What Every Startup Needs to Know About Their First Office Space


Why will 2009 be known as the year of the startup company?

The recent economic downturn has dramatically increased the size of the available talent pool, particularly in the technology sector. Leading edge companies like Mozilla Canada and RIM are taking advantage of the down market to hire top level talent who suddenly found themselves out of work.

What else has happened?

Executives are calling their friends or co-workers to revitalize business plans that were put together years ago. Although there’s very little private funding available for start-ups, many feel that now is time to take a chance on a new business. This has led to a much higher demand for small office space. So, how does a start-up company land the best space for their frugal dollar?

There are four options you need to consider:

Home Office

This is a great solution for start up companies but it has the following drawbacks:

  • your company’s credibility can be negatively perceived as “too small” or “unprofessional”.
  • it’s difficult to build a company and lead a team if you are working remotely.
  • most entrepreneurs can’t find the space they require, especially when the paperwork and promotional items start piling up.

There is no doubt that working from home will save you cash but it’s the intangibles that can negatively affect your business.

Shared Office

This is another cost effective solution but they come with a completely different set of challenges: If you move into another company’s space, they can potentially ask you to leave without warning. I have often heard heated arguments start over internet connectivity, phones usage, and furniture. Most shared office space in Toronto is going for $600 to $2000 per office – slightly cheaper than a fully furnished business center – and it usually comes with a lot of headaches (for both parties). However, I do list some shared space but lots of people just put it on CraigsList and Kijiji. Also, SuiteMatch has just opened for business in Toronto.

Business Centre

Once you realize that business centres need to pay their rents and make money too, you start thinking of this as an expensive option.

  • You pay a little more per square foot but you get reliable internet connectivity, a receptionist to greet your clients and answer phone calls, access to boardrooms as required, quality phones, free desks and even a pool of executive assistants who can put together documentation and presentations.
  • A business centre also offers you certainty (as long as you pay your rent) and your office space is there for you with flexible lease terms (from monthly to yearly).

My favourite business centre in Toronto is Regus. You can also contact a business centre broker like Instant Offices who can provide the same services as a real estate agent but with a focus on short term space.

Office Lease

This option gives you the best of all worlds. There’s nothing like leasing your first office and making it your own. You will start to see some real cost savings once you hit a minimum 500 square feet (approx 3 or 4 people). The sharing of new ideas, sense of camaraderie and mutual dedication can really accelerate your business. Also, you gain instant credibility from your clients. It’s tough to know when to make the leap to your own space but almost everyone who does wonders why they hadn’t earlier. Make sure you interview and hire a good agent to properly, professionally and knowledgeably guide you through the process. Real estate fees are paid by landlords (free to the tenant) so it’s simply smart business.