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Why a serviced office can save your small business money

Who’d be an entrepreneur in the current economic climate? A staggering 80% of startups crash and burn within their first 18 months, often because of poor budgeting and insufficient operating funds. Every cost-cutting decision plays a much bigger role in the continued existence of a business, but when it comes to budgeting for workspace, finding efficient premises can be a double edged sword.

The escalating cost of office space in major cities often forces SMBs to relocate to cheaper premises in the suburbs, but this can take them away from their target market. However, many new enterprises are moving into serviced offices, which offer a cost-effective alternative to fully owned workspaces.

Take London, for example, where floor space dedicated to serviced offices has risen by 67% since 2004. Workspace in the British capital is renowned for being among the priciest in the world, but serviced offices in London offer businesses a much cheaper alternative, with less commitment and better management of how much is being spent on rent. Here are four ways serviced offices can save your business money:


Only pay for the space in serviced offices that you need

It can difficult to predict how your company grows. For now, you might only have a few employees as you launch your business venture. Next year, your workforce may have doubled or even tripled in size. But planning ahead and paying for more space than you need at present is a drain on money.

Serviced offices can be rented on short-term lease agreements, or on a rolling basis where you pay at the end of the month for the facilities you’ve used. That means you can agree new leases whenever you need to expand your office for new employees. Other services such as meeting rooms, reception staff and printing equipment can also be provided as and when they’re needed.

Avoid business rates and other associated fees

Entrepreneurs that choose to invest in permanent office space are subject to expensive business rates, a tax on the occupation of non-domestic property. Business rates are notoriously difficult to predict and prone to changes depending on government calculations. In the UK, the upcoming 2017 revaluation has worried business rates experts, with additional uncertainty surrounding the transitional relief scheme.

Most serviced office providers will include business rate costs in their rental fee, meaning businesses have one less thing to budget for. In contrast, in conventional leased office spaces, the leaseholder is responsible for managing everything. This includes the additional costs from the price per square foot quoted, which only covers rent, business rates and service charge.


Remove utility bills from your company’s monthly budget

Acquiring office space is expensive enough before even considering utilities like internet, air conditioning, heating, electricity and water. According to commercial energy analysts Business Energy, businesses spend an average of £2,528 each year on electricity alone.

Just like business rates, serviced offices bundle all of these utility costs into one fixed package, meaning companies do not have to budget for these individually. Cash-flow is crucial and this way of budgeting allows a business to live within their means without the loss of services.

Maintenance is another cost that needs to be factored into monthly business budgets. BSRIA estimates the average cost for maintenance is around £14 per square metre. But again, maintenance fees are usually included in the serviced office providers rental fee.

Limit downtime when moving into new premises

The stress of moving offices costs small businesses £40,000, according to research by energy giant E.ON. As a result, more than three quarters of small and medium sized enterprises delay moving into new premises. Aside from the transportation of inventory which is complicated on its own, there’s also the downtime associated with setting up internet and other utilities in the new space. Overall, downtime is estimated to cost UK businesses £10.5 billion per year.

But businesses moving into serviced offices need not worry about downtime. These spaces are already set up and ready-to-use before you step foot through the door. Everything from office equipment to communication systems will be operational from the moment a company moves in.

Finding cost-effect office space that’s suitable for a small to medium sized business is a challenge. To avoid becoming one of the eight in ten startups that fail, it’s important to thoroughly consider the pros and cons of a long-term office lease. It must just be that a serviced office works out cheaper when you consider all of the hidden costs.