Whether you currently base your company out of a garage, a coffee shop or (even better) a coworking space, if business is good, you will likely find yourself at a crossroads with a variety of important decisions impacting your future office needs. We will explore each of these over the next several months. But the first, and perhaps most pressing issue will be the subject of this post: when should your company get its own space?
When to Leave the Nest
There are a variety of inflection points that can trigger a move to your first “real” office space. But in a nutshell, they fall into two main, but overlapping buckets: financial and cultural/branding.
It’s all about the Benjamins
Oftentimes, a driving catalyst is the first or second round of seed capital. You’ve built a promising business that others are willing to invest in, but now you need to scale and bring on more workers to hit the target growth. These investments may extend your runway, but leasing your own space is a different ballgame. Now, more than ever, mistakes can stifle your growth, turn off investors and send your company to the proverbial startup graveyard. So just because you may have closed a round, does not mean it’s time to spend lavishly on your next digs or to commit to a lengthy lease term. That said, it is often a good indicator that you should begin the search for your own space.
On a similar financial note, your team size may change as you work to secure funding and grow your business. Coworking space in particular can be a great way to stay fluid and accommodate early-stage growth, allowing you to ratchet the dial up or down as needed via a combination of mobile desks, dedicated desks and private offices. But, there often comes a tipping point when it no longer makes financial sense for early-stage companies to continue to pay for coworking space because all of that plug-and-play functionality and short-term flexibility comes at a premium price point. And as your team scales within a coworking site, that price can escalate quickly - especially if your team requires additional private offices.
For some teams, the need for a move comes after having to pick up a second or third private office. For others, they may have a string of private offices and dedicated desks. While there is no set rule - and while we continue to witness demand for larger “team” spaces within coworking networks - generally once a team hits 1,500 square feet of space (more on target size requirements in the next blog), it’s an indicator that it may be time to start the spaces search.
And this relates to the other bucket: culture and branding. As you grow your company, you’ll want to build your own identity - something that can be difficult to do from a home office or coffee shop. Heck, even the coolest coworking spaces in the world still reflect the culture and identity of the coworking community more than the brand identity and culture of its individual member companies.
Why does this matter? Because the workplace environment you create is an increasingly important factor employees evaluate in choosing where they want to work - sometimes even outweighing salary. Millennials and other top talent that are driving companies forward in today’s economy have a much different idea of what makes a good office. Access to transportation, natural light, cool amenities, funky architectural and design details, and generally more open layouts with functional but inviting (and flexible) furniture are in demand.
But there is another reason space matters for culture: how different members of your team use the space. For example, do you have a bunch of engineers running to a whiteboard every hour next to a sales team trying to hammer away on the phones all day? If you are doing that from home or a coffee shop, good luck. And if you are doing it from a coworking space, you may be creating an inadvertent conflict if the layout does not truly meet your team’s needs - which is a good indicator that it is time to begin looking for your own space.
A lot of thought needs to go into your ideal layout as you build your own brand and culture - and that includes determining who needs private offices, how many (if any) phone rooms are required, your conferencing needs and a host of other issues. Everything from the colors you pick to the functionality of the layout has a direct reflection on your brand and the message you are communicating to your current and potential workforce (and clients!). While coworking can be an amazing launching point, it should not be surprising that it can be hard to accommodate all of these needs in a shared environment after a certain scale. Which is why growing your brand and building your company’s culture eventually makes the most sense in your own space.
Real life Example:
Let’s illustrate the above points with a real life example from one of our clients. This particular company is in the tech space and joined a coworking community to build out their platform. They grew from 3 to 7 and soon to be 10 employees. Along the way, they secured additional financing and are projected to be at 30-50 people over the next 12-18 months. While we can accommodate their short-term needs in a coworking solution, one of the biggest challenges is the number of folks that need a heads-down phone room; something few coworking spaces can accommodate at such a level. The need for more phone rooms along with the new funding and ability to continue growing are the key inflection points that triggered the search for this client’s new home.