Co-working can be the perfect solution to the challenges faced by an emerging business at the very beginning of its journey. It is fast, simple and straightforward. All a startup needs is a few desks, a meeting room when available, and there is no need to worry about cleaning services, broadband connections, repairs or toilet paper supplies.
It seems logical and convenient enough.
However, when a business starts growing, minor issues may turn into real concerns. The meeting rooms are booked ahead of time. Client calls are made in phone booths, but they are not really private. Employees collaborate with one another without cooperating. The bill goes up due to the fact that a new member needs to join the membership program as well.
It is the time to ask yourself: are we really enjoying co-working or have we outgrown it?
The decision of becoming a tenant is not a question of status. There is no need to see it as a necessary next step. Some businesses can enjoy the convenience of flexible working for years to come, while for others, having a private office can be a much more reasonable option.
The key here is to recognize when it is time to make a move.
The signs are typically quite obvious, but not dramatic
Typically, a business does not suddenly decide that it needs an office. Rather, it is a gradual process.
It might start with a senior manager wondering why he cannot find a place for a private conversation. It could be the sales team failing to conduct their presentations due to the lack of availability of a meeting room. Another example is the inability to properly introduce a few new recruits since there is no space for them to work.
All of these issues may seem rather minor, but in reality, they show that the office is unable to support the way the business is operating.
The benefits of shared office environments can be felt when the company is testing its shape. Maybe the company is small, the number of employees fluctuates and nobody really knows how often they will be coming. When roles become more specialized, client interactions more confidential and teams need a routine in their collaboration, shared office space becomes a limiting factor.
The question to ask oneself at this point would be: how often are we making changes to the way we work due to the office space rather than vice versa?
If the answer is “every day”, it is high time to start looking for other options.
Do not focus only on desk price
The financial justification of moving out of co-working is never as simple as a magic headcount formula. Ten people of a company located in one city can benefit greatly from having their own office, while a thirty-person hybrid team somewhere else can still enjoy a flexible environment. Market prices, building quality, location, space requirements and included services will definitely play a role in the analysis.
Nonetheless, when the team becomes rather large and stable, it is quite likely that the members will have to pay a premium for a co-working membership program.
The providers of the flexible space charge for convenience, namely short-term agreements, furnished desks, reception services, amenities and the ease of scaling up or down quickly. All of these things are invaluable in the early days of the business. However, the same can become a limiting factor when the company becomes confident in the structure of its staff, budget and development.
It is best to look at the total expenses of the team in the shared office, rather than per-desk price. Additional fees for meeting room, storage, printing, IT services and other charges that may easily be overlooked due to their size need to be taken into account.
Then, it is crucial to compare that price with the cost of occupying a dedicated office. It needs to include rent, rates, service charges, insurance, utilities, cleaning, internet, furniture, fit-out costs and an estimate of maintenance and repair expenses.
A dedicated lease will not necessarily be cheaper, but it can certainly provide better value for money. One is not looking for a smaller number, but rather, for understanding what one is getting for the cost.
A higher monthly price could be justified by proper office layout, privacy, better meeting room options and the chance to expand without switching the address.
When the office no longer reflects the business
In addition to that, there is another, much less obvious sign that tells a business it needs to move out of the flexible working environment.
A co-working space is neutral by design. It has to accommodate dozens of businesses at once. The office will have to work for freelancers, early-stage startups and remote teams visiting the office for a couple of hours. The idea of neutrality also has its limits.
The employees may be working in an office of someone else. Their work style, culture and branding will not be reflected anywhere. The new members may fail to grasp the culture of the company due to the fact that there is no environment that reflects it. The clients will have a pleasant experience of visiting the space, but they will have to go through the lobby of another company first.
An office will be able to change that experience.
The office will provide the company with the chance to create an environment tailored to its working style. It will have designated areas for concentration, a meeting space that does not need booking three weeks in advance, a proper space for welcoming the guests and breakout zones reflecting the personality of the company’s team.
One does not have to think about fancy office design with a reception desk and a neon slogan on the wall. One will have to think about the space that will be able to become a real part of the business.
Even small changes, such as branded meeting room, secure storage, better kitchen or office layout that considers teams working in it will contribute to the improved day-to-day experience.
A well-designed office will help to create culture as well. It will show new members the way of working for the company. It will encourage teams to collaborate, generate ideas and develop relationships. At the same time, the clients will have a clear vision of who they are dealing with before the actual meeting takes place.
Need for privacy and client trust
Another issue is the need for privacy that becomes more and more important when a company grows.
In the shared office, one relies on the policies, etiquette and goodwill of the office members. While it may be perfectly fine for many businesses, it will not be enough for some types of activities.
Handling customer data, financial transactions, HR-related documents, legal files and product plans requires more control over the environment. Having a confidential call in a shared booth will be difficult. Showing client data on a computer screen in the middle of a walkway will expose the company to potential risks. Informal conversations in the communal areas may become a threat as well.
The argument is not that co-working environments are generally insecure. On the contrary, many of them have high security standards. It is a reminder that the growing company may require more control over its environment than shared office can provide.
An office will allow to create certain routines, such as the process of entrance of the visitors, securing the documents, locking the storage space, establishing a dedicated network and controlling the access to meeting rooms.
