GUEST BLOGGER: Derek Sisterhen in the host of Past Due Radio and Stewardship Director at Hope Community Church. He has worked in banking in corporate risk management and as a personal financial consultant to over 150 families. Derek also wrote Get Naked: Stripping Down to Money & Marriage for newlywed couples to cultivate financial unity in the early days of marriage. For fun, Derek likes to rock out on his drum set (much to the chagrin of his wife). You can reach him @dereksisterhen and on his website, getnakedbook.com.
Ain’t technology grand? Everything required to run your business can be done from just about any location. Wifi, your laptop, and some pajama pants are the only real necessities of today’s modern “office”.
Yet, in our efforts to digitize all our relationships, I’m hard-pressed to find anyone who doesn’t value good old fashioned face-to-face meetings. Perhaps it even took an in-person meeting to secure a deal, contract, or new business relationship for you.
In my conversations with entrepreneurs and solopreneurs I find that there is a shared longing for an office, whether for the peace and quiet of being separated from kids and distractions at home or to have a professional meeting space without the sound of grinding coffee beans in the background (a la Starbucks “conference rooms”). But before you jump into a lease be sure to consider all your options.
As the Lead Financial Coach at Lukas Coaching, it was pretty exciting to me and the founder, Justin, when we needed to find more space to meet with clients and establish an in-house radio studio. So, we leased a large suite in a professional office park, piled into three of the offices, and found a few other tenants to sublease the remaining spaces.
The subleasing actually paid for nearly all of our rental costs, which greatly reduced our overhead. We had a very professional space to meet with clients. It all seemed great.
Then our business began to shift. We were meeting with more and more people remotely. One of our larger clients required that we meet with them in office space, but one by one other clients began to prefer phone, Skype, and email.
Then, shortly after renewing our lease for another 24 months, our biggest sub-lessee turned in their 60-day notice. We were left with three open office spaces and no rental income to cover the cost. We scrambled to rent the space to someone – anyone – as quickly as possible. Dealing with a pinch in the commercial rental real estate market didn’t make the going any easier.
In the end we were able to fill the vacancies, but not after enduring the financial impact of carrying the cost of office space we weren’t even using for a few months (which further reinforced our decision to keep retained earnings on hand, but that’s a different discussion for a different day).
So, what did we learn?
First, sometimes we have to see the writing on the wall: If a significant portion of your client base isn’t in the same state as you, perhaps your office space needs aren’t anywhere near what you think they are.
In our case, 90% of our client base had shifted to out-of-state, so we really shouldn’t have been committing to a new, two-year lease with our business model changing like that. While it’s difficult to sense the subtle adjusting trends in your business on a day-to-day basis, it’s critical to think about where you’re heading annually (at a minimum) and strategically consider your operational needs (office space, technology, service providers, etc.) as you go forward.
Second, there are plenty of alternatives to leasing your own office space. I’m all about professionalism, so when the neighborhood Starbucks won’t cut it for a face-to-face meeting, I can easily rent space for a couple of hours through companies like Office Suites Plus. Of course, you have to weigh the cost of the space to the benefit of face-to-face meetings with certain suppliers and customers, but you can get great looking space, as needed, for a fraction of the cost of a lease.
Some organizations, like churches and other non-profits, have conference rooms available for use. It might require a little schedule juggling, but this can be a low-cost (perhaps even free!) space to use. Just don’t abuse it.
Still others have crafted co-op arrangements on office space, splitting the monthly rent and scheduling equal use of the space through the week for each person in the co-op. One of our sub-lessees actually did this, to which Justin and I thought, “Wow, we should’ve been doing this all along!”
So, while it might feel like your business is being validated by a need for professional office space, be sure to do your due diligence and evaluate your true needs. You don’t want to get stuck in a costly rental situation thinking that you need office space like another hole in the head.