In the past, running a business typically means finding an office space, securing the lease, doing renovation work and maintaining the office – all these done with a presumably tight budget.
Most business owners would agree that while having a good office environment is important for team performance, finding the right one also takes time. Even with a suitable office space, it needs to be properly managed, preferably by an office manager or it can be a huge distraction for your employees.
If you are busy trying to get your startup off the ground, the last thing you want is to fuss about a faulty toilet flush or the malfunctioning digital lock in the office.
In the past five years, we have seen a hotbed of co-working spaces as more and more companies form and thrive in Singapore. These include the likes of WeWork, Found8, JustCo and The Great Room as well as niche players such as Trehaus (for parents of young children), Core Collective (for fitness) and TradingPLC (for traders).
The advantages of these co-working spaces is the convenience of getting a well-suited office without the hassle of maintaining your own space.
But is it a good choice for your startup to get a co-working space? Here are some considerations before you decide on a co-working space or a regular office.
Challenges Of Having Your Own Office
In order to better appreciate why co-working space are enticing, we first have to understand some of the challenges of finding your own space.
Location: Generally speaking, office rentals in prime locations in Singapore such as the CBD can be expensive. If you are paying about $7.00 psf and have an office space of about 1,000 sq ft, that will cost $7,000 per month.
Renovation Cost: Renovation cost can chalk up to a sizeable amount. For an office space of 1,000 sq ft for ten employees (average of 100 sq ft per employee), costs easily go up to $20,000 or more for renovation.
Lack Of Flexibility: Any successful business will grow and scale. If you are running a startup with four workers, you should expect to increase headcount in the next two years to match your growth. But here’s the thing. If you sign a two-year lease for a small office well-suited for four, what happens when you grow and need more space? Scaling the team alongside company growth is important, but so is your office space. A traditional office space might be less suited if you can’t lock in your team size in the next few years.
Maintenance: When you have an office, you are responsible for upkeeping the place. This means having to hire an office manager (more additional costs) to manage the office. Miscellaneous fees such as utility, internet and cleaning costs add up too. Even at the low end, you can expect to pay at least $600 a month (probably more) on such expenses.
Entrepreneur blues: Starting a business is not only challenging, but also lonely. As a startup, you may only have a few co-workers with you. If you are spending eight to ten hours a day with just two to three people in the office, such isolation can easily cause feelings of loneliness.
A Co-Sharing Office Space Solves These Problems For You
To put it briefly, an ideal co-sharing space solves most of the abovementioned challenges for you.
Location: Most co-sharing spaces are situated at central locations in Singapore.
Maintenance Cost: When you get a co-working space, costs such as renovation, utility, cleaning, aircon maintenance or internet cost are included.
Flexibility: If you are in need of a bigger space, many co-working spaces will be able to accommodate your needs.
That being said, there are other potential challenges you will need to deal with.
Lack of privacy is one of the main gripes entrepreneurs may have when it comes to co-working spaces. Unlike a regular office where you own the space you work in with the flexibility of using it in the way you like, a co-sharing space, as the name suggests, is a space that you share with other businesses. So, you should expect to compromise on privacy.
This problem, to a certain extent, can be circumvented by getting a private office within a co-sharing space. A private office within a co-sharing space continues to give you access to all the perks of being in a co-sharing space but offers you the privacy that you need. However, this comes at a higher cost.
With a regular office, the main cost would be the fixed costs incurred. This means having to bear overheads such as utility, cleaning and internet regardless of whether you have four or ten employees. You may also incur renovation cost if you are renting an old office or shophouse in need of significant refurbishment.
Assuming you want a small office within the CBD, you can expect to pay rental of at least $4,000 to $5,000 each month. Inclusive of additional expenses, you can expect your overall cost rental to between $5,000 to $6,000.
If you only have four workers, this costs about $1,200 to $1,500 per person. Based on current co-working rates, you can easily get a private office in a co-sharing space for your team of four.
If you have ten employees, a private office in a co-sharing space may cost you between $7,000 to $10,000 (about $700 to $1,000 per person) each month. At this cost, even if you were to spend $1,000 on maintenance-related expenses for your own office space, you would still have a budget of between $6,000 to $9,000 to find your own office location. You may however need to also hire an office manager in order to ensure that your office is upkeep properly and conducive for work.
In general, the smaller your team size, the most feasible a co-sharing space is. This is because you do not want to be spending on major overhead costs such as renovation as well as fixed operating expenses if you have a small team. As your company becomes bigger, from a cost perspective, you may enjoy economic of scale if you find your own office space.
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