The businesses collaborating with large companies and/or being active in highly regulated industries may also benefit from the process since the physical environment of a business may become a factor in procurement.
Understand the real cost of taking a lease
The most typical mistake the businesses make when considering the move to their first office is their primary focus on rent. While it is an important factor, it is only a small piece of the whole puzzle.
Before making a decision, it is crucial to know everything about the terms of the deal. What are the costs of the service charge? Are the rates included in the overall price or are they additional? Who will be responsible for utilities, internet, repairs, cleaning, maintenance, fit-out costs and insurance? Do they need the contribution for maintaining the building? What happens in case the office needs repairs before the move?
It is also vital to think about the fit-out.
Having a shell office will allow to make anything the business needs, but it may also require significant investment. A fully-furnished office will allow to move in faster, but will be less flexible in terms of layout.
Neither one is necessarily better; it all depends on the budget and needs of the business.
Finally, it is important to consider what will happen at the end of the lease term from the very beginning.
A dilapidations claim can require a tenant to cover the cost of returning an office to the condition set out in the lease. If the business installs partitions, changes lighting or makes other alterations to the layout, it is essential to understand whether those changes will need to be removed at the end of the term.
Such issues are easy to postpone during an exciting move and costly to consider at the end.
When comparing the options, it will be wise to evaluate the private offices for lease against the total cost of their occupation, not just the advertised rent.
The best office is not the cheapest one per square meter, but the one whose cost, location and layout are consistent with the business goals.
Design the office to meet the needs of the business
While having a dedicated office gives more opportunities to customize it, one will not be able to benefit from them, unless used properly.
A popular mistake is designing an office for all members to be present every day. In case of a hybrid team, the result will be paying for the unnecessary amount of fixed desks, while still missing the proper spaces for collaboration.
It is better to take the actual peak occupancy into account.
On which days will the office be the busiest? Which teams need to work in one place? Who needs a desk every day, and who needs to collaborate?
The answers will guide one through the layout of the office.
The company may need fewer fixed desks than one would assume and more project tables. It might need one great client-facing meeting room instead of a few rarely-used ones. It may require a space for focused work, one more relaxed area for casual chats and a functional kitchen encouraging collaboration.
The goal is to design a workspace with a purpose.
A good office does not just serve as a place to store people. It allows to do the focused work, collaborate and host the clients in a professional manner. Solving these problems during the design is much easier than trying to do so half a year later after the move.
Keep the flexibility in the lease, not the office
Many businesses assume that signing a lease means losing all flexibility. However, it is not true.
In fact, much of the flexibility in the lease is decided before signing the contract. Heads of Terms stage is the moment one can negotiate certain commercial details that might prove extremely valuable in the long run.
Having a break clause will give an option of getting out of the lease if the company decides to change directions. Rights of assignment and subletting will allow to relocate or move, if necessary. An expansion option will come handy in case the company will have to increase its footprint in the building. Free periods and the contributions of the landlord toward the fit-out will significantly reduce the burden of the move.
Not every landlord will be willing to provide every option and the balance of power depends on the market and building, but it is always wise to define the non-negotiables beforehand.
The lease looking advantageous on day one can prove to be extremely restrictive if it gives no options of adjusting.
The professional advice is also very helpful at that stage. A commercial property adviser and solicitor will help to understand the obligations one commits to and highlight the problematic clauses.
The goal is not to make the agreement overly complicated, but to ensure that it corresponds to the real vision of the company.
Plan the move before it becomes painful
Transitioning from co-working to a dedicated office is an operational task, not just a property decision.
In co-working office, most of the processes are arranged for. Someone else is taking care of cleaning, maintenance, connectivity and other aspects that keep the office functioning. In the dedicated office, the business will have to manage them.
It does not necessarily mean that one will have to hire a full facilities management team.
Some businesses will be better off with a part-time office manager, managed service provider or the operations manager who will be capable of doing the job. The most important thing here is to define who is responsible for what beforehand.
IT is the special case that requires particular attention. It might be necessary to organize internet installation, networking, security system, printing, access control and transferring all equipment to the new office.
One will not benefit from the beautiful space, if nobody will be able to log in the morning after the move.
It is always better to start looking for the new office earlier than one thinks. Negotiating of the terms of the lease, completing all legal documents, planning fit-out and organizing various services take more time than one can think.
Hastiness will narrow down the options and weaken the negotiation position.
It might be uncomfortable, but overlapping of the old and new office space will be less disruptive than having to relocate an entire business in the panic mode.
The goal is to make the transition planned and thoughtful process, not an emergency relocation.
It is time to move, when the logic changes
A dedicated office is not the “grown-up” version of co-working office. It is just another tool for a particular stage of development.
The moment to move will come, when the financial, operational and cultural benefits of owning an office start to outweigh the advantages of staying flexible. It may be due to the need for privacy, centrality of client meetings, requirement to reflect the brand in the office or the need for a more efficient hybrid workspace.
When this moment comes, it is important not to rush. It is crucial to understand the total cost of the office, its lease terms, fit-out requirements and needs of the people using it daily.
The proper office will help the business for years. A bad one can cause a lot of trouble.
It is not the matter of prestige. It is the planning.