06
Oct
06

How Necessary is Office Space?

By Joshua Steimle 11 Comments Categories: Working

I’ve got another question for the masses and would appreciate your candid responses.

We’ve got fairly nice office space here at MWI. It’s about 3,500 square feet, newly built out, nice conference room, four offices, receptionist area, open space, big sign on the building where it’s highly visible, etc. But for a long time I’ve been wondering whether it’s worth it, and I want to know what you think.


So the question is, if you were a client or potential client, how important would it be to you that MWI have a physical office vs. all our employees working from their residences? I’m talking about first impressions. You’re a potential client, you call us up, and you say you’d like to come meet with us and we tell you that we run a virtual office, and so we’d be happy to come meet with you at your offices, but we don’t maintain a physical office of our own. How would that affect your decision making process?

The second question has to do with the MWI sign. Those of you in Utah have probably seen it on the building. I can’t say whether or not the sign has actually landed us any business, but we do get frequent positive comments about it. But how much of a factor should that be as to whether we keep our office space or not?

I’d like you to answer those questions from the perspective of being a potential client because potential clients won’t know what I’m going to tell you next, which are the reasons why I’ve long considered ditching our office space:

1. We can save between $4-5K per month by not having the office space.

2. Clients/potential clients rarely come to our office. And by rarely I mean that of the clients we end up getting, 1 out of 30 might visit our office once.

3. I’m am 100% confident we can provide the same level of service without an office. In fact, we might be even more productive.

That $4-5K we could save comes out of our profits. In order to pay the rent and other associated costs we have to land $15-20K in work each month that we would not need to land if we didn’t have the office. However, if we move out of the office will we lose more than $15-20K per month of business as a direct result of not having an office? We just entertained a client at our office today, and it is likely we will get a $150K project from them. I’m not sure we would have gotten the project if we didn’t have an office. But that’s a rare occurrence. We have other clients who have paid us $50-100K and never visited our office at all.

Anyway, opinions from objective bystanders would be appreciated as we struggle with this decision.

Related posts:

  1. Draper Office Space for Lease with Freeway Signage
  2. Salt Lake City Office Space
  3. MWI’s History of Office Spaces
  • http://www.nimbleit.squarespace.com Jeff Barson

    OK, here’s the 2 cents of someone who’s been in your office with the intention of having work done.

    Ditch the office.

    MWI’s signage is good and visible. The location is slightly ackward to access. The interior is fine and without ostentation. It doesn’t bowl you over with ‘wow factor’. Just clean and nice.

    Get individual ‘virtual’ location to hold your meetings in. They’re become quite common: Da Vinci suites, Grow Utah Ventures e-Centers, wherever. (I was at Greg Petersons Mirus Advisors new location in Sandy and it’s great.) If you just want a reliable location with a little bling, any of them should do.

    If you are able to run your business without additional overhead. Do it. That 50k is your profit. Profits are what keep you in business and prevent further entries in the ‘You might be an entrepreneur if… ” series.

  • http://www.chrisknudsen.biz Chris

    Josh:

    As a former client of MWI, I can tell you that the office really doesn’t matter. You have a good reputation and so people are going to come to you whether you have an office or not. However, I do think the sign is great exposure and it makes you look bigger than you are.

    Jeff is right on with using DaVinci Office suites. They’re cheap and the space is very nice. Talk to the guys at Sprout Marketing. They use DaVinci.

    I think programmers and designers work well from home if they have a great space to work. Podango is totally virtual and the programmers love it. I work from home and I have small kids. That makes it hard in my line of work (mainly sales).

  • http://www.mwi.com/ Joshua Steimle

    I probably should have included that there are other options other than keeping the space or leaving it. One option would be to sublease most of the space to cover the majority of costs and just keep one office. That way if I need the space in the future I still have it. Another option would be to transfer the lease to someone else and see if they’ll rent an office back to me. