Giving your business four walls can make it seem a lot more real – but there are some important decisions to be made about the kind of office you want before you make the move, one of which being the choice between a conventional lease and a serviced office space.
Although they may not sound worlds apart, there are important differences between the two, with each one suiting a different kind of business, with different needs, and often at a different stage of its growth.
A serviced office is fully equipped and managed by a facilities management company, that offers relatively flexible and simple rental contracts, with the added advantage of having all essential amenities in place, such as phone lines, internet connections and office furniture.
On the other hand, a traditional office space involves leasing the office from a commercial landlord, and involves a medium to long-term contract, typically of at least three years. As the tenant you get full control over space, but are also responsible for its upkeep.
Here are the questions you should ask of your business to help weigh up which office space suits you best.
What’s your budget?
Conventional leased office space is generally the cheapest way to rent a commercial property. The luxury of having everything taken care of in a serviced office will often incur considerable additional fees. The cost of a serviced office can include cleaning, heating and lighting, reception, security and maintenance, redecoration and refurbishment, and for this all-inclusive service you’ll be paying a premium.
However, while you may end up paying more in the long run, for a start-up, the flexible nature of contracts with a serviced office mean there’s far less financial risk involved should you enter into any difficulties. All that’s required will be you paying the minimal rental period, usually of around three months (although it is worth noting that some serviced office contracts will tie you in for as long as a year). Additionally, in moving into a serviced office, there are little to no start-up costs.
What do you have more of: time or money?
While a leased office space might cost less on a per desk space basis, there’s certainly a lot more hassle and time required than going into a serviced office. Even before you’ve moved in, there’s a huge amount more paper work involved, and the long-term nature of the contract requires legal advice, and going through with a fine-tooth comb.
And then there’s the time spent setting up shop. Phone lines, internet, electrical power and other utilities need to be sourced, and contractors need to be arranged. Conversely, a serviced office provider will already have these things in place by the time you move in, allowing you to concentrate your time and energy on your business from day one.
Even after you’re all set up, having a conventional leased office will involve setting aside time for general upkeep. Commercial tenants have far more responsibility towards maintaining the building than residential tenants, and if something goes wrong, the ball is firmly in your court to resolve it. This can be anything – from a leaky roof, to general redecoration, to a poor internet connection – all of which would be sorted by the office provider in a serviced space, making it a much more time-efficient environment
If you are willing to spend a bit more money in order to save considerable time, perhaps a serviced office space is a better fit for you.
What stage is your business at and do you foresee change or growth in the near future?
This again goes back to the long-term vs short-term choice. A conventional leased office space can work out cheapest on a per desk basis – but might only make sense if you’re not planning on expanding any time soon, unless of course, you are leasing a place big enough to expand within, which is certainly something to factor in.
If you’re a start-up or SME, the short-term nature of a serviced office space suits the potentially uncertain future of your business – maybe in six months you’ll see huge expansion, maybe you will downsize, maybe it will make more sense to relocate to a different area, or, at worst, maybe your venture won’t work out.
In any of these instances, a contract of three years plus will only act as a burden, curtailing any development and change, and potentially landing you with a broken contract or lost deposit if you cannot keep up with the bills. A traditional leased office is, therefore, best for businesses that have secured and established plans for the immediate future, including any possible expansion. It’s imperative when choosing an office space to factor in your plans for growth.
Where will best suit your brand’s image and identity?
It goes without saying that your office should reflect the character of your business. While a leased office space might involve taking on a lot more responsibility, with this comes a greater control over the space and freedom to make it your own. This is often the primary reason people opt for a traditional leased office space, rather than a serviced alternative.
However, a serviced office can certainly help build a professional image for smaller businesses, with the added bonus of reception services and meeting rooms creating a slick presentation. There might be less scope for creating a truly unique environment – but for a business still in its infancy this is less of an issue, as it is likely that the brand is still evolving.
All in all, when it comes to making the transition from your kitchen to the office, it’s not just a case of looking at your budget. There are no hard and fast rules for which type of space is the cheapest, with the limited up-front costs for a serviced office space often counteracted by the premium you will pay on rent each month.
Even this isn’t set in stone – you may find that in certain locations, a serviced office space is actually the cheapest alternative. It’s a matter of making this difficult transition itself as smooth as possible in all other respects as well – examine the demands on your time and which option is the most efficient for you, the stage of your business and your plans for growth, and crucially, the identity you wish to create and present. Weighing up all of these factors will allow you to find the most suitable home for your business.
Peter Ames, director of strategy for office space search engine, Office Genie
