Will a Home Business Location Work for You?

If you are debating whether to set up an office in your home or lease commercial space, think seriously about keeping the office in your home if you can. Unless you are operating a retail store or expect clients to regularly visit your office, your face to the world will be your products, your services, your literature, and your marketing.

Spend Money in Areas That Your Customers Will Really Appreciate

The cost of setting up a commercial office is more expensive than just the cost of a lease. Even if you are not remodeling, you will likely undertake a few leasehold improvements.

You might install additional electrical outlets, put in new carpeting, or, at the very least, paint the place. You will probably need written approval from the landlord every step of the way, and he or she is not going to look favorably on you getting the least expensive of everything. In fact, it’s not uncommon that landlords insist you use their contractors. Their contractors may cost more than yours, but worse, they are unlikely to make your work their top priority—I had to beg, beg, and beg some more to get the landlord-arranged contractor to finish his work.

If you haven’t previously leased commercial space, you will have to place deposits with the Internet, phone, electric, and maybe even the heating fuel company. Your fixtures and furnishings expenditures for a commercial space will probably be more than they would be for a home office.

Then you’re going to have to get liability insurance in case someone gets injured in your office. Don’t feel it’s necessary? Almost any landlord will insist on it.

And then there are the lease terms. Yes, you can usually negotiate them, but you will typically start with the landlord’s commercial lease, which is horrific. If you are lucky you can negotiate it so it is merely terrible. For example, you will probably have to agree to terms such as if the building burns down but the landlord can fix it in a reasonable amount of time, then you are still obligated to continue the lease. Great!

When problems happen, guess what? Most commercial landlords are used to fighting with tenants frequently and taking them to court often.

Now there may come a time to rent commercial space, and I’ve done it plenty of times. But don’t rent commercial office space to impress your friends or make yourself feel you’ve hit the big time. Rent commercial space because you can’t fit any more semi-trailers into your backyard or because you need train siding or because you have too many employees to fit in your house!

Takeaways You Can Use

  • Unless you’re in retail, office space may not be necessary.
  • Only rent commercial space if the needs of your business demand it.
  • Spend money where your customers will appreciate it.

About Bob Adams

Bob Adams is a Harvard MBA serial entrepreneur. He has started over a dozen businesses including one that he launched with $1500 and sold for $40 million. He has written 17 books and created 52 online courses for entrepreneurs. Bob also founded BusinessTown, the go-to learning platform for starting and running a business.