Operating a home-based business is no longer reserved for stay-at-home mums and retirees. Technology has made it incredibly easy for almost any business venture to begin at home.
With a backdrop of rising commercial premises rents, the low overheads of a home-based business are undeniably attractive, as is the associated benefits of work/life balance and a reduction in travel time.
However, fast-growth start-ups often outgrow the home environment. Maintaining growth in staff, infrastructure and client numbers isn’t easy if you have to cram everything into a cluttered spare bedroom.
But how do you know when it’s the right time to move out of your home-based office and how can you achieve a smooth transition to another workplace once you do make the shift?
Read the signs
According to home-based business expert Jane Shelton, you need to plan to move out of your home office as soon as your business begins to take off, particularly if it is putting a strain on your home life.
“When the demands of business life are making home life more and more stressful, it is time to separate your two lifestyles,” she says.
The Women’s Business Centre Australia says business owners who are unsure if it’s time to move out of their home office should ask themselves the following questions:
- Are you finding it difficult to work productively because you are distracted by household demands? Do you frequently feel torn between caring for your family and caring for your business?
- Does your home atmosphere enhance or detract from the professional image you wish to project to clients?
- Does your growth require you to add employees? Is a business that started in a spare bedroom or basement taking over the house? Is adding on to your house or moving not an option?
If you answer ‘yes’ to any of these questions, it’s probably time to make your move.
Accept your fate
The founders of iiNet, Michael Malone and Michael O’Reilly, started their business in 1993 in the garage of Malone’s mother’s home. For every customer that called the company, there needed to be a phone line.
By July 1995, there were two people working out of Malone’s garage and four people operating at desks in his bedroom. However, this was not the primary reason behind the company’s move from suburbia to the CBD.
“I’d love to say it was a plan but in reality, we had 300 phone lines coming to my mum’s house by then. Telstra was very accommodating but they ran out of capacity,” Malone told StartupSmart last year.
“Their recommendation was the CBD because it was the only place they felt they could cope with our growth.”
Economist Kevin Johnson says despite the advantages associated with working from home, start-ups should expand their business premises in line with the expansion of their operations.
“I remember a market research guy who started his business out of his home. He said when they reached about 12 people sitting around his lounge room, it was time to get an office,” Johnson says.
“From my own experience, I don’t think you’d want more than two or three people [when operating a home-based business].”
“If you’re really not in a financial position to be able to take a lease on an office space by then, you’re probably doing something wrong.”
Assess your budget
Tammy May is the founder of MyBudget, which specialises in helping people manage their finances. What began as a one-woman operation carried out on May’s kitchen table is now a $6.9 million brand with 6,000 clients.
According to May, there were several factors she took into consideration before deciding to move out of her home and into a commercial space.
“It was not ideal to have staff working from home and client numbers rose to a level where travelling to meet them at home or in coffee shops was no longer viable,” May says.
“My advice to start-up business owners would be to ensure you can financially afford the additional cost of commercial rent.”
May says a good thing to keep in mind is that the first floor of a building is often more cost-effective per square metre.
“We had a budget per square metre for ourselves. Also, the size was based on how many offices or work stations we needed for our staff and predicted staff numbers,” she says.
“If you expect further growth, look for a building that has additional space that you can lease in the future. At MyBudget, we took more space within 12 months of being at our first office.”
May also advises start-ups to cut costs in less important areas, such as furniture, to help minimise the financial impact of moving.
“When MyBudget made the step from home office to commercial office, we bought secondhand furniture, including our reception desk,” she says.
“Things don’t have to be brand new to start with, especially when you are on a tight budget and every cent is going back into the business. This will help to keep your capital costs down.”
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