What we’re talking about

As your business grows, there may come a time when you decide it’s time to move from home, cafes or hotel lobbies and rent your own space – whether that’s because your team has grown, you need to up collaboration or you want to host regular meetings. The main options include taking a section of a co-working space, renting a serviced office that’s fully-equipped and managed by an office provider, sub-leasing space from another company, or leasing your own office. Though many small businesses might opt for something cheap and cheerful as their first home, that doesn’t mean that factors like location, space, infrastructure and terms of contract don’t need to play a big part in the process. 

Why it’s important

Choosing the right office can be a game-changer for a small business – even early on when it might not seem a huge priority. It can mean happier and more productive staff, increases your attractiveness to potential hires and strengthens your brand’s image. Getting it wrong can mean, well, the opposite, and the threat of a potentially damaging financial burden. Rent and utilities will probably be some of your biggest fixed costs – careful not to fall into the trap of ending up with an expensive, long-term lease that doesn’t suit your needs and that you can’t get out of. 

Though the importance of physical offices has definitely shifted since the gradual, then enforced, shift to remote and hybrid work, for many small businesses it’s still crucial. Getting the balance right between something you can afford, and something that hits all your business’ requirements, mode of working and the needs of your staff takes some due diligence – and likely a bit of compromising, too. 

Things to note

There are two main options when it comes to renting a space: licensing or leasing. Licensing is typically cheaper and more flexible, with shorter contracts that you or the landlord can terminate at short notice (eg, co-working spaces). Leasing, on the other hand, offers more security and is better suited to businesses with more predictable needs. Most leases are between three and 25 years, although they often come with break clauses. More and more spaces are offering a mix of the two, giving you the freedom to create your own branded space while using a simple, short-term licence. 

Moving offices is expensive and a big drain on your time. That means you ideally need to be thinking mid to long term when choosing your space. Think about where you think your business will be in two to four years and plan accordingly.  

Leasing your own space requires lots of work. There’s a lot of unseen infrastructure required in leasing your own space: from setting up the appropriate level of tech, security and access, to health and safety protocols. That’s why, even though it’s slightly more expensive per square foot, it often makes sense for small businesses to opt for co-working spaces or serviced offices, where a lot of that stuff is taken care of. Alternatively, sub-leasing can be great for businesses on a tight budget: look for another company leasing out part of their space, or find somewhere that allows you to lease out part of your space and you can save money on the rent and utility bills. 

External help can make a big difference. It might be tempting to try to do it all yourself, but when you’re searching for the right space, bringing in external, local expertise in the form of a commercial estate agent or broker can really help. They can share knowledge of the area, guidance on what to prioritise and help with negotiating the terms of your rental contract.  

How to set up an office space cost-efficiently 

1. Get clear on your priorities. First, clarify what your main priorities are for the space you’re going to rent – what does it need to deliver and for who? For example, will you be using it for client meetings? How important are travel links? What type of internet capacity will you need? Make a list of your daily business needs and the non-negotiables you need to operate – your office requirements need to align with your business’ overall strategy.

2. Work out your available budget. You need to know what you can afford before you decide anything else. Your budget might need to allow for both rental costs and, if you opt for leasing your own space, one-off set-up costs including furniture and equipment (see step 10). At this point, it’s definitely worth speaking to a business accountant – preferably someone close to the business – to understand your range. US commercial real estate company Hartman suggests not spending more than . 

3. Consider your desk space requirements. Think about how many desks you’ll need for employees – both current and any planned future hires over the next 12 to 24 months. Outline the different roles of your staff and how often people are likely to come in – it might be that hot-desking is suitable for certain roles, while others require a permanent desk with privacy. 

4. Figure out your office configuration. Now think about the different functions of your office space – from meeting rooms to breakout spaces –  and whether things like a private kitchen or shower are important to you. Open plan spaces naturally offer more flexibility but less privacy and meeting spaces. Once you find your space, you could even do a simple mock up of the office configuration to get a sense of what will go where. 

5. Decide on a rental arrangement. Now’s the time to clarify what type of rental suits your needs and budget. Try reaching out to a commercial estate agent or broker in your area and getting their input on what’s realistic and suitable for you – taking into account the pros and cons of each type of lease or licence.

6. Narrow down possible locations. Location is no doubt one of the biggest factors in this process. Think about transport links (for your staff and hosting or travelling to meetings); proximity to customers, suppliers or competitors; areas you need to be in or where your staff would like to hang out; access to amenities like banks, lunch spots and post offices; and whether it gives the right impression about your business. There might also be financial benefits to setting up in a particular zone with tax reliefs. A bit of research, or speaking to a commercial estate agent, should give you a clear indication of average rents in the areas you want to be in. 

7. Scope out potential sites. Visit a few locations to get a sense for what’s out there and what your budget can do. Plenty of co-working spaces and serviced offices offer tours – try asking in your local business community for recommendations. For commercial leases, any decent commercial estate agent will be able to show you a range of potential spaces. From here, it’s all about choosing the space that best fulfils your criteria. 

8. Dig deep into the contract. Once you’ve found a space you like, take some serious time to look over the terms of your contract. At this point, get someone with legal expertise to check it out with you. If it’s your first space, you might opt for a shorter contract or one with a break clause, or look into options for sub-leasing. You need to know exactly what’s included – from who’s responsible for repairs and maintenance to how the space will be delivered and what you’re allowed to adapt or change. Any improvements that need to be made need to be raised now.  

9. Work out your infrastructure demands. If you’re leasing a commercial space, you’ll now be in a position to work out what elements of the infrastructure need sorting. Think: electricity and internet demands (taking into account the growing needs of your team), building security and access, and utilities like heating, water and gas. Look into which service providers are available – your landlord or other business owners in the neighbourhood should be able to offer some advice. If you’re entering a co-working or serviced space, get as much detail as you can on the IT spec and capabilities. 

10. Budget for your one-off costs. Again, this will depend entirely on the kind of space you’re getting, but there will likely be certain initial costs you’ll need to bear in mind. Refer back to your list of daily business needs – maybe referencing an office supplies catalogue to help – and think about where you can save money by either going second hand (like office furniture) or leasing (like laptops and equipment). Look out for auctioneers holding sales of office furniture or office clearance companies that offer complete sets of office furniture and equipment. This will probably be a balancing act – deciding what elements to invest in and what areas to be thrifty on.

Key takeaways

• Finding the right office requires compromise, but you need to be clear from the outset on your non-negotiables and budget – and stick to them. 

• Each type of rental agreement has its own benefits and drawbacks, but many small businesses opt for co-working spaces or serviced offices where a lot of the infrastructure is taken care of. 

• Lean on external help where you can, especially if leasing your own space. It can help with everything from working out your budget to negotiating the terms of your contract. 

Learn more

Perspective. Not sure whether it’s the right time to move into a physical space? Life Hack has a list of the . 

Perspective. If you’re weighing up the pros and cons of operating as a hybrid office, GitLab has to the nuances of it. 

Example. For inspo on different office layouts and configurations for small businesses, check out .  

Tool. To create a simple office budget, BizFluent has put together to get you started.