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Leased or serviced office space – which is the best fit for your business?

December 16, 2016

Your new venture might have first spread its wings in the comfort of your own home, but most start-ups need to fly the nest at some point.

Whilst sending emails from your sofa in your onesie undeniably has its charms, there comes a time when moving your business forward requires giving it its own four walls.

Moving into a proper office can make what you do seem a whole lot more real – but it’s a daunting move to make, and with more options available than ever before, it’s unsurprising that many small business owners make the wrong decisions, or delay the move from home entirely.

To help you choose the best route for your business, we compare the more traditional option of renting an office on a commercial lease and the serviced office option. We look at what each one gives you and highlight the benefits and drawbacks of both, so you can come to the right decision.

Aside from some of the more avant-garde office options available (shared office space, co-working, and the ‘virtual’ office to name a few) those looking to house several employees under the same roof should weigh up the choice between a conventional leased and a serviced office space.

Balancing the pros and cons of a traditional leased office against a serviced office space

A serviced office is fully equipped and managed by a facility management company, which offers relatively flexible and simple rental contracts, with the added advantage of having all essential amenities in place, such as phone lines, internet connections, and often even furniture.

On the other hand, a traditional office space involves leasing the office from a commercial landlord, and typically involves a medium to long-term contract, typically of at least three years. As the tenant you get full control over space, but are also responsible for its upkeep.

Although they may not sound worlds apart, there are important differences between the two, with each one suiting a different kind of business, with different needs, and often at a different stage of its growth.

Here are the 4 questions you should ask yourself to help you weigh up which office space suits your business best;

1. What’s your budget?

With the cost of office space higher than ever, one of the first questions for any company looking for a place to call home, especially in its infancy, is what will the damage be in terms of rent?

Conventional leased office space is generally the cheapest way to rent a commercial property. By comparison, the luxury of having everything taken care of in a serviced office will often incur considerable additional costs.

The cost of a serviced office should include Internet and phone bills, cleaning, heating and lighting, reception, security and maintenance, redecoration and refurbishment, and for this all-inclusive service you’ll be paying a premium.

However, whilst you may end up paying more in the long run, for an SME, the flexible nature of contracts with a serviced office mean there’s far less financial risk involved should you enter into any difficulties, with all that’s required being a payment of the minimal rental period, usually of around three months (although it is worth noting that some serviced office contracts will tie you in for as long as a year).

Additionally, in moving into a serviced office, there are little to no start-up costs.

2. What do you have more of: time or money?

Whilst a leased office space might cost less on a per desk space basis, there’s certainly a lot more hassle and time required than going into a serviced office.

Even before you’ve moved in, there’s a huge amount more paper work required, and the long-term nature of the contract requiring legal advice, and going through with a fine-tooth comb.Virtual office

And then there’s the time spent setting up shop. Phone lines, Internet, electrical power and other utilities need to be sourced, and contractors need to be arranged.

Conversely, a serviced office provider will already have these things in place by the time you move in, allowing you to concentrate your time and energy on your business from day one.

Even after you’re all set up, having a conventional leased office will involve setting aside time for general upkeep.

Commercial tenants have far more responsibility towards maintaining the building than residential tenants, and if something goes wrong, the ball is often in your court to resolve it.

This can be anything – from a leaky roof, to general redecoration, to a poor Internet connection – all of which would be sorted by the office provider in a serviced space, making it a much more time efficient environment

If you are willing to spend a bit more money in order to save considerable time, perhaps a serviced office space is a better fit for you.

3. What stage is your business at and do you foresee change or growth in the near future?

This again goes back to the long-term vs short term choice.

A conventional leased office space can work out cheapest on a per desk basis – but might only make sense if you’re not planning on expanding any time soon, unless of course, you are leasing a place big enough to expand within, which is certainly something to factor in.

If you’re a start-up or small business, the short-term nature of a serviced office space suits the potentially uncertain future of your business – maybe in six months you’ll see huge expansion, maybe you will downsize, maybe it will make more sense to relocate to a different area, or, at worst, maybe your venture won’t work out.

In any of these instances, a contract of three years plus will only act as a burden, curtailing any development and change, and potentially landing you with a broken contract or lost deposit if you cannot keep up with the bills.

A traditional leased office is, therefore, best for businesses that have secured and established plans for the immediate future, including any possible expansion. It’s imperative when choosing an office space to factor in your plans for growth.

4. Where will best suit your brand’s image and identity?

It goes without saying that your office should reflect the character of your business. While a leased office space might involve taking on a lot more responsibility, with this comes a greater control over the space and freedom to make it your own. This is often the primary reason people opt for a traditional leased office space, rather than a serviced alternative.

However, a serviced office can certainly help build a professional image for smaller businesses, with the added bonus of reception services and meeting rooms creating a slick presentation. There might be less scope for creating a truly unique environment – but for a business still in its infancy this is less of an issue, as it is likely that the brand is still evolving.

Weighing up these factors

All in all, when it comes to choosing an office, it’s not just a simple case of looking at your budget.

There are no hard and fast rules for which type of space is the cheapest, with the limited up-front costs for a serviced office space often counteracted by the premium you will pay on rent each month. Even this isn’t set in stone – you may find that in certain locations, a serviced office space is actually the cheapest alternative.

It’s a matter of making this difficult transition itself as smooth as possible in all other respects as well – examine the demands on your time and which option is the most efficient for you, the stage of your business and your plans for growth, and crucially, and the identity you wish to create and present.

Weighing up all of these factors will allow you to find the most suitable home for your business.

About the author

This guide has been written for ByteStart by Peter Ames, head of operations at OfficeGenie.co.uk, the UK office search engine uniquely designed for small businesses and freelancers.

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