Many entrepreneurs run their startups from home to keep their expenses low, myself included. But what happens when your business takes off? Do you keep working from your tiny spare bedroom, or do you rent office space?
Some entrepreneurs love telecommuting and never need to switch to in-person work. But if you have trouble focusing at home or need a place to meet with contractors or clients, it may be worth getting a dedicated office. Here are some signs your business would benefit from leasing office space.
Signs You May Need Office Space
You Have Employees
The pandemic forced many businesses into remote work and showed that distributed teams can be productive and successful. But there are drawbacks to telecommuting you should consider if you have a distributed team.
Nearly 30% of employees say they’re less productive when working from home, likely due to distractions such as kids, spouses, and pets. Communication can also suffer when workers telecommute. For example, studies have shown that requests made in person are over 30 times more successful than requests made via email.
Sometimes there’s no substitute for face-to-face collaboration, and employees tend to agree. Most workers prefer a hybrid model that allows them to come into the office a few days per week and work from home the rest of the time.
So if you employ several people but don’t have an office, consider renting one. Many workers enjoy working in an office because it gives them a better work-life balance. You may even discover that you prefer going to the office too if you find it hard to focus at home.
You Have a Lot of Inventory
My sister runs a successful online clothing reselling business and is thinking about renting an office. Her inventory is taking over her small condo, which is making it harder for her to stay organized and be productive. She wants to expand her business by sourcing extra inventory but can’t fit more products in her cramped home.
If you own an e-commerce business and are in a similar position, it may make sense for you to lease an office. The extra space will enable you to grow your business and be more efficient, so the cost of rent is worth it.
You could even rent multipurpose flex space with room for a retail storefront to expand your online shop to brick and mortar.
You Meet With Clients Regularly
Some business owners like me never see their clients in person. But if you regularly have face-to-face meetings with your customers, you may benefit from renting office space.
Although you can meet clients at a restaurant or coffee shop, the cost of frequent business dinners adds up. If you look back at your bank statements, you may already be spending the equivalent of a rent payment on food and drinks.
Plus, having an office will make your company seem more professional and established. As a result, it may be easier to win over potential clients and land new contracts.
Make Sure You Can Afford Rent
Before you find your dream office and sign a lease, it’s important to make sure you can afford a rent payment. Generally, you should limit your rent to 10% or less of your revenue. That way a lease won’t eat up too much of your profit.
If you’re a startup in a high-cost area, that might mean you can’t afford to lease an office yet. But luckily, there are alternatives you can explore. You may be able to get discounted rates on office space from a local small business incubator.
Co-working spaces are another affordable option. They usually have conference rooms you can use to host meetings with your clients or employees. They’re also a great place to network with other entrepreneurs.
Do you rent office space for your business? If you don’t, have you ever considered it? Let me know in the comments section below!
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Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.