Lean startups: Office space for the 21st Century Mike | April 25th, 2011

When starting a company it is important to figure out not just how the team will work together, but where the team will work together. Lots of factors will drive this decision, including what type of company you’re launching, who your customers are, how large your team will be, what your budget is, and where in the world you plan to start your business.

Today there are tools galore which enable a startup to work smarter, faster, and cheaper and these too will color your decisions about your physical space. But good planning, a flexible vision, and smart budgeting can go far in helping you to save money, build and retain a strong team, and create a great working environment.

Here are 10 things for you to consider as you start the hunt for space:

1. What kind of company are you starting?
The first question you’ll need to answer is a simple one: what kind of business are you in? Are you a B-toB? B-to-C? If you are a professional services business with constant client visits, your needs will be very different from the retail business down the street. Consider what your business does as you consider what kind of space (and how much) you’ll need.

2. Who are your customers?
Your physical space (or lack of one) should be reflective of your customers and their needs. If they are consulting clients, they will probably prefer for you to visit them. Alternately, if they are dry-cleaning customers, they’ll probably want to stop by for drop-off and pickup of their garments, right? The location of your physical space should also be chosen with customers in mind; the dry-cleaner is a good example of a neighborhood business that absolutely must be in the neighborhood, while the software company can probably located wherever you care for it to be.

3. What exactly are you selling?
Services? Clothing? Electronics? Digital goods? Do customers ever need to visit your office to receive your offering? Do they take delivery of physical goods? Do they need face-to-face meeting with you or your staff? Alternately, will they communicate with you by phone, by email, or by sending packages via a messenger or delivery service? A software business offering downloads of product should need much less physical space than an accounting or tax preparation firm offering client consultation and this is an important driver in your decision process.

4. How large is your team and how large will it be three years from now?
Have a vision for where you will start and where you are going. It s equally important that you understand the team in year 1 as it is in year 5, so do your homework and plan for a level of growth that makes sense for your business. Once you have gone through that exercise, do the next one: forget everything you just figured out and plan for it to be different. This thought process should be reflected in your lease; try to build in an “out” clause that allows you to cancel the lease after a certain amount of time. for instance the lease we negotiated with our own landlord is a 5 year agreement, and gives us the ability to cancel the lease after 3 years as well as right of refusal on adjacent spaces should our growth be faster than we anticipated. In other words, be agile in your approach and have your office choices reflect that agility.

5. What is your budget? What will it be in 3 years?
Think hard about your budget and consider how this significant expense will impact over the life of the lease. Rent is typically one of the largest line items in a budget, and you will need to carefully consider how much you will commit to paying. A good rule of thumb is that your rent should not exceed 30% of your gross sales, and if you are approaching that number, you should probably consider alternatives. For some companies, buying a space might be an option and if you think that the investment is justified and you have faith in the real-estate market, you might consider this as an option, too.

6. Where will your team come from?
Remember that not everyone will live in the neighborhood and you should consider convenience and transportation when you are deciding where to locate your business. Is there public transportation available? Parking? What about bicycle access? How far out of the way is the new office? It is important to bear these details in mind as you consider location and your employees.

7. What’s for lunch?
Amenities are important to your workers (and to you) and you should take into consideration neighborhood features – good restaurants, banks, parks, and other neighborhood features and services are important to them, so should be just as important to you. Remember that you are trying to attract and retain talented, hard-working people and the more you can offer the more likely you’ll succeed.

8. How important is it that everyone be together every day?
Lots of workers today prefer a flexible schedule which allows them to work from home or come into the office and allows them to have some control over the hours they work. Plus many high-tech and Internet companies are increasingly international and may have team-members distributed around the world. So ask yourself whether you all need to be in the same place and, if so, how often? With a team of 20, you may find that only 10 will ever be in the office at the same time; in this scenario you might ask yourself, why rent 2,000 square feetwhen you can get by with 1,000?

9. What features do you really need?
Think hard about the specific features you need for your business and back into your office space accordingly. For instance do you need a conference room? Showroom and display space? Storage? Massive server room? Along with employee headcount, these will be the most meaningful drivers for determining your needs.

10. Do you really even need an office?
Finally, consider whether you need an office at all. With the productivity tools available to us via the internet, with cell phones, laptops, and other connectivity tools, can the truly virtual company work effectively and prosper? There is a distinct advantage to the “virtual office” and with Starbucks on every corner, and meeting spaces available to rent by the day, why not consider whether you really need to rent space at all.

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  • http://twitter.com/dhb7 davidhbigelow

    Great thoughts. We ended up going with Regus after doing our own brick and mortar for the previous 3 years. Regus has offices all over the place and the pricing was right – but they can nickel and dime you on the details. But if you are savvy about it – you can save a lot of money and time by using their turn-key approach. Also – they are flexible for timeframes – you can get something month-to-month or a longer term relationship.

  • Mike

    @davidhbigelow – Thanks for mentioning Regus; shared space and shared resources is a strategy that many startups (in particular) choose. It makes a ton of sense when resources are limited and needs are modest. I have even visited companies that use shared space to entertain clients and it worked beautifully!

  • mike_samson

    @davidhbigelow – Thanks for mentioning Regus; shared space and shared resources is a strategy that many startups (in particular) choose. It makes a ton of sense when resources are limited and needs are modest. I have even visited companies that use shared space to entertain clients and it worked beautifully!

  • Albion Colt

    To accommodate growth and the changes
    of the new market you may have to start looking for a new office or retail
    space. Times change and focus points in your business strategy may change as
    well. There are a lot of factors to take into account when searching for new
    office and retail space, but one of the key factors to consider is who your
    property management group will be. There should be enough windows for clean fresh air. The
    office should be easy to access, in a safe environment and with enough parking
    slots. Aside from your clients being able to access you with ease, remember
    that you will have staff that will need to come to work everyday.

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