Should you spend money on office space for a software start-up?

Should you spend money on office space when you are just starting your business? I asked this question on answers.onstartups.com and got great responses. This post is basically a summary of the answers received.

The benefits of working from an office

When you are building a new business and you are bootstrapping it, it is hard to think about paying rent for an office and all the other costs associated with it. It is also hard to justify the expense of leasing office space when you are a software startup since all of the work can be done from your home or a coffee shop. However, office space is now more affordable than ever, especially when you look at the incubator-like offices because the cost is much less than a regular office and it also offers an environment full of other entrepreneurs which for the most part are always happy to help you in many ways.

Incubator-like offices are a great resource for any kind of entrepreneur, the cost is low, the environment is great, it is a place where you won’t feel lonely and at the same time it offers a great opportunity to meet other talented people who can help you in many aspects of your business.

If you are the type of person that likes to work alone or needs to be in a quiet place to get work done, most of these incubator-like offices also offer private space and the cost of this is usually less than leasing an entire office by yourself. You still get the benefit of sharing the cost of internet access, meeting rooms, a kitchen, coffee, etc…

Many people think of getting an office because they think it will give their company more credibility, it gives a business the opportunity to have a place to invite clients, interview new employees, etc… It also takes you away from the house and it might even make your wife happy because of it, I am serious. The following was part of an answer to my original question posted on answers.onstartups.com

” I spent the first 3 months in my last business working out of my dining room, and my wife quickly lost patience with the stuff everywhere”

Meeting clients and doing interviews outside the office such as coffee shops and the like has become more common these days. In fact, many will agree that a restaurant or coffee shop offers a better atmosphere for such meetings since it is a place where office distractions such as the office phone, a frustrated co-worker or the common office emergency are less likely to interrupt. And yet, meeting with a client at a coffee shop it is widely common and many people prefer that than meeting at a boring office. In summary, getting an office just to have a place to invite and meet potential customers and existing clients is not a good reason to have an office at all.

Having a space to call your own, outside of your home, creates a sense that your business is real. This is very important for someone who is just starting a business.

In summary, these are some of the clear benefits of working in an office/co-working space:

• Socialize with other like-minded entrepreneurs that can help you move your business forward
• A place always ready to meet with clients and colleagues
• Not being too accessible to family members and friends
• The feeling that you are going to work
• A clear separation of the office and home environments

The benefits of running your software company from home

The main benefit is that you get to save some money, and in some cases this can become a substantial amount of money and overhead that you save if you work from your kitchen or your garage. There is also the benefit of deducting home office expenses. However, be sure to check with your accountant before you start deducting expenses related to a home office. In the US there are strict requirements for what can and cannot be deducted as a home office expense and how household expenses must be pro-rated.

There’s an obvious cost in money spent in an office but there is a cost involved with your time, when you work from home you avoid the commute and all the undesired things that come with it such as the traffic and the cost of gas. Also, you don’t have the extra expense of yet another internet service bill, another computer (assuming you can use your home computer to do your initial software development), a second electric bill, etc…

Another benefit I don’t see people talking about is the fact that you can just walk away and have a private place to rest your mind and body, for example, if you work from your home office and feel like you need a break, you could just walk up the stairs into your bedroom and nap for 30 minutes on your bed.

Access to healthy and inexpensive food. That is right! unless you bring food from your home to the office, chances are that you would end up eating on restaurants and filling on not so healthy snacks every day of the week. When you work from home, you have access to better food and assuming you like to prepare meals and eat healthy, this can be a huge costs savings and a ramp up on your health as well.

In summary, these are some of the benefits of running your company from your home:

• Save money by not having an office lease and avoiding the cost of office furniture
• The potential to deduct some of your home office expenses
• Time and money savings by eliminating the commute and gas cost when driving a vehicle
• No extra bills such as internet, electricity, etc…
• Access to a bed to rest at any time
• Access to healthy and inexpensive food
• Privacy (assuming your kids aren’t running all around you)

Photo Disclosures: The home office photo is from @bwahacker and the business office on top is from Maximum PC. 

In the end there is not a clear answer to this question, it really depends on many factors and I hope the information above helps you make a decision that works for you and your startup. I am still working from home and are about to launch a beta version of TidyContact by December, if my first software product is successful enough then I might end up moving to a small office since I actually do like the idea of physically separating work life from family life.

If your startup is at a point where it can afford to lease an office and the many costs associated with it, then I believe it is a good idea to at least try a co-working space. Once you start hiring employees, then perhaps having your own space will make more sense.

If you have any questions or would like to add to this post, please do so in the comment’s section, I always appreciate having different point of views.