Yaneek Page | Entrepreneurs: Four questions to consider before renting office space
QUESTION: I must first congratulate you on the good work you have been doing to help entrepreneurs in Jamaica through your TV show, on radio, and in the newspaper. I have followed a great deal of your advice from the relationship with my credit union to fund my business to customer things I never knew before. This is my first time writing you for help. I closed my small office and moved everything to my home in 2017 because the rent was out of hand. At first it was hard, but we have got into the hang of things, and slowly, it turned around. It was two years of struggles just to pay rent, all the bills, and my two staff, but when I moved home, it eased the pressure on me. It was uncomfortable. I now learn to pay myself a salary, thanks to your advice, and I don’t have to be running around trying to [pay] my workers come month end. Now, I am thinking that since things are improving, we can rent space again, but I want to know if you think I am doing the right thing.
I have called around and visited some commercial spaces, but the cost is much more than even in 2017 when I moved my business home. I actually found a place, not ideal, but it can work. However, the landlord wants a minimum two-year lease with at least six months’ notice if I want to get out of it. So now I am very nervous and questioning myself. Do I sign this lease, Yaneek?
Businesswise: I’m so glad you have found this column useful and that the advice has helped your business. Unfortunately, you didn’t share what type of business, the main services offered, and how you changed your customer interface since moving home, and so on. Without this important context, I can only provide some general guidelines and considerations for renting office space. Here are the top four questions every entrepreneur should ask before making the decision to establish a brick and mortar workspace in this new digital age:
1. Is it Mission Critical?
Every business should have a clear understanding of why it exists, who it serves, and how it needs to execute every day to deliver that ‘why’. These key elements of your mission statement also help you focus on organising your operations and resources around what matters most. The question for you is whether a commercial office space is absolutely critical for your mission? If it is, then you should create a requirements checklist for this space – perhaps location, layout, parking, accessibility, security, and so on. If it is not mission-critical, as in, if you can achieve your business mission, then why are you doing it? Why not go completely virtual?
2. Will It Make You More Expensive?
Remember that with the new office space comes added cost, which will need to be passed on to the customer. You need to carefully consider whether this investment in office space will enable you to increase revenue to cover all the associated expenses and result in increased net income. You will need to do financial projections such as a comprehensive budget, projected income statement and cashflows for at least the two-year minimum of the lease period. In addition, I want you to consider an issue many entrepreneurs do not: will this make you more or less competitive within your industry and to what extent?
3. Does It Add Value to Your Customer?
I noticed that you have been silent on the customer experience and whether this potential move would add value to your target market. This is the crux of the matter. It is not just a cost issue – but cost relative to the value, real and perceived, to your customers and whether they will be willing to pay for this. Many entrepreneurs make the costly mistake of investing heavily in brick and mortar outfits which add no value to their customers and therefore gives no strategic advantage over the competition.
4. Can You Manage?
Many entrepreneurs don’t realise that the build-out and maintenance of a new office space is work. Someone has to clean the office; maintain equipment; order toiletries; stores and supplies; pay the bills; manage the relationship with the landlord, property manager and even other tenants, etc. The question is, who will take on these additional tasks and at what cost? If you have to dedicate time to office management, then you will have less time to spend on strategy, business expansion, customer experience, sales etc. Remember, business success is intricately connected to effective leadership and management, that is, ensuring that the organisation is maximising all its resources, to extract the highest and best return at all times, in pursuit of the business mission. Good luck!
Yaneek Page is the programme lead for Market Entry USA and a certified trainer in entrepreneurship. She’s also the creator & executive producer of The Innovators and Let’s Make Peace TV series. Email: Yaneek.firstname.lastname@example.org