Why Buying Your Own Space Isn't Always The Best Option
An article published in the MIT Entrepreneurship Review bears out the fact that business location is a key ingredient to success. The resources that foster growth and development within an organization – like revenues, talent, and others – draw from real people, and a good setting within which to do it further adds to the value you can get from those resources.
However, that does not automatically mean that you have to shell out a lot to ensure yourself of a good office location. In fact, buying your own office space is not always the best way to go – especially if you are a startup. Here are two good reasons why:
- It’s expensive. Property and market intelligence resource Reis reports a 2.1 increase in the average cost per square foot of office space for the second quarter of 2013, compared with the same period a year before. This rate increases relative to the size of the space. In addition, overhead costs such as utilities, equipment acquisition and maintenance, and others have to be factored into total monthly expenditures and, the bigger your space, the bigger your overhead will also be. Businesses that are just starting out may find shouldering these costs all at once too much to handle.
- It’s restrictive. Startups may be fueled by some of the most innovative ideas, but these ideas can go to waste if they do not find the right setting in which they can take off. Offices, in general, operate as stand-alone entities. While this encourages a lot of good things, it also restricts your startup from realizing its full potential. Making and closing deals, as well as learning more about your market, will require you to venture out of the office because there’ll be little, if any, opportunity within a stand-alone space. Moreover, putting up an office of your own requires having enough capital on hand to spend on all the right tools to run essential business processes – otherwise, your company’s productivity may suffer.
Startups also usually have a ways to go before they are able to establish themselves – there will be challenges to face in terms of finding just the right number of people to employ, client dynamics, and strategy adjustments. Moving into an office of one’s own is something that many business owners, in retrospect, realize should be done only when the business is stable enough to hack it on its own.
So what should you do instead? Find out in the next installment of this three-part blog series.