Shared office space or co-working environments offer many advantages to entrepreneurs and branch offices of businesses and continue to grow in popularity. Much of this shift is due to the rising rental and purchase costs of commercial office space, as well as to the decrease in suitable space in many places. If you decide that shared office space is the best option for you and your company, then fully inform yourself as it will pay off in the long run.
While you can reduce much of the stress of managing a traditional office space with the shared office option, make sure that you do not take any agreement a face value. Review your shared office contract – dot all the “i”s and cross all the “t”s – and make sure you have a firm understanding of all of the costs associated with your decision.
Here are 7 things to keep in mind as you look to move into a shared office space:
Phones
Most providers will give you a business phone number when you move into a shared office space if you do not have one. While this seems like an added benefit and convenience, know for some providers, when you try to leave, they will remind you the number is technically theirs and not yours. Don’t put your business marketing efforts and brand identity in jeopardy when you are ready to grow.
Retainers Being Returned
When you sign for a shared office, you will be required to provide a deposit/retainer ranging from 1 to 3 months base rent. As your company grows, the next step from shared office may be a much larger space. The retainer as you grow will grow as well – be very clear on the parameters and timing of how you get your retainer back to avoid embarrassment and a cash crunch when it comes time to hand over the retainer to your new landlord. It is typical you will get your shared office retainer back 30-60 days after you leave which may not make it available to use as the retainer on your next space.
Move-in/Move-out fees
Why would your new provider charge you to move in? It seems crazy, but some providers do – and it will most likely be in the small print or seem nominal at the time. Don’t let them do it – keep your cash for your growth. OK with that covered – seems reasonable for move out fees too – right? Maybe – but not all charge them – so either negotiate them out or find a provider who doesn’t!
Business Continuation
What is business continuation and why is it important? Well, it all revolves around mail handling and call handling during your transition to another office space outside of the shared environment. With regards to mail there are postal regulations specifically for shared office providers. As you may know, your new address will become the same as many other companies when you join a shared office floor. USPS delivers to your provider and your provider accepts the mail and delivers it to you. Therefore, the USPS ran into problems when they did not catch that the address changes were a part of an office center and inadvertently would redirect mail for hundreds of clients.
So, the business continuation provides for all providers, large and small alike, to continue to support you with inbound mail, while you communicate the change in a timely manner to your clients. With regards to walk in clients, phone calls etc., the small price you pay is well worth the embarrassment of your communication about your move not getting to everyone who may be trying to communicate with you.
Auto Renewal Agreements
Over time your business needs may change causing you to re-think your shared office space. Perhaps you will need more or less space or seek out another provider. Whatever the case, it is crucial for you to know that your existing agreement in most cases will automatically renew thereby your options may be limited. How to handle the auto-renewal – see Cancellation Notice Timing.
Cancellation Notice Timing
Is it 30 days, 60 or longer? Be careful – your timing may be different from the contract you signed. Fight the fight upfront! You can debate what is reasonable timing or how long before you need to give written notice. You can also negotiate when the contract will roll over into another term.
This is not something a provider is doing wrong either or a way to trick you. They need reasonable notice to start to re-market your space, so they hopefully have no interruption in revenue for their valuable inventory. As a business, you just need to bring your attention to its existence and be sure you know yours.
Quick Tip: Don’t want your term to roll over or extend? Consider putting in your notice of cancellation the day you sign the contract. That way you won’t forget and you won’t be caught off guard by missing your filing date.
Price Escalations
As it relates to most companies real estate expenses, annual price escalations are normal, if not expected. As such, shared office rates will increase as well. Why? In most markets real estate taxes, rents and operating expenses rise not to mention the cost of the staff and infastructure your shared office provider has invested in to support you. The escalation in your contract is usually clearly defined as an increase on the anniversary date or at least annually on longer terms in the fees you pay that are fixed and reoccurring in your contract. It will be on the items such as rent, phones and Internet.
Keep in mind…
You are signing an enforceable contract. If this makes you feel uncomfortable – review with an attorney, consult or retain a tenant representative. At a minimum, walk through with your provider and have them explain the details that will affect how much you pay, how you cancel, what happens if you do not, when you leave what then? The providers in the industry are not all the same, feel comfortable with the responses and go with your gut!
With the right preparation, moving into a shared office space can be one of the most enjoyable experiences for your business. Shared office space brings the opportunity to create mutually beneficial and supportive networks, the opportunity to learn from other companies, and the financial savings that result with sharing expenses.
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