An Alternative to Buying Space for Your Business:
What to Consider When Leasing Office Space
Due to the size or needs of your business, you may decide to rent office and/or warehouse space rather than have a home or own a building.
Although the overhead may be higher, the advantages may outweigh the cost concerns.
How Much Office Space Will You Need?
When deciding what purposes you need your office space to fill, think about your expected everyday activities. For instance:
- Will clients be visiting your office space? If so, you may want a reception are, good parking, and perhaps a conference area.
- Will you have employee meetings? If so, you may want meeting rooms that have computer hook ups and other meeting options such as white boards, overhead projection systems, etc.
- Will any of your employees work from both home and office? If so, you may want central workstations where anyone can plug in while in the office.
- Will you be working as a team on different projects or to create different concepts? If so, you may want areas separate from employees’ offices where several employees can discuss and brainstorm without disturbing others.
- Will employees need to use the phone or be performing tasks that require quiet or privacy? If so, you may want to have private offices for these employees.
- Will your employees need a break room? If so, you may want a kitchen space.
- Will your business a loading and shipping dock area? If so, you will have to find space that allows for this. Also, consider future products that you are not currently offering but plan to offer later when making this determination.
Once you know what you will use the space for, you will need to determine how large the space needs to be.
According to OfficeFinder.com, in typical office scenarios, you can estimate 175-250 square feet per employee.
When determining if you need to lease or buy, you should look not only at the financial aspect, but also from a needs standpoint.
For instance, how long will you need the building and do you think your company’s need for space will grow.
For many small start-ups, the leasing option is the best since buying a building takes up a large portion of your initial capital.
Lease Issues To Be Aware Of
Many leases have something called an escalation clause. This is an annual increase built into your lease from day one.
The landlord accounts for inflation, market value increases, etc. These increases can be fixed or based on a percentage of the consumer price index. In most cases, these are negotiable.
Be sure to read the fine print. If you don’t, you may find that what you hoped to do can’t be done. Check for things like:
- Business hour limitations
- Alteration limitations
- Lease renewal restrictions
- Common area maintenance
- Administration charges
- After-hours utility costs
The most important thing to remember is that the lease is written for the benefit of the landlord, not for you.
Therefore, it is important that you read everything and have yourattorney read it as well.
Next Chapter:
Chapter 10 - Technology And your Small Business
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