Source | Entrepreneur
Launching a startup can be exciting, and an increasing number of Americans are doing just that: According to the Global Entrepreneurship Monitor, two-thirds of Americans consider entrepreneurship a good career move; and the result is that today there are more than 27 million entrepreneurs running or starting new businesses.
These entrepreneurs are working from home, cafés, shared workspaces, basements and garages. Others are taking the plunge, either buying or leasing commercial office space to give their startups credibility and authenticity.
But is that a smart move early on for a new business? The answer may be “no.” So, if you’re considering leasing private office space, curb your enthusiasm and excitement long enough to ask yourself these five questions.
1. What is the cost?
When you’re considering leasing office space, the one number that stands out the most is the cost per square foot per month. That’s the bare minimum monthly obligation you’ll be paying for private office space. But there are other costs to consider here, as well:
- Insurance to cover your business assets
- Liability insurance
- Furniture and decór
- Utilities (internet, electricity, water, waste removal, alarm service, etc.)
- Maintenance fees that a property owner or management company may apply
The overall message is to factor in the total overhead that comes with leasing a private office space, in order to maintain a healthy margin on your product/service. This is especially important if you expect to need to raise more capital in the near future.
2. What does your growth-projection look like?
The length of a lease for private office space can vary dramatically from short term (three to six months) to long term (three to five years). Commercial property owners may not want businesses cycling in and out quickly, as that can create a negative perception of the property.
Think about how your business is expected to grow when considering private office space. In the early phases of a startup, your growth could come in fits and starts — or be explosive. In any case, you’re likely to add people.
If you’re certain that private office space is necessary, think carefully about how much space you need, based on your projections. You don’t want to be locked into a commercial lease with zero room for growth and expansion.
3. Will private office space bring value or contribute to revenue generation?
I encourage founders and entrepreneurs to consider their spending carefully. Simply put, if an expenditure doesn’t contribute to revenue generation, you probably don’t need it.
Will your business model benefit from private space? Will it improve the efficiency of workflows at your startup, the team dynamic or the client experience?
Commercial office space can definitely lend trust and authority to a startup in the eye of the public, investors and clients; but ask yourself if it’s absolutely necessary at this current time in your startup phase. Do you just need it to add “flash” to your business or boost your ego?
As Tony Hsieh, CEO of Zappos, cautions in his book Delivering Happiness. “Don’t be cocky, don’t be flashy. There’s always someone better than you.”