According to Smallbiztrends 69 percent of U.S. entrepreneurs start their businesses at home. But what about when it's time to move out of the house and find some office space? A bit more than 50 percent of small businesses fail in the first four years. Therefore it is important to have all of your bases covered before finding your office so that you can put your business in the best position during the first few fragile years. In this post we are going to over exactly what you need to be aware of before renting office space.
Pre Office Space Checklist
1. Is there a laid out blueprint for growth? Financially, there should be a planning department with clear objectives through an agenda of how money will be made. Is there a customer acquisition plan? What will be the cost? Will you market your idea? What are the costs?
2. Are you fully aware of the costs that come with an office space? Some requirements are office furniture, on and after-hours security, security deposit, parking, telephone, internet, business permits (if any) and more.
3. Do you understand the policies for moving in and out of an office space? Breaking a lease will incur fees. An attorney can help you with this but again an attorney will add to your costs.
4. How much space is required? Are there any more prospective employees? Is there a plan of how the office should look like?
5. Are there any utilities and amenities included in the rent? These include electricity and water. If not, there should be a clear plan of how to pay for the same in the following months to come.
6. Where is your location going to be? Taking into account factors such as transport, housing, medical care and so on, a good location should be somewhere office members can conveniently access required amenities.
7. Is this a place we can comfortably welcome clients and potential employees? Does the interior and area represent the image that you want to portray to your clients?
8. Do you know the type of office that you want to use. Depending on your individual needs there are various different types of offices that can be used.
Acquiring Your Lease
Office space can pose a challenge while trying to predict and project the future of the company with the available office space. For a long time, leases have been for a minimum of 3-5 years depending on the owner's agreements. Therefore, company directors have to tussle with the idea that unforeseeable outcomes on growth may affect the available office space. In view of the above, I have summarized strategies that have proven to work around growth possibilities below.
1. Make use of your arsenal. It is advised to work closely with a negotiator who understands your market, growth factors as well as landlords that would be in the same market. This dealer will negotiate effectively with a landlord for the forward strategy that may cover expansion possibilities.
2. Know the law and your rights. If you are leasing a size of office space in a building and a third party approaches the Landlord of this building to lease a size of space adjacent, contiguous or in the building, you (the initial tenant) has the right to wave a Right-of-First Refusal (ROFR) where the tenant can refuse this outside (third party) offer and match the same to acquire the additional office space. Usually, the Landlord should wave a Right-of-First Offer (ROFO) where the initial (first) tenant is offered the space first before any third party is.
3. Phase-in. According to the lease documents, as long as the economies of scale in the entire space and the design are secured, certain terms can be agreed upon. For example, A similar scenario occurred where a tenant paid for 10,000 square-foot space acquiring 20,000 square-foot of space in the process.
4. Short term leases. Leases of 1-year contracts do exist. However, they are more expensive than the 3-5 year plan for the long haul. These short term leases encourage flexibility in office space throughout the growth of startups.
Executive Office Suites
This is a great option to consider for startups when looking for standalone offices. Executive office suites provide full flexibility plus some business benefits e.g. mail services, top-grade utility support and administrative services. These additional perks make them more costly than other small business incubators. However, since they offer smaller office space and more flexibility in their contracts, this makes them a hot-cake for startups.
Office Requirement Checklist
I have summarized a checklist of all the requirements startups need for an office space. However, some of the items on the checklist are crucial to be done in the initial stages of company formation since they define a specified blueprint and course of action that are important to the growth objectives of startups.
1. Construct a business plan. It is important to get the details right with a step by step process so as to have viable financial projections that come to life.
2. Obtain the required capital. It is important to figure out the required capital e.g for the first 6 months and start investing and working towards that amount as soon as possible. For startups, this should be done before or during the initial stages of formation.
3. Figure out the legal structure. Walk through the legal requirements for your company and office space with your attorney.
4. Rent space for office or retail. When it comes to retail business, taking into account factors such as foot traffic is important, since it affects the number of people who walk into your shop. Therefore, it can project how long to pay for a lease. For office space, it may require other complex methods.
5. Put in place an accounting department. As soon as a bank account has been set up, a program should be set that will control the amount of going in and out of the company. This will be important in the planning stages.
6. Create and assign key roles in the company. Depending on a few factors and qualifications, co-founders and other members of the company should be given clear responsibilities that are accountable without disagreements e.g a marketing team, IT team and so on.
7. Inquire and secure coverage with an insurance company. This is important especially for the employees' health and liabilities. Also, in case of a fire or similar event, measures need to be made to prevent company breakdown.
8. Your pitch should be completely refined. When approaching potential investors, bankers as well as clients, it is important to have a persuasive pitch for your startups. For example, the company executives should maintain a clear, confident image for the company through company support. This is important for marketing strategies and potential investors.
9. Find a mentor. Someone who can give priceless advice and has succeed in your industry is an important factor for startups. They will be able to be a sounding board for new ideas.
10. What is your budget? Factors to consider are; product improvement, additional employees, office lease agreement and fixed expenses. Here, advice from a mentor will prove helpful. Upfront costs should be also be considered as much additional costs like utility, taxes, internet and operational expenses
11. What is your office culture? You need to have an idea of who you are as a company as well as what you do. For example, some companies have a built-in gymnasium which can be accessed before or after work hours. This has proven to create relationships and encourage teamwork in the company. Also, having a colorful environment can seem fun and make the workplace a cool place to be in, thereafter boosting the workforce. The overall layout and design of the office space are can create a certain aura or vibe in the room. This has proven to encourage teamwork.
Conclusion
It's important to make sure that everything is in order before making the leap from the home office into renting your own office. There is a fine balance between balancing the added costs with the benefits that your own professional work space can bring. Thats why we recommend a monthly office rental so that you get both the flexibility and the professionalism of your own space.
For more information on executive office rental in the Hallandale / Aventura area contact 221 building today for more information.
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