When starting a new business, one of the first decisions to be made is whether or not to rent an office. Obviously, if you're opening a restaurant or a manufacturing facility, you must have a fixed location. But if you're an attorney, a human resources professional, an accountant, or some other type of consultant, the decision isn't quite as clear-cut.
One of the biggest concerns when starting a business is keeping expenses low, so for some, an office might be one more unnecessary expense. On the other hand, there are some small business owners who say that they couldn't do busines without an office, so it's must no matter what.
Ask yourself two questions when deciding if an office is right for you: 1. Do I need it? 2. Can I afford it?
There is no doubt that someone like a criminal defense attorney needs an office. It wouldn't be prudent to meet with clients at a home office in this line of work. For others who aren't so sure, ask yourself whether you're willing to have clients come to your home, whether meeting at a coffee shop is a possibility, and whether an office is necessary to your company's image.
If you have some seed money to start your business or if you have a ready-made client base when you open the doors, you can probably easily afford an office. If you're starting from scratch, it might not be possible to pay for one. If you're unsure, look for an office sharing arrangement or incubator which might offer you a cheaper office alternative.
If you're still not really sure that you can afford an office, err on the side of caution. Put off moving into an office until your finances are more stable. The last thing a new business needs is a long-term lease with no money to pay for it.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Introduction to Retirement Funds
Target date funds help you maintain a long term portfolio.View Course »