April 16, 2010

If, like many small business owners, you want to cut costs, one prime place to look is your office space. That typically can come to as much as 5 percent of total revenues for many small companies, according to Ken Gaebler, who heads Gaebler Ventures, a Chicago-based small business consulting firm.

It’s also an area where it’s easy to find yourself overextended. But, “Every dollar you save on office expenses is a dollar that can be used to grow the business,” says Gaebler. “It’s best to be as frugal as possible.”

Here are five creative ways to do that:

1. Operate a virtual organization. Thanks to the Internet, videoconferencing and other technology, it’s easy to run your business virtually. If appropriate, you can use independent contractors to do most of the work. Or, you can have a full-time staff telecommuting from their homes.

2. Re-negotiate your lease. Office vacancy rates are on the rise. For the first quarter of 2010, they increased to 17.2 percent, the highest level in 16 years, according to Reis, a real estate research firm. As a result, many landlords are happy to re-negotiate agreements with existing tenants. To get the best deal, make sure to ask for at least one month’s free rent. But, also discuss other concessions, such as inexpensive renovations, a lower base rent, and the option to expand to a larger office at your current rate.

Another possibility: If your cash flow allows it, ask your landlord to accept prepayment of, say, three months rent in exchange for a sizeable reduction in rent for the duration of the lease.

3. Shack up with someone else.  That can mean subleasing from another company with extra space. If the business is in a cash flow crunch and looking for a quick source of added money, you’ll probably be able to negotiate a discount of at least 25 percent. Or join forces with another business and move into a shared office together. Then again, you might also consider subletting your own space, if your landlord allows it. Best is to ask your fellow tenants whether they need additional space; that way, you can be sure you’re doing business with a firm you know and trust.

Gaebler points to a struggling entrepreneur working down the hall from him who recently decided to look for someone to take over his small, $1,000 a month office space. After knocking on many doors in their building, looking for someone interested in subleasing, he eventually approached Gaebler, who, as it turned out, needed the extra space. He agreed to take it over.

4. Look in economic development zones. Some municipalities offer tax and other incentives to businesses moving into their areas. In addition, economic development zones provide such benefits as low-interest loans to companies willing to set up shop there. 

5. Use short-term office rentals. If your business is small, consider renting space on a daily, weekly or monthly basis from an executive office company. You’ll probably have access to shared conference rooms and administrative services you can use on an as-needed basis. And you might be able to receive mail at that location, a plus if it’s in a high-rent district. “You can look big while you grow big,” says Gaebler. 

Join the conversation ( 1 )

• SharedBusinessSpace 7 months ago

  

  Great ideas Anne! One more idea that should be considered is to look into joining one of the growing number of coworking spaces that are opening in most major cities across the U.S. (and the globe!). These spaces are ideal for startups, freelancers, tech types, creative professionals as well as traditional professionals looking to work alongside like-minded individuals. They focus on community building and offer fantastic networking and educational opportunities. Most offer daily drop-in rates or a menu of monthly pricing options as low as $20 per day or $200 (or less) per month. You can find a comprehensive list of coworking spaces on the Coworking Wiki or on other online office sharing websites such as https://www.SharedBusinessSpace.com. Coworking is certainly one of the biggest trends in business right now with the enormous growth of startups and entrepreneurs that do not want to work from home or out of coffee shops. There are some great options out there!