If you are about to sign to a long term lease, you will need to carefully calculate your space requirements. You need to allow for spaces you don't use very much, like a boardroom, staff lunch room, reception area, bathrooms and there will be connecting spaces like hallways. Then you must allow for business expansion and subsequent growth in staff numbers.
But what if this current recession is longer and tougher than predicted? What if the staff you need to retain now, or hire in the future would prefer to work from home much of the time? How much space should you sign up for? If you have taken too much space, how do you down-size without taking another business into an office that wasn't designed to be shared? The old rule of thumb of 10 sqm per staff member (which allows for expansion) may be way too much, or way too little depending on your business trajectory.
If you can sign for a shorter time, what happens if the landlord wants to re-develop your space? Or a larger tenant in the building needs your space? Are you ready to move on after just two years, with the upheaval for staff and customers that brings? Or what if you expand so fast, you need to move out in a few years and sub-lease out your old space, often at a loss?
If you sign a personal guarantee and should your business fold, not only have you lost your company but your income, and have a large personal liability you now can't cover. Having a limited liability company won't protect your family home or other assets in this case. This highly stressful scenario plays out all the time, especially in recessions, leading to bankruptcy, mental and physical health issues for the owner(s).
Lester Bryant shares personal experiences in this Stuff article by Rob Stock. And Lester's book "Going Broke" details how badly things can go and how quickly, when you are locked into high fixed cost commitments.
But it doesn't need to be that scary, there is a modern alternative for business owners that avoids all these uncertainties and risks. It's called a shared space, and in the case of Hastings HIVE, we provide dedicated serviced offices for SME business. And for small business or start-ups, we provide co-working desks.
You only pay for the space you need. Expanding? Take the interconnecting office next door. Need to down-size? Simple, move to a smaller office or a dedicated workstation in our co-working area.
As well as getting an affordable workplace, you will also get the best of what an office should have with fantastic break-out spaces and meetings rooms, superior internet fibre connectivity, luxury style bathroom with showers, and a well equipped kitchen/cafe with free espresso coffee.
No leases, no guarantees required.
Book a tour here: Reserve your shared space
And read about the editor's own struggle with an inflexible property lease here: