Is it time to get an office space?
Updated: Oct 30, 2020
Let’s make this quick! Probably not. If we haven’t had an office but we see that as a part of the next phase of development of the organization, let’s just stop and think about it before we proceed. And let’s think a second time as well. Because it’s probably a larger step than most of us think we’re about to take.
This conversation goes a little like many conversations we may have had with our parents about a number of things. Are you ready? Are you mature enough? Do you understand the consequences of your actions? Are you rushing into things?
Still, we may think we’re ready. If companies grow, an office will become necessary at some point. But offices are expensive. And people have to want to go there. If there’s one thing our recent extended time at home has taught us, most organizations can work from home just fine. And many of our coworkers preferred working from home even before this moment.
But still, there are certainly times we need an office. Let’s just go through some things that mean it’s time to think about office space:
We host customers at our facilities. Anyone with a retail front or that has a lot of customers come in for meetings, trainings, sales demos, or interviews is going to need an office space. This is usually industry specific.
We have expensive equipment. We need to get everyone access to research equipment and have the equipment insured properly which might be difficult if we’re storing it in our leaky basements.
We physically need to be together to be collaborative. This isn’t likely but some teams can only really work together in person.
It’s too disruptive at home. If we can’t set boundaries in a home, like when there are small children around, then that’s understandable. If we just need to get out of the house, then we just need to get out of the house.
That’s a pretty short list. And sometimes the needs can be satisfied by using a co-working space. Co-working spaces cover a lot of the needs a startup has and they’re great places to make contacts. Most have a lot of options for how often we use the space, how much space, and how dedicated the space we have is. But we should get an office space if the costs of the co-working space outweigh the costs of rent and any tenant improvements required.
So let’s say we see the list above and we just disagree. We’re ready to get some offices, dangit! Now, let’s consider a bunch of things we might not have already thought through:
Image. Office space doesn’t make us any more legitimate. Making sound financial decisions makes us legitimate. Building great products makes us legitimate. Not a snazzy new office.
Culture. The company culture is not built in an office space but in the way we communicate. Effective leaders can steer a culture in a direction by being thoughtful and deliberate about having a clear mission, a vision for the future, and defining values early. And getting buy-in from the team. Use the savings from not having an office to do team outings or introducing perks.
Tenant Improvements. Most offices don’t come ready to move into. Build outs don’t need to be fancy but they can be expensive. A coat of paint, some desks, chairs, tables for meetings, new gear for conferencing, phones, Internet connections, stocking food, coffee, and of course the ping pong table. These things add up and can easily put us in debt in a time when we should be expending capital judiciously.
Location doesn’t matter. It’s important to remember that a home address, co-working space address, or a postal box are acceptable addresses to use up to a point. In cases where we do get space, the ease of access is far more important than being in a coveted neighborhood. Also consider driving distance for the existing staff.
Taxes. The office location could impact tax rates. Discuss that with a tax professional before factoring it into a decision.
Insurance. The office will certainly impact insurance. Get a quote for that prior to signing any contracts and factor that into the financial impact as well.
Offices are more social. It’s easier to have a conversation with someone over Slack than to get up and walk to a coworkers desk. It’s more efficient. If we’re pair programming, It’s easier to sit all day in a Zoom or Hangout working with someone and far more intimate.
Keeping a sales team together. We don’t need sellers in one room. Being on the phone all day can get loud. Calling customers with engineers trying to write code can be distracting. Having sellers hear everyone else can be disruptive.
People won’t show up on time if they’re not coming to an office. People in support need to check in for a shift and log on - and we can see when they became an agent easily. Others are likely knowledge workers and we should be concerned about performance, not hours. If there’s a performance problem, it’s equally as likely that would happen at home or in a co-working space as it is in a physical office.
Valuations. The company will not be more valuable based on the office space unless it’s owned by the organization AND it’s considered an asset rather than a liability (or enough of the loan is satisfied so the office could be sold for more than the current value). Contracts for rental spaces are a liability and may be considered a liability in a potential acquisition.
Centralized infrastructure will be cheaper. Probably not. Buying everyone a cheap printer is likely cheaper than buying (or more likely leasing) a big printer. And that same economy of scale is true for most things.
Long term thinking. An office will be required at some point, but it doesn’t immediately make us a better long-term company. Instead, planning for it in a year or so gives us additional capital to have more flexibility in our longer term models.
Talent requires space. No, the kind of talent we want requires vision and leadership.
People can’t work efficiently at home. Yes, they can.
Whew, that was a lot! And yet, more convincing might be needed. So if we need to physically be together, get inspired, and be social then absolutely get a standard co-working space (preferably without signing a long-term contract). If traditional office space is cheaper, fully loaded, than we’re spending on a co-working space then it might be time to get an office. Just do so deliberately and with all the factors we've covered taken into account. Because it’s more important to have a healthy startup than one with an office.