There’s a moment that inevitably happens in every transitioning company. You’re in a coworking space and for the third or fourth time this month, someone has taken that conference room you were waiting for. Do you need to start thinking differently? Perhaps your team has grown too large to properly accommodate the hot-desking situation. Or perhaps you’re just tired of having to explain to your clients why they’re meeting you in a lobby filled with ten other companies doing the same.
Making the leap from flexible working situation to a leased office feels like a greater decision than it should be. But it is. Because if you’ve made the decision too soon or too late, you’re throwing money away either way.
When the Numbers Start Adding Up
The first thing many people notice? The bill. For co-working spaces, billed per desk, when you have a staff of 8-10 and your brain starts doing the math of what renting an office could be, your mind starts wandering. Perhaps a dedicated space would be cheaper.
The break-even point ranges from business to business, however generally it’s between six to twelve people. Anything below that is statistically more favorable in numbers to co-working. Anything above that status quo, and the math starts getting interesting. Somewhere between $500-$800 is the average cost of a co-working desk in a decent location. When you multiply that by 10 people, you’re at $5,000-$8,000 monthly. At that point, many markets allow you to rent an actual space for that cost – sometimes less.
But the decision isn’t just based upon static rent numbers. It’s about what you’re getting (or giving up) elsewhere.
The Flexibility Dilemma
Co-working has always positioned flexibility as its biggest selling point. Month-to-month terms, no long-term commitment, the ability to increase or downsize without being stuck in a three-year lease with penalties. This is imperative when you’re still finding your footing.
Private office leases do not work like this. Lease assignment means at least one to three years – with possible higher stakes depending on the landlord. If your business begins to fail or pivot mid-way, you’re stuck paying that rent for that space regardless. This fear keeps growing teams in flexible situations longer than they would.
The issue with flexibility is that it costs money. You’re paying a premium to have that option every month. For teams feeling somewhat stable with projected revenue numbers within the next 12-24 months, the added fee-to-fund that’s unnecessary for now feels unnecessary. Companies exploring offices to let find that committing to a longer lease drastically changes the per-desk equation – especially in competitive markets where landlords are willing to negotiate multi-year terms.
What Really Makes the Decision
Talk to enough bosses who’ve made the switch and you’ll discover a few common themes that pop up over and over again. While cost is certainly a consideration, it’s rarely the overarching theme.
When your team gets larger, privacy becomes an issue. Sales calls all day long? Confidential meetings? Conversations amongst team members that are general business necessities that they’d otherwise have in their office? Shared space becomes problematic. A private office situation alleviates this immediately. You can have those tough conversations. Make those calls. Leave project materials strewn across the desks without fear of prying eyes.
Branding matters more than business owners might realize. There’s something about having a space with one’s name on the door (or at least on the directory) that makes potential clientele or new hires perceive stability in a way that “we’re on the 3rd floor at WeWork” just doesn’t do. In certain industries it’s more important than others; it’s nevertheless surprisingly common.
Storage and equipment needs matter. Co-working spaces give you a desk, and maybe a locker if you’re lucky. If your business operates beyond than just computers on desks, it becomes problematic. Designers with samples, consultants with physical collateral, tech companies with servers or equipment – all of that stuff needs to go somewhere and “somewhere” usually means paying for additional storage – which no one wants – or keeping it at home, which ultimately doesn’t work long-term either.
The Culture Factor That’s Not Talked About Enough
This one is subtle but an important one. The constant presence of people in co-working spaces nearby means your team is always sharing physical space with other companies and while that’s excellent for networking and creates cool energy, it unfortunately does not create an effective environment for company culture.
When you move into your own office, now your space is just you and your team. There’s minimal interference or imposed culture by others unless you bring it upon yourselves. You have control of noise and distraction levels as well as vibe. You want to have a team meeting? Do it at lunch. You want something on the whiteboard overnight? Go ahead and leave it there. You want music playing or dogs present? Who’s going to tell you otherwise other than yourself?
Many businesses value this cross-corporate mixing; others, as they grow, find it too distracting. Neither side has any right being right or wrong but it’s critical to analyze what would foster the best environment for work.
The Logistics That Surprise People
If you’ve never leased office space before, there are potential pitfalls that surprise people. First and foremost, most office leases require first month’s security – sometimes multiples months’ rent of security all together. This is cash-in-hand up front – definitely not something you’ve had to do month-to-month in other situations.
Then there’s buildout consideration. Most offices are bare bones. You’re going to need furniture, internet set up, basic improvements – none of which co-working spaces require you worry about. Most assume everything’s taken care of for them and it isn’t the case for offices. Plan for this – and plan for time because set up takes longer than expected.
Utilities and maintenance get covered differently as well – everything is included in co-working space covered under desk costs unless someone requires additional help; private office space utilities mean you’re responsible for electricity, internet, cleaning as well as possible water and heating/cooling needs instead of a set fee all billed equally as desk costs are monthly.
When It’s Clear To Make The Call
Usually there’s an innate feeling about readiness – so it’s crystal clear whether or not making the call needs to be made at a given point even if people can’t articulate why they’re ready just yet.
It’s often circumstances like employee/team growth size, financial stability, operational needs and just general momentum felt from desire established that makes sense as time progresses more so than expected need.
Timing doesn’t have to be perfect either; if it is, you’re probably waiting too long and extending your inefficiency in a system that’s no longer working for several months longer than you’d like; however, jumping without strong revenue streams cemented doesn’t give confidence either and puts unnecessary pressure with previous commitments down the line.
Start looking about three-to-six months before you’d ideally like to move into your space; using time exploring options before where you’re desperate and there’s no time left before wasting other people’s time can avoid a situation where you find yourself begging for help.
It isn’t necessarily about size and growing UP – it’s about realizing you’re at a point where larger confines make sense over flexibility that’s no longer necessary – a blend of those moving parts will be assessed relative to status quo when it’s time to make the switch!
