Is it worth it to spend money on office space for a software start-up?


37

I am working on my small software startup from my home office (Austin, TX). I have been thinking about the possibility of getting some office space or even shared office space at places like

Is this a good idea? Can you actually get work done with people sitting right next to you, etc.?

The reason I believe an office "might" be a good idea is because of the benefits you get from it such as a place to invite clients to, colleagues, private space, etc.

Office Space

asked Jan 23 '10 at 12:44
Blank
Ricardo
4,815 points
  • It's been one year. Did you find friendly people to help you out in many ways that you would not typically have access to? – B Seven 6 years ago
  • have you looked at zinio? – Ina 5 years ago
Add Comment

17 Answers


20

I think incubator-like offices like the one you suggested are a great idea. I had the great privilege of meeting Kevin Hartz the founder of eventbrite recently. One of his best recommendations is to work in an environment with other entrepreneurs and startups. You will have access to friendly people who will help you out in many ways that you would not typically have access to. In my honest opinion, it is well worth the money to be in an environment like that.

answered Jan 23 '10 at 15:15
Blank
Eric Amzalag
818 points
  • I agree on the value of incubator/accelerator/coworking space. HubSpot got started in the Cambridge Innovation Center. It was really nice to be around other entrepreneurs. – Dharmesh Shah 6 years ago
Add Comment

16

Tim makes a valid point about the financial implications, so if you get an office, I would certainly try and balance getting a nice place you can bring clients with getting somewhere affordable to keep the cost down. At this stage I would certainly try and avoid getting into a long lease - if you need to cut costs, you ideally want to be able to walk away with just a month or two of rent to pay. (One thing to bear in mind - at least in the UK, there are a number of additional costs to consider beyond the rent - electricity, heating, maybe local taxes, etc - these things quickly mount up beyond the marginal cost of working from home.)

I just started my second start-up and from day 1 I rented a small office (big enough for 3-4 staff), not too far from where I live. Although I have no income yet, I figured the cost was a good trade-off against the issues I would have working from home. I spent the first 3 months in my last business working out of my dining room, and my wife quickly lost patience with the stuff everywhere. I also faced the issue of being too accessible - as you can see from this question, working from home can put undesirable pressures on a relationship.

On a purely personal level, I also find that leaving the house and going to the office, although I'm still on my own at this stage, makes me feel like I am going to work, and I feel I need that mental separation between home and work. I agree it isn't an issue for everybody - many people work perfectly well from home all the time.

answered Jan 23 '10 at 18:31
Blank
Steve Wilkinson
2,734 points
  • +1 for feeling like you are going to work. There is some value in that and I think it helps focus your mind. – Jarie Bolander 7 years ago
  • A postscript 18 months down the line: I stand by my comments about geting out of the house, but I found that I was spending less than 5 days a month in the office (as I was working on client site and visiting prospects much of the time). In the end, I converted my garage (which is a separate building from my house), and now have a great working environment with no commute, saving myself several thousand a year. If that's an option for you, I can recommend it. – Steve Wilkinson 6 years ago
  • Glad to here you found a good balance. Continued success. – Jarie Bolander 6 years ago
  • Thanks Jarie - that means a lot. – Steve Wilkinson 6 years ago
  • +1 Thanks Steve for coming back and posting an update regarding your answer 18 months after you first answered this question! – Ricardo 6 years ago
Add Comment

8

You can always meet clients at other venues. I work from home but joined the IOD, a London based club, which gives me plush meeting facilities when I need them. You can also hire offices/meeting rooms if you need them. The main reason to get an office is because it helps you organise and separate home from work. If you can do that at home, save your pennies until you need the space.

answered Jan 23 '10 at 19:37
Blank
Mark Stephens
976 points

6

You need to weight the cost/benefit.

The external trappings (office, secretary, etc.) are the result, not the cause, of success. When in Startup mode you should be making a product the customer finds valuable (great article). Anything that doesn't lead to a useful product for customers who are willing to pay is a waste of valuable time. If you don't know how a software company succeeds it's easy to look at the outside of successful companies and think "if I look like that I'll be like them. But those external trappings are the result of the success, not the cause.

