Working without a designated working area is unthinkable for all but the most resilient entrepreneurs – having a designated place to work is an almost essential productivity tool. However, one working space that many startups get tempted towards are office spaces – whether it’s a cheap room in a complex or a fancy hotseat setup with gym and restaurant perks.
A vital question for any company to ask themselves is whether they should be spending their precious cash on renting office space.
The Debt Question.
If you as an individual are in debt, you might want to have some second thoughts about renting an office (and you well might be – student debts stop 40% of people starting a business). Debt doesn’t define you, many people start businesses with low upfront costs, but if you haven’t paid off your debt, you need to think very carefully about unnecessary expenses. No matter how affordable that office might be, you need to consider if you could direct that money towards anything that might increase your ROI more – essential software, even an extra staff member.
If you’re going for an office because you think it will increase productivity – ask yourself if it comes furnished or if you need to decorate. Your environment impacts your productivity and various environments suit different job types better – if you need to think creatively, for example, you should at least have a view of nature. Your office should inspire you and, if that is too expensive, maybe set up shop at your favourite café instead. Spending 4 dollars on coffee every day will cost a whole lot less than renting an office.
You should also have the option of remote work, which over the past few months has shown that it is an astoundingly practical way to run a company. Employees feel in general very happy working remotely, and with digital workplace developments, you will be able to facilitate collaboration and increase efficiency remotely. Remote work reduces your operating costs and improves employee engagement, as well as giving you access to talent in different time zones, potentially increasing the value of your employees. Just pay careful attention to time zone management though, as this can slow business down if you don’t structure your employees correctly.
The WeWork Question.
Co-working spaces like WeWork eliminate the need for traditional offices, instead just requiring monthly membership fees. You can make the most of various perks and even find productivity boosts from working in the same room as other exciting companies. You should ask yourself whether this is money that will be put to better use elsewhere. It’ll be helpful to create a model and work out how much of an efficiency boost the space would need to give you to be worth an office. 5% seems reasonable. 20% seems impossible.
If finances are low, but you’re sure you need office space, why not try for an incubator? Pitch your concept to a panel of business people, and if they accept you, they will give you space, potentially some funding and of course, a lot of guidance.