot deny that launching a startup is one of the most exciting endeavors in life. Based on the research performed by Global Entrepreneurship Monitor, over 60 percent of Americans are looking at entrepreneurship as a promising line of work. Due to this development, over 27 million of entrepreneurs are running their own businesses. It is also interesting to point out that those entrepreneurs are mostly working from their home, coffee shop, coworking space, and even from their basement and garage. Some entrepreneurs with deep pockets of capital invest their money in renting their very own office space. You might wonder if it is wise to spend some of your precious capital on getting a dedicated workspace for office purposes. Before deciding what type of space you want to rent, here are a few pivotal items to consider.
1. Rental cost
Depending on which city you live in, renting an office space can be a huge cost for startups and growing businesses. While the cost may vary depending on the location and specification of the space you’re looking at, bear in mind that most renters also have to bear the cost of maintenance. When starting your own business, capital is such a precious commodity, be extra careful as to how you spend. Coworking spaces often provide extensive savings for companies – up to 50% in some cases.
2. Business plan
The owner of a commercial space often offers you a fixed duration for renting the space. However, the needs of your business may vary depending on your business plan. If you’re planning on expanding aggressively over the next 6 months, it may make sense to take a shorter lease and expand into a larger space when the time comes for your business. If possible, negotiate a lease term that is compatible with your business plan and add in additional clauses for extension upon lease expiration. Another viable option to consider is going for a month-by-month plan in a coworking space if your needs are unpredictable.
3. Business profit
It is also crucial to consider if after renting an office space, you still have enough operational buffer in your business to be profitable. If the revenue generated from your business is not sufficient to cover your rental costs and operational overheads, you may need to consider more economical options.
The next thing you need to consider is if it is necessary for your business to even an office space. Plenty of startups do not even have a fixed office, and they can still achieve their revenue targets from their business compared to those who do. The main consideration is whether you’ll need a dedicated space to bring clients or partners to for work meetings. But in this day and age, most office meetings can take place in a variety of places, not just the work place.
5. Impact on existing workflow
Every business model has their respective workflow. Consider the impact of having an office in a rented space on the workflow. If your team frequently needs to brainstorm and huddle in-person, then having an office space would be beneficial. On the other hand, if team members can effectively work remotely together then an office space might not be needed after all.