It is very very easy to get off track with a startup. You have to stay laser focused on making a product that will be useful. Read the article Andy Brice (a successful software company owner) just published about 13 lessons from failed startups. Most failed because they were distracted away from creating value from the customer. It's rarely a technical or a marketing failure. If you correctly identify the customer's pain and use that as your compass to keep you on track it's a lot easier to be successful.

Costs There's an obvious cost in money but also in time, as you have to commute to your new office. Also, if you just need to pop in to do something (like start a backup or a 1 GB download) you now have the overhead of a drive to the office. The beauty of software is that you can probably have skills to get the whole thing off the ground (prototype product, basic website, etc.) with sweat equity. So time is your currency. Spend it wisely.

What are the potential benefits?

  • Socialize with other people. This can be a huge distraction in startup mode. Unless you're socializing with folks who can help you understand your customer, design your product (to meet their needs) or market to your customer, it's a waste of time. During this phase you should be socializing (at work) with your customers.
  • Socialize with colleagues. Unless they are directly helping to move your startup forward it's a waste of time.
  • A place to meet with your customers. See the excellent suggestions above for meeting @ Starbucks, for lunch, etc. $600 in rent money buys a lot of lunches. You should be up front with customers and let them know you're a startup and that you are 100% focused on them and the product.
answered May 29 '10 at 01:31
Blank
Clay Nichols
737 points

5

We don't know your company's financial situation or the logistics and benefits of having an office, so...

The only real question is can you afford it? By that I mean:

  • does it cut your ability to do other high(er) priority things
  • do you have to dip into savings?
  • can you pay for a year in advance?
  • will it otherwise put a strain on your resources or "runway"
answered Jan 23 '10 at 15:17
Blank
Tim J
8,334 points
  • +1 on the affording side. It's important to watch your budget and get a place when it makes sense. I still think it's a good thing to do, when you can afford it. – Jarie Bolander 7 years ago
  • +1 on several factors to consider on the financial side; sounds like experience talking. – Jeff O 7 years ago
Add Comment

4

Having a space to call your own, outside of your home, creates a sense that this is real. Working from home is great but if you will be interacting with employees or customers, it's best to have a space that is dedicated to your company. Of course, you have to be able to afford it but I think it's worth it.

answered Jan 24 '10 at 01:20
Blank
Jarie Bolander
11,411 points

4

I have worked from home and rented office space but I prefer renting.

There are several issues/perspectives to consider when deciding to work from home:

Personal:

  • Are you social -- do you like/need the company of other people? When working by yourself after a while it gets lonely.
  • Do you need the separation of work and personal space? If you work from home, you are always at work. At the very least you should dedicate a particular section of your home as "work" and don't go near it in your "free" time.
  • Are you ok with sitting at home all day long? When it's 4 PM and you are still in your pajamas you may find yourself experiencing cabin fever.

Logistical:

  • Do you have or are planning to have other employees? If so, are you ok with them becoming a part of your household? Working late? Working weekends? Keeping food in your fridge?
  • Do you need to see clients face-to-face on a regular basis? You will probably need to make arrangements to meet someplace other than your kitchen.
  • Do you need to receive business correspondence? If so, are you ok with customers sending mail to your home address/knowing where you live? Consider getting a private mail box for your business.

Financial:

  • Can you deduct your home office? In the US there are pretty strict requirements for what can and cannot be deducted as a home office expense and how household expenses must be pro-rated.
  • Is there affordable office space available? As mentioned in other posts there are many options: sub-leasing, using an incubator, sharing space or bartering for services.
answered Jan 24 '10 at 06:38
Blank
Oleg Barshay
2,091 points

4

For me you left out the 3rd option which is the one that has served my few startups best. That is working out of a Starbucks (or Peets, or any other coffee shop). Surprisingly you meet many other people in a Startup situation, and you also realize that many business meetings happen in these places rather than the old-school conference room or office.

