Startup Office: Basement, Leased Space or Virtual Office?

Startup Office: Basement, Leased Space or Virtual Office?

Aside from making a business dream into reality and putting together the funds to make it happen, the dreaded task of setting up a startup office can be yet another unwelcome hassle entrepreneurs have to face. Where you set up shop can have a big impact on your business’s budget, ease-of-access to resources and how customers ultimately perceive you.

Below, I’ll discuss 3 common startup office locations: basements, leased spaces, and virtual offices; along with pros and cons each can present for varying businesses.

Business Branding

You can also refer to this consideration as the perceived value society will place on your business as it relates to the location the business resides.

  • Basement: This works fine for a tech or Internet startup. However, when clients or investors do a quick Google search on your business address and zero in on the street view of your residential address, confidence in your product and services can quickly be lost.
  • Leased Space: An official place of business is always a good sign to customers that you aren’t some 30-something living in their mom and dad’s house! However, location selection isn’t always the greatest, especially if new developments are limited where you do business and all the good places are already taken up.
  • Virtual: You’ll find virtual offices in all the major business centers of the world. While you do need to complete your research on the addresses you consider (to make sure they’re not seedy dumps), it’s easy to shop around with the various providers to find a place that will boost the perceived value and overall standing of your business.

CEO office

Cost Considerations

Cost is always a concern when doing business, but trying to save on location costs can easily backfire.

  • Basement: Aside from setting up a hot dog stand on the side of the road (outside the view of law enforcement), you can’t really beat combining your living expenses and business overhead in one central location as far as cost is concerned.
  • Leased Space: I have no idea where you’re located currently, but commercial office space is at least triple what you’ll pay for a rented apartment in a city center or suburb. Not to mention requirements to pay (non refundable) months rent in advance, insurance costs, and overhead. Rates can go up anytime, and you’re at the mercy of the property owner if they decide to kick you out and turn the place into a yoga studio!
  • Virtual: While this might sound biased, you can actually rent a virtual office anywhere in the world starting around one-hundred-dollars monthly. Most providers offer added options like a virtual receptionist, message and mail forwarding, access to office equipment when you visit, and an official address and phone number you can put on your website and business cards.

Employee Meetings and Work Areas

Your employees need to have a place to work and actually feel like they can hold meetings and work in a professional environment.

  • Basement: The phrase “professional workplace” and the word “basement” do not go together. Nothing like showing up at the boss’s house while they’re changing a kid’s diaper and having to await work instructions.
  • Leased Space: This is an obvious improvement over a basement business, and any factors that would make it undesirable for employees are under your control such as amenities, quality office equipment, software to make their life easier, parking availability, and a quality office water cooler and coffee machines.
  • Virtual: While virtual implies that the office is “make believe” most packages offered by providers offer varying access to your office and also provide meeting facilities you and your team can use, VIP lounges for you and your clients, office equipment to get work done with, and access to varying levels of amenities.

Who Checks the Mailbox?

This will apply mostly to one or two-person startup teams, but it’s still worth considering.

  • Basement: Maybe you can shoot up to the mailbox whenever you feel like it, but what about important packages and unexpected special deliveries? What if you step out and there’s nobody there to accept, or the delivery person drops a package on your doorstep and it gets stolen?
  • Leased Space: If you work in a professional building with a receptionist, mail and packages are sure to be received each and every time.
  • Virtual: The advantage with renting a virtual office is that mail will arrive and a virtual receptionist will receive it and forward it to you if needed.

Clean office space

Office Management

Somebody needs to manage the office.

  • Basement: Hey, you’re on your own kid! If you’re working in a basement, it’s likely staff and the responsibilities they bring aren’t going to be much of a factor. In fact, there isn’t much to manage in your home office other than keeping it tidy and keeping your equipment up to date.
  • Leased Space: While the landlord will be responsible for much of the maintenance around the office, leasing still presents an additional dwelling place you have to manage. Things like hiring a cleaner, scheduling maintenance, calling the plumber when the pipe’s burst in the winter, changing the toner in the printer, and even simple things that take up added time like making sure the coffee pot and water cooler is always full.
  • Virtual: Virtual offices are where you literally pay to play. Everything is taken care of, provided you pay your bill. There’s nothing to manage, and providers often offer access to other things that save you time and resources such as a receptionist, and access to virtual assistants and customer and technical support staff to man your phones as needed.

Weigh Goals and Immediate Needs Carefully

As you’ve likely noticed, there aren’t many drawbacks to using a virtual office for your startup. If you’re running super-lean currently and still trying to get a fresh product to market, your home (or parent’s) basement might be the only option until more funds roll in.

However, this still may not be the option that works best for you. Do keep in mind though, that location and reputation are synonymous in most industries, meaning that a physical business address separate from your home is almost always the best option unless you’re an online freelancer of some sort.

If you have a large team that needs to be centralized for a large portion of each business day, a virtual office can be more expensive than a modest commerical office space leased by the year, making this a more viable option. If this isn’t an issue and you and/or your team is on the fly most of the day, and merely need a place to meet quickly and an official address to register your business, a virtual office is the obvious winner.

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