The Financial Case for a Coworking Office
When you’re ready to move your small business out of your spare room and into a professional space, is it better to find a traditional office or leverage a private office at a local executive suite or coworking location? While there are many considerations – convenience, control, flexibility, projected growth – one of the most important factors in your decision is the financial impact. So let’s compare the costs of a traditional office vs. an executive office:
You’ll spend quite a bit less in rent per square foot of space for a traditional office than you will in membership for an executive office. There are a couple important points, however: first, your square footage in a traditional office will likely include a meeting room and a reception area (and possible additional offices) compared to the executive office, so while your unit cost will be significantly lower, you’ll pay for 4-5 times more space; and second, you will likely have to commit to at least one year and up to five years to get the lease. The renewable terms for coworking or executive office members usually run no longer than one year.
At a coworking or executive office you will pay extra for using meeting rooms, so those charges will add to the expense of the space, though you will only be charged for the time you use them, and many providers include credits for conference rooms in their monthly fees.
One of the major advantages of executive offices and coworking spaces is that they usually have an office manager or receptionist to greet members, welcome guests, sign for deliveries and keep the kitchen and meeting areas tidy. The cost of these services is included in the fees you pay for an office, whereas with a traditional office you would need to pay the full cost of any staff you hire. With part-time receptionists earning $1,000-1,500 per month and full-time receptionists making $2,500-3,000, this is a large difference in cost.
Internet and telephone service
In a traditional office, you will have to arrange for any internet service or telephone service and equipment you might need, so you have more flexibility and control over the services you receive. At a coworking or executive office you will get high-speed internet and phones chosen by the managers, but the costs will usually be included in the fees you pay for your office, which can result in a cost savings of $100-500 each month.
Printing and copying
In a traditional office once again you have complete control over your copying and printing equipment, but you’ll have to buy and troubleshoot it yourself or arrange for a printing service to do it for you. In an executive or coworking office, you will typically use a multi-function machine that not only prints and copies but also scans and faxes. You usually pay by the copy (more for color copies), so you only pay for what you use, and you do not have to pay equipment leases, minimum volumes, toner or maintenance. Considering the costs of equipment as well as usage, you’ll often spend $20-30 less per month at a coworking or executive office location.
Tastes can vary widely, so choosing your beverage service in a traditional office means you get exactly what you want in your coffee, tea and water, though again you have to pay for all of it. At a coworking or executive office, coffee, tea and water are free, and most operators are happy to take requests for coffee and tea favorites. Depending on how thirsty you are, coworking spaces can save you another $20-30 per month.
One of the hidden costs of a traditional office is furniture – you’ll have to outfit your entire office with desks, chairs, file cabinets, bookshelves, conference tables, and other furniture to make it usable. Depending on the furniture you choose, you can spend anywhere from $25 a month in rental fees to thousands of dollars to buy it. At a coworking or executive office, furniture is included in the monthly fee.
The bottom line
All in, a traditional office provides much more control and customization compared to a coworking or executive office, but that control is expensive: traditional offices are often 2-5 times more costly in hard-dollar costs alone (rent, equipment, staff, supplies). You will also have to invest up to 10 hours a week in time and energy to manage all the administrative demands they bring. If you are comfortable outsourcing decisions about office furniture, technology, and equipment, coworking or executive offices can provide significant financial benefits.