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Starting a home business is a dream come true for the most people, especially when you include your family into starting a business together. As a matter of fact, running a business from the comfort of your home allows flexibility and an opportunity to save money by doing business tasks yourself, without having to hire employees or having to get an office space.
However, once your business starts to grow and expand beyond the possibility of operating from home, the question of moving your home business to an office will emerge. Moving a business from your home to an office means sacrificing flexibility and certain liberties, but it only sounds more frightening than it actually is. After all, your business has achieved a level of success and you must allow it to grow further. Here are a few tips on how to move your home business to an office.
Determine the reasons for moving
Running a business from your home is a perfect situation, so why would anyone want to move out in the first place? Home conditions are best suited for startups or small business in their early stages of development. Simply put, when there is not enough business to go about and you can do almost everything from home. However, once your business starts to grow, you will have to weigh your options carefully about whether staying at home is possible or not.
For instance, will your business require you to hire additional employees beside your family members and can you outsource those employees or will you need them to gather in one place. Will you have to have personal meetings with business associates or will video calls still suffice. Can your budget and current business growth handle the expense of moving to an office or will moving to an office actually help your business grow further and see a return on investment? These types of decisions will have to undergo careful planning and the best way to start is to consult with your family and examine all the options.
Understanding the costs
The big question, when it comes to moving a home business, is whether you should buy or lease a commercial real estate. The answer entirely depends on your budget and whether your business will continue to grow further or will it stay idle for a prolonged period of time.
Leasing or renting an office space is upfront cheaper at first, but staying under lease for too long and the expenses may surpass those of buying a real estate. However, leasing offers the opportunity to grow your business at a steady pace, while upfront costs of buying a real estate and maintaining it, will hinder your ability to grow your business.
For instance, buying a real estate for moving your home business will cost you a lot upfront. Will you be able to afford that money and tie it in a down payment for your mortgage, and even if you can afford it, wouldn’t it be better to spend that sum on growing your business instead?
When leasing property, you have to pay the landlords a security deposit that is equivalent to one month’s worth of rent. Also, if you use a broker, there is 10 percent fee based on yearly lease total, times the number of lease years for their services, as well as attorney fees for lease negotiation. Compared to down payment for mortgage and fees such as due-diligence fees and closing fees, the upfront leasing cost is considerably lower than those of buying a commercial real estate. On that note, there are three most common types of leases you should familiarize yourself with.
- Net – Rent plus some or all of building costs such as utility, maintenance, taxes and so on.
- Percentage – Monthly rent plus percentage of your monthly sales
- Gross – All-inclusive rent meaning a landlord pays for maintenance, utilities, insurances etc. while tenant pays for monthly rent.
Once you understand the costs, you must find the right commercial property location that suits you best. After all, you should consider the distance of your office from your home, as well as rent prices that are lower on the outskirts than in central locations of your city or town.
Benefits of moving to an office
Moving your home business to an office will enable it to grow further. You can hire more employees and have personal meetings with clients and business acquaintances. Furthermore, you no longer have to mix business agenda with a harmony of life, and even if your family is involved in your business, a home is still a home.
Nevertheless, financial expenses should be planned carefully and even though moving a business to an office can get expensive, the increase in revenue after business growth will provide a return on investment.
When your business outgrows your home, moving it to an office is a good idea. From a monetary point of view, it may be a better investment to buy commercial property than to lease it in the long run. However, monetary standpoint isn’t always the determining factor. After all, you’d want to allow your business to grow first and have some flexibility before finding a more permanent residence for it. In the end, the choice comes down to you and your future business goals.
