Would An Office Be A Financial Commitment Too Far?

When we start businesses, most of us do so using basic supplies and home offices. Thanks to technology, in fact, it’s now possible to take things further than ever without needing to leave home until you’re well into your enterprise. But, for the sake of appearances and satisfaction, most entrepreneurs are keen to move into a stable office space as soon as possible.

This makes sense. Let’s face it; there are only so many boxes of products that you can keep at home. Not to mention that you can’t run things on your own once they get going. But, that’s not to say that you should rush into renting or buying an office before your finances are ready.

The fact is that there’s no need to push your profits for this purpose anymore. Even when working solo in your home office becomes challenging, options like remote work and even a short-term coworking space could be a better choice. These allow you to expand without tying you down to substantial monetary commitments before you’re ready. As such, they could be the way forward if you’re falling foul to the following financial commitment issues.

Your income is still unpredictable

In the first months of business, it’s normal for income to fluctuate. While profit margins and market predictions can help, they’re by no means a guarantee of income. Even if you receive significant profits one month, you may struggle to break even another. This is mostly nothing to worry about, but it is a sure sign that committing to an ongoing financial burden should be off your cards.

Before you’re even eligible to rent an office space full-time, you’ll need to prove that your finances can cover costs. Even if you were accepted as it stands, managing rent every month could soon start to eat your profits. That’s a strain your company doesn’t need at this early stage.

Instead, you’d be better off waiting until your finances levelled out. That could take a year or more, but there will come a time when you can largely predict your base profits. When that happens, you’ll be in a better position to see how much of your earnings you can spare towards an office. You’ll also be able to rest easy that you can always meet rent without worry.

You’re still in debt

No matter how good your income, you should also avoid a financial commitment like this if your business is still in debt. While technology has gone some way towards reducing start-up costs, there are still hefty sums attached to most enterprises. As such, many business owners take out loans to cover early expenses. There’s nothing wrong with that until you think about adding the cost of an office on top of your repayments. Then, you may find that you’re in a much worse position for paying back that loan fast. And, that leaves at risk of extreme interest.

That’s why it’s always worth paying off business debts before committing finances elsewhere like this. That way, you’ll be able to take control of your profits sooner, as well as ensuring that you pay minimal amounts of interest, leaving you free to pay for your office with ease.

Your team is still small

It may seem logical that a small team doesn’t need a large office, but it’s surprising how many entrepreneurs fail to consider this. Instead, they focus on providing an area which will suit the future that they see for their enterprise. The trouble is that smaller teams bring smaller profits. And, those small profits could see you struggling to cover the costs of utilities within your office, let alone your rent itself. Even if you did manage to scrimp and save for the purpose, stretching yourself here would mean wasting money which would be much better focused elsewhere. Instead, it may be best to look into coworking spaces with weekly rental costs, or even just building a remote team to ensure that there will be enough people working in your new office to justify and comfortably cover those costs.

You’re growing at a fast rate

Most of us know that it’s important to consider growth rates before making any financial commitment. But, in the majority of cases, we’re wary of slow growth. When it comes to renting your first stable office, though, it may be best to look out for fast rates of growth, too.

New businesses which see success often grow at an incredibly fast rate. While there’s no denying that this in itself is positive, it can lead to issues if you rush into things. That’s because this fast rate can be pretty tough to keep up with. It may be, for instance, that your employment levels have to double within the space of a year to keep up with demand. And, if you’ve already gone ahead with an office space, that could see you having to consider yet another move.

Aside from being costly, a relocation like this can actually increase the chances of failure which any company faces. That’s because it could mean losing customers in your current location or even falling under the radar yet again. Let’s not forget that moves like these also often mean downtime which a new business could do without.

If growth is fast right now, then, the best thing might be to hold back on signing any official leases until things have settled down a little. That way, you’ll be able to invest in an office which is large enough to cater to your company, without having to think about the potential disasters which relocation could bring.

It’s normal to feel as though you need to rush into investing in an office space. But, doing so could undo your company before you know it. Instead, take the time to assess your finances from every angle. Even if you can’t afford this commitment straight away, that should be enough to see you setting a date to rent an office in the future.

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