As you probably already know starting a business can be hard work and if it fails, compared with the hours you put in, it can reap poor financial rewards. Despite this once you start-up, even if you have multiple failures, it is completely illogical and perhaps impossible to stop.
If you are a first-time (or second/third time) entrepreneur there are many reasons why your business might fail with the most likely reasons coming down to the following;
Poor business model; the business model is not scalable, not set-up in a way you can employ another person (or this is very difficult) or there just is not enough people willing to pay for your product or service which leads on to my next point..
Poor market research; you did not fully understand the market you are trying to enter, the incumbent or perhaps not obvious competition are just too hard to budge, customers are just interested in something new or there just is no market demand for what you are providing and perhaps where you are providing it is wrong.
Poor effort; you had something that could go somewhere but were too lazy to put in the effort, or effort in the right places, to get it going. Perhaps you were not able to build a team that could do so either.
Rarely will a business fail based entirely on something that happens which is out of your control. Take global economic crisis – sure you might get hammered, may have to let people go, and it will be difficult but a robust business model should be able to survive testing times with the profit margin taking the hit.
Moving in to your first office can be pretty cool, but for most (self funded) start-ups you tend to spend your formative years either working from home or renting a desk with other companies.
There are are a few ways to manage your work environment and I have experience of most of them – below is a break-down of the key options and what I found.
Working from home
There are lots of advantages in doing this – but unfortunately it is coupled with a few striking disadvantages. I worked from home for a little over a year as we started up for the first time. At this point we did have an office but this was in Kuala Lumpur where our programming team was; in the UK there was just me doing my best to keep them busy.
I had recently moved to a flat in North London over looking a park with a friend who I used to work with. There are some advantages to having no commute and ‘arriving at work’ basically means sitting up in bed and picking up your lap-top. However it not always conducive to a productive work environment.
The key disadvantage is that you find yourself travelling out for all your meetings and you find yourself feeling slightly awkward when you say you work from a home office (it clearly positions you as a small company or one man band). It got to a point where taking on additional employees or interns just felt a little awkward and when dealing with more serious clients the fact that you do not come across like a ‘real’ business does become an issue (even if it is just down to confidence).
Rent a desk
There are plenty of companies offering hot desking environments and depending to what sort of company you are starting certain types of offices will suit you more. They usually have additional costs for when they take and forward calls for you and other add-ons like meeting rooms and such. I did not really want to move in to this kind of office, many are practically chicken farms, and generally over priced for what you get.
The easier option is to find a small business that has some spare desk space that they are looking to rent out to individuals or other small businesses. You can usually find a decent desk in a friendly, small and intimate office for £200 to £350 per month. I moved in with another start-up albeit a more advanced company and built good relationships with was beneficial for everyone involved. I rented one desk, and if I needed more for free lancers or employees, it was easy enough to take another.
One key issue with moving offices like this, or running a lean start-up in this way, is sorting out a phone line. The easiest way is probably to just have a land line number that forwards to your mobile. If you are often out in meetings this is invaluable.
As you grow you are likely to need a bit more than a couple of desks in an office – somewhere for your business to call ‘home’. We moved in to serviced offices early into our third year. Our first office was enough for 12 people and a small meeting table (we were not too fussy about putting people close together) and as we got the office in the middle of a recession it really was not a problem to negotiate down rent costs (for which we got about 30% off).
The office cost around £3,000 per month (in 2009) (if my memory serves me correctly) and although actually pretty expensive for the space we could leave with more-or-less 3 months notice and phones, IT, internet, chairs, desks, cleaning, heating, electric, reception and post collection was included. It meant we could move in and be up and running in a matter of hours.
About a year later we moved into a larger room in the same building – which cost about £5,500 and I estimate to be around 750 sq/ft. The office was actually pretty damn nice, but at £95/sq/ft/year it was obviously fairly expensive. We were able to fit around 20 people in that space, and to be honest could have fit another 10 if we were going to push it!
We wanted space for about 30 to 40 people it was obvious that moving into a leased office would make more sense. Also as we were getting bigger it was clear that our revenue streams were going to be a bit stronger and we could ensure that we would be able to honour longer-term rent agreements.