Do Startups really need an Office..?

Modern_OfficeWhether or not start up and small businesses need an office is a question that I am asked by clients from time to time and recently this question was asked on an online forum. I provided some information about a couple of the factors that should be considered when making the important decision over whether or not to take the step away from working within a home environment by occupying commercial premises. I thought that it may be useful to post my response here for others to view also.

Hi David. Without knowing much about your particular situation or aspirations my best answer would be “well possibly but…”. Stick with me on this for a while and you’ll see what I’m getting at…

A lot depends on the type of business that you are involved in. For example – if you were running an estate agency it is likely that prospective customers would want to visit your office to discuss a possible sale or purchase. In this instance the absence of physical office premises could result in a negative perception of your business, the professionalism of your staff and your capacity to meet client needs. My suggestion here would be that the benefits of having an office would in all likelihood outweigh the costs.

If on the other hand you were for example running an IT consultancy business, I would expect that you would be visiting clients within their premises all of the time as there would be little benefit in undertaking off – site consultancy as you would need to physically be present at the clients site in order to undertake an analysis of their IT needs. In this instance a physical office is of less importance as you could quite conceivably work from home. A virtual office could well provide a prestigious address, call handling and mail forwarding benefits at very low cost so this could well be a viable alternative.

Thus far I have concentrated on the financial costs and benefits but when dealing with clients there often tends to be an aspirational element that goes unmentioned, the benefits of which aren’t always easy to determine. One example would be a consumer electronics retailer where the owner wanted to replace his three year old delivery vans. The existing vans were all in perfect working order however he felt that having newer vans would provide a more professional image. He could have been right however it would be difficult to wrap a set of metrics around something such as this.

Do startups really need an office?

Well possibly but..!

What do YOU think..?

Andy Salmon.

2 thoughts on “Do Startups really need an Office..?

  1. Hi Andy

    In response to your question, I agree, it is dependant on the business but I personally feel, that start ups do not need an office, especially if they wish to keep overheads as low as possible.

    Kind Regards

    Sharon Jenkins

  2. I think it depends what you do. One thing about start ups I advise from my own experience is to be as flexible as you can possibly be in your first year – treat it as a R&D development year, but aim to make a bit of money at the same time. The cost of starting a Ltd company for example and running it properly can be expensive before you even get going (accountants, professional fees, marketing etc). If an office is not 100% essential, I would be in favour of investing the savings of holding back on that aspect into marketing. After 1 year I think most start ups have learned what works and what doesn’t, and year 2 is about rolling out the business like version 1.1 as quickly as possible. At that point you may think “yep we need an office”.

    It’s different for everyone, but I no longer have an office in the traditional sense – had them in the past, but now I don’t need it anymore. Most of my clients actually ask me (rather than other way around) for video chats / skype calls etc…because with the credit crunch I feel that a lot of businesses have embraced the idea of saving money with freely available technology for co-working and communication.

    If you do need an office, I very much recommend seeking a partly funded solution whereby you can potentially pay only a fraction of the office space cost for your first year (helped by start up initiatives for instance).

    One thing though – you definitely need a good workspace where you can operate in a professional way.

    Andy – about the aspirational aspect, you have a good point there. Many startups have a list of things that they assume are a mark of success in terms of the “I did it” moment, and an office is certainly one of them.

    Also – it’s certainly true like you say that in some cases an office (or nice van) is something perceived as an essential professional image needed.

    Very useful blog post. The office / no office debate has been relevant to me for the last 8 years. So I imagine it’s very relevant to lots of start ups.

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