Office space when you’re starting out?

OfficeWhen I opened the doors of my first startup, I was told to find space in a building that was “classy”. The first thing I was told to do by my partner was find space in a very nice building, get phone lines, get “really nice” furniture, and fill the office with a bunch of “nick knacks”. This was all to be done off of our initial seed capital of $25,000 – which was supposed to provide for the business and personal expenses until we were cash flow positive. I did what I was told, and secured a 1-year lease at $1100 per month in a AAA building in Fort Worth (which is unheard of), got a phone line and Internet service at $200 per month, and was able to get really nice “executive” desks from a used business furniture store for $1000. I succeeded in getting the office going, but at the same time my partner also told me to be careful because every dollar spent would be twice as hard to recover.

We were selling VoIP services in Dallas. Small and medium phone services from the phone company were still nearly the exclusively used by businesses in 2004. Voice over IP was the service model that would kill the telco monopoly, and after working for the phone company for nearly 5 years, I knew exactly what to do. At the same time I was spending money to start the office up, I was finalizing the partnership agreements, building the websites, getting a sales force established and trying to get marketing materials finalized.

Three months later, we were ready to go out and sell our service. The problem was, the money that was supposed to last us 6 months was all but gone. Four people on payroll, an secretary / telemarketer and the overhead of our office burned through our seed investment before we had a chance to even talk to a potential customer – what went wrong? How did I make this mistake?

Fast forward seven years, and I had learned from my previous mistakes. I decided to bootstrap my next company, no office space, no overhead, just take it into the marketplace. This worked fine until I brought on three additional partners, and then my house because our headquarters. In 2004, it was just me, in 2011, I had two toddlers running around and screaming during the launch. My wife worked full time to cover our bills (which she barely did), and I was tasked with babysitting and transitioning us from our place in life to wherever our business would take us.

Yes, this approach saved us money. Yes, I did not waste time with a commute, but having the office in total turmoil and with all of the other household distractions, productivity suffered immensely.  I found myself doing the same amount of work – but working for twice as long – then what I could do when I was in an office.   Ultimately working from the house and being a parent was a difficult situation, but it worked for me then.   The drawback was that I was present for my daughters first years, I was forced to distance myself and was always working – my computer appeared more important than them, and this is something that still hurts.

The bottom line with office space – and most decisions you make when you start a business – is to really take a deep look at yourself and your business.   You also need to figure out how you work, where you are most productive, and also whether minor distractions help or hurt you (yes, minor breaks and distractions can help you be more productive).   Finally, like everything else with starting your business, do your research, and then do it again.   There are always deals out there, and there may be other business owners that are looking for an office partner – someone to share space with.

Posted by: mprictor on December 27, 2014
Posted in: Law