Picking an office is a big decision for any business owner, particularly a startup. The right office has the potential to attract and retain staff and customers. And with the significant costs involved – rental, fit out and outgoings to name a few – this is one decision you really want to get right. So here are 6 tips based on what I have learned as a small business owner when making the decision to rent a new office.
1. Does the office location and space align with your brand, culture and customer base?
When it comes to choosing an office, there are a number of ways to think about location. One of the most important is alignment with your brand, culture and customer base. Selecting a suburb with businesses that are similar in style to your own provides an opportunity to reinforce your identity with your clients.
Also, consider where your current customers are located as well as the clients you want to attract. If a client is comparing businesses, the one that is less than 25 minutes away and in a suburb they (potentially) know, will be much more attractive than one that requires significantly more travel time.
Your office choice will also have a significant impact on your culture. One aspect that was important to me was the communal space available. I actively looked for an office that had a balcony or courtyard so that we could have a weekly BBQ, drinks outside or simply sit in the sunshine. The small increase in lease costs have been worth the investment, given the contribution to our culture.
If you are moving offices, understand what different locations will mean for your team’s commute. For most businesses, people are the most valuable asset and looking after them wherever you can is paramount.
2. Can customers and clients easily reach you on public transport or find a car park?
With the increasing focus on climate change, making sure your business is close to public transport is a given. Equally, consider the parking options for those that travel by car. What is the typical length your clients will be at the business, are there parks that would allow this and what is the cost?
This is an area where your choice of office can breed significant client goodwill. A client that has easily found a 3 hour park that is reasonably priced or had a quick walk from the train will arrive in a much better frame of mind than one that has been circling for 10 minutes or had a longer walk than they wanted. Ensuring there is space to store bicycles is also another factor to consider.
3. Does the office space have the fundamentals – natural light, heating and cooling?
The work environment you provide has a big influence on your staff and their wellbeing. In terms of the office itself, a critical factor is natural light. This has a huge impact on your employees and your own enjoyment of the space. More windows also means you have a view outwards, encouraging staff to look up from their screens. Will the office get uncomfortably hot or cold? Remember to test the heating and cooling system and consider whether installing blinds will help.
4. Is there enough space for the business to grow?
Moving offices is expensive and if you need to do it regularly will impact on your business growth. When looking at an office space it’s therefore important to think at least 5 years down the track. What’s your business strategy and growth projections? Will the space cater for an increase in staff without feeling too small. If the office feels too big with the current team size, you could consider hiring out the additional workspaces.
5. Can I afford it?
When choosing an office, many businesses focus on the rent. But fit out costs and outgoings do add up. For a fit out, there will be the main building costs, for example putting in an office, but there will also be peripheral costs you may not have thought of. Think speaker wiring, wiring for the phone system, doorbells, kitchen cabinetry, door signs and alarm systems, which include the product as well as the cost of installation.
Importantly, what the landlord pays for versus the business is up for negotiation. Painting, carpeting, lighting, ceiling tiles, free rent periods during the fit out, blinds – these are all examples where a business owner can agree that the landlord contributes or pays in full. If the landlord has agreed to pay for something then be specific – if you want block-out blinds, then ask for those.
If you are setting up an office for the first time, also think carefully about the style of desks and chairs. They may seem reasonably priced when you look at them individually, but multiplied by your staff numbers, these costs quickly grow.
Outgoings are another area to be clear on with the landlord. Ensure that all outgoings – for example, landscaping, air conditioning servicing, parking congestion costs, lift servicing, insurance – and who is responsible for paying them are clearly spelt out in the lease. Remember that if you are paying for something, for example landscaping for the building, then you will not have control over the contractors that are hired and their cost.
6. A final note on lease terms from someone who has learnt the hard way
The tenant generally has the bargaining power when first negotiating a commercial lease. This is because a lot of commercial real estate remains vacant for long periods. When negotiating, think ahead. The terms you agree now – the length of the lease, options for renewal and basis for rent reviews – will have a big impact on costs years down the track.
For example, if you have opted for a 3 year lease with an option for renewal, this means at the end of year 3, the rent will be up for renegotiation. And you will be in a far worse bargaining position. Balancing where you think the business will be, flexibility along with a degree of certainty around costs can be challenging.
The lesson – go hard for your first negotiation.
So with your new office rented and the team moved in, you have one more thing to do. Update your address!
Guy Cooper is Managing Director of Wave Digital, an Australian app development company founded in 2000. He is a business owner and tech entrepreneur who works with founders, executives and fellow business owners to bring their app idea to life.