You’ve finished your business license, got your UBI number and you’re ready to open your doors. Now for the big question: What doors are you opening? The one to your spare bedroom? The one leading to your basement? Or perhaps you’ve got keys to a brick-and-mortar storefront in town.
When I opened my business way back in 1994, I went with Door #1 – the one to the spare bedroom. It was a no-brainer, as it was the least costly option and I knew I had a lot of other expenses ahead of me.
Eventually, the company made its way to the basement as it grew, and the kitchen became the defacto conference room. That worked well, until the day our biggest client came to call. She was the CEO of a big real estate company in town and we were her agency of record. Usually, we went to her offices to meet. But on this particular day, she was passing by and insisted we meet at our home office.
I’ll never forget the expression on her face as we invited her to have a seat at our dining room, um, conference table. It was apparent that she was either uncomfortable or thought we were going to feed her. Though she knew full well that we ran our company out of our house, she hemmed and hawed as her eyes darted around the room, appearing more interested in our pirate décor than the subject at hand.
It was at that moment that I decided we needed to kick the company out of the house for good. If she was uncomfortable, we could only imagine what other clients thought.
Of course, there’s no shame in running a business out of your home. Hewlett Packard, Apple, Disney and Amazon all started out as home-based businesses, so you’re in good, even legendary company. But you do need to weigh the costs against the benefits, not only in terms of hard dollars but in customer perceptions.
Mindset. First, do you have what it takes to stay focused on building and running your business? Or are the refrigerator or television going to become irresistible and costly distractions?
Achieving a life-work balance. It’s easy to lose that all-important balance between work and home life. No business is 8 to 5 in the beginning, but you need to make sure that you won’t be tempted to check your email every hour to see if a big project got the green light.
Customer perceptions. Thankfully, coworking spaces have become the norm in this world of ours, so you probably won’t have to host your biggest client at the dining room table as I had to. Even if you run your business out of your house, consider leasing or renting space at a coworking location near you for meetings.
Space is important. You’ll be spending a lot of time in your new office. Make sure it is spacious enough to be comfortable and has the tools and quality furnishings you need to run your business efficiently. Never put your office in your master bedroom – it will become an unwelcome mistress.
Choose your words carefully. While you never want to lie about where your business is located, it’s O.K. to use brick-and-mortar terms to make your business look a bit bigger than it is. I referred to my garage as the “fulfillment center” and the kitchen was the “cafeteria.”
Advantages of a Home-Based Business
- You can run it part-time.
- There’s no commute to worry about.
- Startup and operating costs are much lower.
- You can set your own hours.
- There are home office tax benefits.
- You can work in your jammies.
- Family members can help out in a pinch.
Disadvantages of Home-Based Business
- Space can be at a premium, especially if your business and family are growing at the same time.
- Family life can be disrupted.
- It can be lonely at times. Isolation becomes a liability.
- Neighbors may file complaints if you have too many customers visiting your home.
- It can be hard to establish solid working-at-home patterns.
- You may run afoul of zoning or community HOA covenants.
- You are more likely to be audited by the IRS.
A place to call your own.
If you’re a growing company, the time will come when you’ll want to think about actual office space. This could mean a traditional bricks-and-mortar style operation, a coworking space or an office to call your own.
Before you sign on the dotted line, there are some things to consider:
Cost. Renting or leasing space is a big commitment. Be sure that you have an attorney review your lease agreement to see if there are any hidden costs or unusual clauses. You’ll also want talk about utilities, access, signage and parking with your prospective landlord and add these to your lease.
Safety and access. The lease terms may be too good to be true, but there may be a good reason for that. Make sure the local labor market can support your needs, and more importantly, ensure that your workers and customers feel safe and secure.
Expansion opportunities. Nothing is worse than locking in a lease for a space you outgrow within a year. Better to lease extra space in the beginning than try to squeeze into a space that’s a bit tight now, but will feel like a phone booth down the road.
Zoning. Double-check the zoning and permitting of the space to ensure that your intended use matches city or county ordinances.
Connectivity. What is the bandwidth like in the office? Who is the supplier? I once made the mistake of leasing space in a building that said it had cable connectivity. It didn’t. If it weren’t for a chance meeting of the VP of the cable company at an auction, I may have never had a single bar of service.
Whichever way you choose to go, make sure it makes sense to you. Remember, you can always change your mind down the road and transition to new digs as your company changes over the years. As my own company morphed, we went from a spare bedroom in our apartment into the basement of our next home, then on to an office overlooking the Port Orchard waterfront and finally to an 8th-floor villa in Florida with a killer view of the Atlantic Ocean. Not a bad way to spend 20 years of your working life.
In the Emerald City, still dreaming of that view from my Florida office,