When you begin dreaming about working in a new office space, you’ll likely have visions of trendy layouts and the included extras you’ll get in a fully furnished office for rent. You’ll imagine yourself tossing a ball around with your team while you brainstorm ideas and impressing clients with gourmet coffee. Hey, maybe there will be a foosball table!
It’s great that you have big dreams, but in business, everything boils down to one factor: cost. Before you start visiting properties and signing paperwork, you have to understand what you can afford.
Are you truly prepared to sign an office space lease? Ask yourself these questions before you sign.
Ideally, you should have a thorough business plan that projects your expenses over a few years. A business plan is a fantastic document that not only gives you an overview of your company now, but makes educated predictions about what your company will look like in the future.
But if you’re a little less prepared, don’t fear. You’re in the same boat as many entrepreneurs. In fact, U.S. Trust found that “A large number of business owners have not articulated a strategy…” All you need is a careful understanding of your budget.
(I’m going to give a basic budgeting overview, but Info Entrepreneurs has an excellent guide.)
Gather all information about monthly income you can depend on. In this category, you should round all of your numbers down. Use worst-case scenarios.
Don’t use last year’s numbers. Use what you can expect next year. For instance, if you made $25,000 at a trade show, but don’t plan to attend it this year, you wouldn’t calculate that as income.
Add all of the costs you expect each month. This category includes salaries, licensing fees, insurance, fees, anything else you pay for monthly that will not be included in your fully furnished office for rent.
These are expenses that may change each month. It includes items like commissions, marketing costs, and travel. Many of these expenses scale up or down with your sales, so when the bills get higher, you’re also making more money.
This is tough, but necessary. Consider any big purchases you’ll have to make within the next few years. You won’t be able to predict everything (like a broken computer, which will happen unexpectedly), but new hires or equipment usually have some lead time.
Distribute these expenses into the months leading up to the purchase. For instance, if your expenses total $5,500/month and you have a $2,000 purchase coming up in six months, your actual expenses are $5,833.33 per month for the next six months.
Now that you know where your money is coming from and where it’s going, put everything together. How much is left over each month after your expenses are covered? This is how much you can spend on growth, including new office space. Ideally your income will grow over time, so your fully furnished office for rent will eventually require a smaller percentage of your income (although it should never be more than 10%).
Keep in mind that was just a light overview. Business budgeting can be a complex process depending on your unique situation. However you do it, just make sure you know how much money you have available before you begin looking at potential office spaces. It may seem obvious, but many business owners fail to make these calculations.
If the lease and utilities on office space were the only costs you had to consider, this type of space would be quite affordable and available to more people. Unfortunately, your costs don’t end there. There are some significant hidden expenses that many new lessees fail to consider.
If you choose an unfurnished office space over a fully furnished office for rent, you’ll need desks and chairs, which can add up quickly depending on the models you choose. If your staff sits for long periods of time, you can’t buy poor-quality chairs or they’ll quickly complain of back problems. Sure, you can buy cheap or snag free furniture off Craigslist, but it likely won’t last long.
Even if your team has always worked remotely and paid for their own expenses in the past, they’ll expect you to provide office supplies once everyone moves into the office. These are recurring expenses you should plan for every month. Your team will need basic items like pens, calendars, printer paper and ink, mouse pads, highlighters, etc.
Your staff used their home computers before, but they won’t be willing to haul their desktops to work every day. You’ll have to invest in new machines to keep the work moving. If your technology needs are high (like drafting equipment, servers, or 3D printers), you may have to pick up new units.
Depending on the items of your own you want to bring to the office, moving in might be a challenge. If you choose an unfurnished office space, you may have a few desks, chairs, or maybe a copier sitting around your garage that you want to use. You can save money by using what you have, but getting to your new office might require renting a truck and some time.
Anticipating lawsuits are a part of doing business. Many landlords require the lessee to take out insurance with the lessor named as the additional insured. Since you won’t be doing anything industrial, this won’t be terribly expensive, but it’s a cost many businesses fail to consider.
Many leases require the lessee to pay a prorated portion of the site’s property taxes. (If this isn’t listed as its own line item, it’s already been rolled into your rent.) Make sure you’re aware of this charge (and all other charges) before you sign the lease.
If your office space shares common areas with other businesses on the site (like parking lots, bathrooms, or waiting areas), make sure you understand the fee structure and how you benefit. You don’t want to be surprised by a hefty fee for a shared receptionist you don’t intend to use.
In many leases, the utilities are included in the rent as long as they are used during normal business hours (typically set as 7 AM to 6 PM). If you use power, water, gas, or oil outside of those hours, you’ll may be asked to pay additional fees. If you have a charge like this, make sure you understand how it lines up with your working hours.
If services like phone, Internet and cable are not included in your lease, you’ll have to cover these costs yourself so be sure to check.
Would you like help finding an unfurnished or fully furnished office for rent that matches your budget? Just complete our easy contact form and we’ll be in touch with you soon. Or feel free to begin your own search for free right now at turnkeyofficespace.com.
