When starting a company one of the most loaded questions is;
“When should I get my own office?”
Should you get it at once, should you wait until you want to start hiring?
When should you get your office?
In my opinion there is only one way to answer this question – when you get a positive Return on Investment from having an office. As soon as your increased income from having an office is more than the cost of the office it is time to find one.
How do you calculate the ROI?
First, you need to know how much the office would cost per month that is your baseline, the figure you need to beat to be able to afford moving into an office.
To calculate your increased income you have to take a lot of different things under consideration.
- Will you be more efficient at the office? How much more efficient? How much more will you earn because of that efficiency?
- Will you be able to invite customers to your office? How much of an increased income per month could that result in?
- What other added benefits are there from having your own office? How much money (quantify it) are those benefits worth.
If you are going to have employees you cannot invite them to work from your home.
Either you work without offices, letting everyone work out of their own homes, or you get an office.
- What are the benefits of letting your employees work from home?
- What are the benefits of having them work out of the office?
- What is the difference in monthly income for your company?
Now add all the different increases and decreases in income together, to calculate how much extra you will earn because you have an office, did the income supersede the costs of an office?
Then it is worth it!
What if you need to get an office long term, but in the short term it is a bad investment?
If you have properly created a business plan and your long term goal you might see that you need an office to reach your goals. If you by using the above calculation got the result that is wasn’t worth it to move into an office, you either made a miss calculation when calculating the value of the employees you could hire or you need to revisit your business plan.
If you are looking to get new offices with room to hire maybe 2 new employees and the value created by those 2 employees isn’t enough to sponsor the office, you need to find ways to increase your margins.
There is no reason to get an office just to have an office, the whole point of moving into an office is to increase your income and make more money.
If you cannot afford it?
You need an office and can calculate a positive ROI, but you cannot afford it, what do you do?
There are two things you can do, the first is to take a risk and get a loan so that you can afford your offices, the second is to wait, keep growing your business out of your home and when you have more money you move into the office.
That decision I leave to you.
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