Home Office Vs. Leasing An Office Space

Everyone who is starting their own business has one fundamental decision to make.  Where are you going to do all your work?  This decision will have an effect on almost every aspect of your business and personal life.  Let’s examine some of the pros and cons of the business location.

The easiest and most cost effective solution is to work from home.  This may be an option for you and then again it may not.  If most of the services are performed at your client’s location then this could be a no brainer.  You probably don’t need an office or physical location, at least to start.  Here are some of the pros and cons associated with setting up shop at home.

Pros of working from home

1. No commute!  You’re at work when you’re at home so there’s no travel time or travel costs.  You would have travel costs when going to the clients and performing the service you’ve been hired for.
2. Lower costs.  Using the home as your place of business saves on many redundant costs you would otherwise have.  There’s no rent (unless you chose to pay yourself rent), no duplicate utilities and you might even be able to use your home phone for the business (check with your phone provider first).
3. Flexibility.  Remember this from the 5 signs worksheet?  You can work when you need to or take time to get other things done if necessary.
4. Dressing down.  Working from home, especially if you’re performing a remote service, means you don’t need to spent lots of money on suits or nice clothing.  However, you will have to dress appropriately when going out to meet clients.
5. Child care.  If the business is one that provides the appropriate flexibility then you might be able to care for your children at the same time you’re working.  This might work or it could prove to be a little tricky.

1. Distractions!  This is certainly the most dangerous thing when trying to work from home.  Is there anything good in the fridge right now?  I can run this laundry and work at the same time.  The child care in ‘pros’ above could be a big problem depending on you and your child.  It’s also easy to talk yourself into sitting down in front of the TV for just a few minutes instead of doing what you’re supposed to.
2. Isolation.  Many people find they need the personal interaction with others in society or the office to feel fulfilled.  You may be someone who needs to interact with others daily.
3. Do you have the motivation?  Being in an office setting with other people can sometimes drive you complete tasks that need to get done.  Being at home by yourself with no deadline could mean the work will take much longer to complete.

Some business types may not even give you the option of working from home.  Selling cabinetry or design services may dictate that a showroom is required.  Other business types require large amounts of space to store supplies.  It might not just be inventory; it could be tools or displays that won’t fit in your garage.  Some service businesses need to manufacture things large or small that would make the use of your home impractical.

Another person with whom you should discuss this decision is your spouse or significant other.  They may dictate that you can’t work from home because of storage or distraction issues.  As with any major decision regarding your business you should check with your loved ones to get their feedback.

When we started our small business it was important for us to have an office.  It wasn’t much at the time; it started out as one room with a single desk and computer.  Eventually it grew to multiple rooms with office staff and a showroom.  We made the choice not to primarily work from home.  We wanted to be professional and weren’t prepared for the distractions of home.  I’m the one that always feels like he should be doing laundry or multi-tasking with something else around the house!

Just like the benefits of working from home there are benefits to having an office or warehouse space.  Here are some of the pros and cons associated with buying or leasing space for your business.

1. Focus!  Having a place to go and work away from all the distractions of home can be very important to some.  I know I can focus much better away from the distractions of home.  For some this could be as simple as going to a coffee shop or library to finish something important.
2. Equity investment.  If you buy your office or warehouse space it can become a great investment vehicle.  The business can pay you rent and you have the benefit of an appreciating asset on your personal or business books.
3. Real identity.  Having a bricks and mortar office gives your business credibility and an identity.  There is a business mailing address and depending on the location you may have a conference room to meet with clients.  It’s always nice to have a place to meet clients and show them you’re professional.
4. Safe haven.  Having an office location means you can better separate your personal assets from your business assets.  If you are sued and have a corporate structure then it is more likely that your home would be protected from creditors.
5. Everything’s in one place.  Having an office means that all the files and items needed to run your business can be kept in one central location.  If you work from home and everything doesn’t fit there then you have to have separate storage space to keep everything or a post office box for your mail.  Having one location for everything means that you only need to go one place to find anything.
6. Employees.  If you need to hire people for your business it’s almost a must to have an office.  Bringing employees or clients into your home can be uncomfortable and difficult to deal with.  Your house would always have to be picked up and clean to avoid embarrassment.

1. Overhead!  This is a dreaded word for most business owners.  Overhead means that you have fixed recurring costs you need to cover.  Having an office means that your sales have to increase to cover the cost of having this space.  If the office is required no matter what then it’s not a question.  You may have the option of starting from home and then working up to having an office as revenue increases.
2. Drive time.  Similar to the pros of working from home.  If you have an office you need to get there.  This means travel time and costs.  There’s also the stress factor of driving to work and needing to get there early.
3. Overtime.  Working in an office with deadlines may mean that you have to stay late or get there early to get things done.  Working a little extra time at home could be easier when you have a few minutes to spare.

Whatever you decide about having an office make sure you carefully consider your options.  Everyone has different priorities and personalities.  Some people will have no trouble working from home while others could set themselves up for immediate disaster!