Also working by yourself can feel isolated and being out and about has helped to keep me motivated and stimulated. Also you always have easy access to caffeine. If you need privacy, putting on your iPod is the 21st century equivalent of closing the office door.

For years I rented office space via Regus, and from Craigslist .. once I got used to this I never went back. Especially when computing in the monthly savings (Regus was $800 a month for a tiny box ... and nickle and dime'd on everything). Also in the Starbucks in CA you tend to meet a lot of software folks, where as in the shared offices I seemed to only meet Lawyers.

answered Jan 24 '10 at 13:58
Blank
Doug G
446 points
  • I hear this a lot on podcasts and in other places. It always amazes me. Can people really get work done in places like that? the kind of work I do generally needs some whiteboards and quiet time to think. I guess it all depends on the thought intensity required to do the work. – Tim J 7 years ago
  • I guess I am the opposite. I've developed some pretty sophisticated software working out of Starbucks (an application server, and risk mgmt software used by Private Equity firms to manage their financials). For me the distractions in an office environment is greater with people constantly coming at you with questions randomly throughout the day. I find noise in public almost like white noise. For collaboration I use IM and confluence wiki's. Haven't been near a whiteboard in 10 years. – Doug G 7 years ago
  • @Tim I share your amazement. The noise, tiny tables, uncomfortable chairs, the shortage of power outlets, dirty looks from the staff and having to pack up all of your belongings to go to the bathroom (which happens quite often due to caffeine consumption) just does not strike me as the ideal place to create software. – Oleg Barshay 7 years ago
  • If I'm in the zone, I could be at a NASCAR race and still get work done. Unless I'm in a meeting, whiteboard stuff can be done on the pc. It's a matter of having specific tasks that need to get done and not just the feeling of I'm at the office. Phone calls are the biggest problem. If I was a client and you called from Starbucks, I would be put off. – Jeff O 7 years ago
  • @Doug I agree with you that this is also an option. However, after done the coffee shops for a while, I got tired of driving around trying to find an empty seat close to a power outlet at a coffee shop and good wifi... – Ricardo 7 years ago
  • Lol .. yeah thats pretty much the drill. I did get a broadband card so wifi is never an issue. – Doug G 7 years ago
Add Comment

4

I moved into an office almost a year ago and have no regrets. I got enough space that I can have three or four employees in this location but right now my staff is all remote. Couple of things I learned:

1) I'm much happier and so is my wife. It's nice to leave the house and my wife is very happy to have me out of the house. It does create that separation between work time and home time and has helped me mentally turn work off which is almost impossible for me.

2) I found it very hard to find less than 1000 ft unless I wanted to sublet. I didn't really want to sublet so I ended up with more space than I needed/wanted but it still worked within my budget. If you're not averse to subletting, it's not hard to find someone with an extra furnished office they need to rent out. I found a few smaller spaces but none really worked for me and none would have been much cheaper than where I ended up.

3) My 1000 ft. is still cheaper than the corporate office suite solutions in my area.

4) If you are going into an empty space, figure out what it will take to furnish it. I ended up getting a really good price on some nice ergonomic desks/cubes/chairs from a liquidator. For what I was planning to pay for one egonomic desk for myself, I got four desks, modular cube walls, nice erognomic chairs, and a small meeting table for my office. Of course now I'm stuck with four which hurts my mobility but I can sell all of these off on Craigs list for more than I paid for them. Find your local/regional office liquidators. (I tried to just buy two of the desks but he didn't really want to figure out how to break up the set/mess with setting it up for display so he just sold me everything he had in that set for what he was going to charge me for two. These guys will negotiate.)

5) Utilities/taxes can add up. I was able to keep the utilities low by using a hosted, pay-as-you-go voip service. I was able to drop phones on my employees desks and we can trasfer/conf call easily and it was a lot cheaper than trying to install a traditional phone system/buy traditional lines/trunks. Most months I'm paying less than I would for a single line/trunk, and my equipment cost was much lower.

