One of the very first tasks any new entrepreneur is likely to perform is to start driving around town looking for the best office or warehouse space that is available for rent.
Right now you might think that you will be able to start small with essentially yourself and a couple of staffers… but what if your business balloons in size and you’ll need to accommodate a dozen, a score, or a hundred employees in short order? All of a sudden you’ll find that the 650 square foot office above a falafel shop that suited your company so well when you were starting out is now bursting at the seams and you need massive office space with ample parking and an upscale presence.
You don’t want to have to buy your way out of a lease
On the other hand, it is inordinately difficult to launch a successful new business in this stultified economy which does not seem to have shown too many signs of life since it fell off the cliff way back in 2008, so you have to face the reality that you might want to wind up the company after giving it a good try, and the last thing you need once you’ve burned through all of your company funding is to have to buy yourself out of a lease which is extending years into the future. Since commercial landlords are not usually amenable to month to month leases but like to secure their tenants for five years at a time or even longer, you could be facing a potentially huge payoff to bail out of the building.
Subleasing is not generally as easy or effective as it may seem as much of the current commercial office space is difficult to sublease and most contractual subleases leave you on the financial hook in a myriad of scenarios right up until the time of the end of your lease.
Start your business in a location free from additional real estate costs
You might be thinking “so I shouldn’t get an office that’s too small as I might outgrow it, and I shouldn’t get a lease that’s too long as I might have to break it, so where am I going to place my business, in a fridge box under a bridge?” The answer may be that you could start your business in a location which will allow you to not incur any additional real estate costs at all: Your own home.
Starting a business from home has become a very popular approach to achieve the American Dream, and the number of small companies which are run from the owner’s home has skyrocketed since the advent of computerized home offices and the ability to perform a variety of tasks which just a generation ago required roomfuls of equipment and staff.
Many municipalities place severe restrictions on home businesses
Not every business is suitable to be started from home and not every home is suitable to start a business in. Generally, the suburban detached homes with large lots and plenty of parking are preferable for the establishment of a new business, but large neoindustrial urban lofts have also become inordinately popular. All of this is a nonstarter unless your municipality allows the running of a company out of your own home, and you will find that many place severe restrictions on what you can and cannot do in residential zoning which might convince you to seek commercial space.
The type of business activity is also a powerful determinant of suitability for home location. If your business is primarily conducted via telecommunications such as phone and internet, the home might be a perfect place to start. However, if you require extensive manufacturing, packaging, or shipping and receiving, you’d best head for the industrial parks as your residential neighbors will not look lightly on stake trucks continually loading and unloading on their street.
The key words in real estate have always been location, location, location. Carefully consider the location of your new business and you’ll be well on the way to making a success of the entire enterprise!
About the Author: Hal Licino is a veteran freelance writer, award-winning author, and email marketing expert and consultant for Benchmark Email, a global event marketing service for small businesses. He has written dozens of articles on email and newsletter marketing, and he frequently contributes to a blog hosted by Benchmark email.