by Frank
(Ghana)
How Much of Your Start-up Capital Should You Spend On Renting An Office Space?
That is a good question because that is one of the early decisions in a business that can adversely affect your performance and ability to grow.
Simple answer . . . do NOT spend more than 20-40% of your start-up capital on renting an office space for your business.
Think about it.
People who visit your office want to buy what you sell. If you spend so much on renting the office space but then don't have enough to stock it, what value does that add to your business?
Yes, an exotic office in an exotic location will help the reputation of your business. But what happens when customers enter the exotic office only to discover that it does not have the assortment of products they expect?
That is disastrous, isn't it?
Sure, we all will love to have an office that is at the centre of town and where you can rub shoulders with the big boys and even claim "big boy". But if you play with the stars when your wings are not strong enough to fly at that altitude, you will only crash-land.
So, my candid advice is this . . . rent the office that 20-40% of your start-up capital can afford. If 20-40% of your start-up capital cannot afford a decent office, then simply work from home . . . from your garrage, store, BQ etc
Come to think of it, even the search engine giant Google started from a garrage!
So, don't be arrogant. Don't live in gentil poverty. Don't attempt to operate a standard of office your budget cannot afford. Instead, deplore the little funds you have into the everyday running and funding of your business.
As your business grows, your office will feel it in terms of location, decoration . . . and more.
If you visit Google's head office today, you will be tempted to doubt that they actually started the business from a garrage.
Start small and grow big if you have small capital. It's embarrassing, even heartbreaking, to do the reverse.