6) I haven't started actively looking to sublet any of the space but it's something I've considered. If I can find some other tech entrepreneurs, I wouldn't be averse to it. I would start marketing the space at some of my networking events, so if you go to any networking events, you might ask other founders if they have any extra space you can rent. They may have space they'd rent but don't want to go through the hassle of renting it/aren't actively marketing it.

answered Jan 25 '10 at 01:49
Blank
Scott Drake
81 points

2

Do your customers care? Some people may not feel you are a legitimate company unless you have an office with ample staffing. If all contact is over the web/phone, they may not care. Then it boils down to where you personally or the others in your company can get the most done.

answered Jan 25 '10 at 07:27
Blank
Jeff O
6,169 points

2

Getting office space is really up to you. Some people enjoy working alone out of their homes while others would rather go to an office because they feel more productive being around other people.

There have been a couple of coworking space locations open up around town. There you can rent space by the day and get to work along side other entrepreneurs who like the vibe of working in a collaborative and creative space. Might be a good option for you to try out a couple of days a week and see if you like it.

There are also a few executive suites in town that rent offices. There are Class A options that are obviously more expensive however there are other less expensive options that would work well for you, however that depends on where you live and how far you are willing to drive each day to the office.

answered Feb 24 '10 at 15:08
Blank
Nathan Smith
166 points

1

This site may help you locate some good options, including office sharing, hotelling, virtual offices, etc: abetteroffice.com

answered May 29 '10 at 05:52
Blank
Smart1 Cpa
171 points

1

Is it worth it for a software start-up to rent office space? "It depends on the needs of the individual's creative and management styles." Money should not be the only factor. If you get a million dollars to start up, new owners must think in the long term just as if the money was not available. Numerous businesses start out with deep pockets only to find them depleted before the software project has been completed.

For people seeking to move from home to a professional office environment, cost is not the only consideration. I hope someone in Austin will start incubators and shared office spaces geared towards small business owners who are also moms and parents who are seeking friendly, casual, and professional creative space. Is it worth it to spend money on office space for a software company? It depends. Read the discussions here and made a list of which factors are important to you. Fold a paper in half. One one side are pros. On the other side are cons. Do the math and weight the non cash costs then decide which path is best for your creative and business management styles.

answered Sep 8 '11 at 04:39
Blank
Jackie
11 points

1

I personally feel during the development phase, don't spend money on an office as you don't need it and you can set up meetings in some coffee shop or over Skype.

Once when you think your product has all the features for launch then share an office space so that it would help you to set up meetings with your client.

answered Feb 6 '11 at 03:09
Blank
Bhanu Prasad
209 points

1

Do it only if you absolutely need it and cannot do without it. You can always defer the office until your product is released and/or starts generating revenue.

answered Feb 6 '11 at 06:38
Blank
Nilesh
420 points
  • I was bummed that my answer (which I thought was excellent *and* included nice formatting and links to a great article) only had 3 up votes. I feel a little better now that I see your answer only got 1 ). Misery loves company. – Clay Nichols 6 years ago
Add Comment

1

Just a warning on renting your own office. Whilst it may seem cheap when compared to the relatively high cost of a services office, remember that there are numerous additional costs, not to mention the stress and time it takes to organise everything.

For example, the first extra cost is the landlord will probably want at least three months rent in advance, plus get you to pay for his landlord to draw up the lease agreement. Then you need to furnish the office, so as to make it liveable. Then you need to deal with the phone company, internet access (who won't give you an internet service until the phones are in), the electricity company and the myriad of other costs.

All this takes a lot of time, effort, money and commitment. So please be aware of this before committing to a lease.

answered Feb 7 '11 at 08:28
Blank
Kosta Patsan
11 points

0

A virtual office is a combination of off-site live communication and address services that allow users to reduce traditional office costs while maintaining business professionalism.

www.ioaustin.com

www.bssbartonsprings.com

www.bsswestlake.com

www.bssarboretum.com

www.davincivirtual.com

www.bssbartonsprings.com

www.businessuites.com/austin-texas

www.intelligentoffice.com/locations/texas/austin/austin.aspx

www.austinsuites.com

answered Jul 13 '11 at 16:18
Blank
Julia
178 points

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Office Space