I am contemplating moving my business from a home office to a commercial office space. What pros and cons should I weigh? Any tips on making the transition?
—D.B., Dallas
Once you've decided to take the plunge and move your home-based business to a commercial office space (see BusinessWeek.com, 1/22/07, "Home Office or Commercial Space?"), there are a number of decisions you'll have to make. First, where will you go and what facilities will you need?
Taking an office close to your home and your employees' homes is always a good bet, as it will cut down both on gas costs and on driving time. An office outside the home should provide a comfortable space—such as a conference room—where you can meet with customers and employees, particularly if one of your motivations for leaving home is to impress clients and appear more professional.
A real estate agent who works with business clients should be able to help you determine what square footage you will need. Space for a service business is usually easier to calculate than that needed for a company that produces a product, says Robin Lasher, a consultant with the Tarrant County College Small Business Development Center in Fort Worth.
An Eye Toward Growth
"A consultant may need no more than a small office with furnishings to create the desired image with clients, whereas a company that manufactures a product and has outgrown the garage may also outgrow commercial space sooner than expected," she notes. "However, even a service business that starts with 300 sq. ft. may find it a tight squeeze if an administrative assistant is hired."
So be cautious about the length of the lease you sign, Lasher advises, no matter how good a deal a landlord offers you on a long-term lease. "Try to negotiate a one-year lease with a one- or two-year option if you have any reservations about your move or whether the space will meet your future needs. If you're two years into a three-year lease with no immediate space available for expansion, you may have no choice but to stunt your growth until the lease expires, try to sublease your current location, or operate from two locations by leasing additional space elsewhere, which usually creates logistical problems," she says.
Jeffrey Landers, a serial entrepreneur and the owner of Offices2share.com, agrees. "The most common and often the most fatal mistake made by fledgling businesses is signing a multiyear lease which can require a financial obligation that may outlive the business itself," he says.
Call Your Lawyer
As long as you're looking for space, why not try to find an office location that has some prestige or local prominence? "Many prestigious office locations have some small spaces available as a result of dividing up larger spaces," notes Robert Donnelly, an entrepreneurial consultant and author.
"Negotiate for a reasonable rent," he adds. "You're doing the landlord a favor by taking a space that usually is not attractive to larger prospective tenants." It doesn't hurt to get your attorney involved in these negotiations. Commercial leases can be notoriously one-sided, and a savvy attorney should be able to help you get much better terms.
Once you've settled on a location, draw up a list of costs to include in your budget. You should include one-time costs associated with the move and the purchase of new furniture and equipment, as well as ongoing fixed costs, such as rent, insurance, and utilities. Will the building provide adequate parking for you and your employees? Make sure you include parking costs in your budget.
A final expense will be changing your business address to reflect your new location and revising all your marketing materials. Good luck!
Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.
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