Our rent is $27,000 a month, and on top of that, we’re running out of space in our current office. So this week I wanted to talk about one of my least favorite things – office space.
Office space is a headache
I don’t like thinking about office space, I prefer to focus on growing the business and developing new software for business owners. But, if your business is growing, then you’re going to have to deal with decisions about which office spaces are best for your team, and all the headaches and costs that come with finding a good place for you and your team to work.
I wanted to share our office space history so that as you’re building your business you know what to look for and what to avoid. Helcim has had 3 (and a half) office spaces since we started, and I’ve learned different lessons from each one. Here are some of the main things that I have learned about renting office space so far are:
1. Stay in the garage longer
Don’t rush to move into your first official office space. It can be tempting to want to "legitimize" your business - and yourself - by moving into an office space as soon as you're able, but that isn't necessarily always the best decision. Instead, enjoy the time when you don’t have the responsibility of rent and salaries, so you can focus on just growing your business. If I had to do it again, I would rent out a house and turn the whole main floor into an office.
2. Long-term leases are a challenge if you're growing
Most commercial leases are for three to five years, so if you’re a startup that is trying to grow, you want to be cautious about signing on for a long lease for space you’re going to outgrow in a year or two. If you have a small team, I would also recommend you check out co-working spaces. Co-working wasn’t a big thing when Helcim was starting out, but it’s a great option if you want a more formal office space without being locked into a lengthy lease. While these spaces don't make financial sense if you're a team of 40 people, they can be a great idea if you're just starting.
3. Make sure you understand the lease
Once you start renting office space, you’ll learn a few things about commercial office space that are frustrating to business owners. One of the things I learned was about the Gross-Up Factor, the difference between the 'usable' area and the 'rentable' area in a building. For example, in our second space, our rent was for 900 sq feet, but approx. only approximately 500 sq ft of that was our actual office space. The other 400 sq ft came from the lobby, hallway, bathroom, and elevator. Depending on how efficiently your building is laid out, Gross-Up Factor might make a big difference in your rent. It’s also important to be aware of specific clauses that might affect your lease. Most leases include a clause that the landlord can ask you to leave if they are doing renovations. This happened to Helcim in our second office space, and we had to move after only five months.
|Office||Sq Feet||Cost Per Sq Foot||Operating Cost Per Sq Foot||Annual Cost||Monthly Cost|
|#1||500||$15 sq/f||$24 sq/f||$19,500||$1,625|
|#2||900||$15 sq/f||$22 sq/f||$33,300||$2,775|
|#3||4,000||$25 sq/f||$13 sq/f||$152,000||$12,667|
|#4||9,000||$19 sq/f||$14 sq/f||$306,000||$24,750|
* I approximated and rounded some of the figures to simplify the chart. There are also a few other costs including parking and amenities that are not included, but I wanted to provide a general overview of our office space history and to give perspectives on sizes and costs.
If you’re currently growing your business and weighing the pros and cons of moving into an office space, I hope this vlog gives you some guidance on the different things you should consider. There are a lot more options for startups looking for office space now compared to when I started Helcim ten years ago, so don’t think that you need a conventional office to be successful.
I’ve learned a lot of lessons with regard to office space as Helcim has grown, so this is going to be a multi-part vlog. Stay tuned for next week's episode where I’ll talk about our current space, what we’ve learned, and what our future looks like.
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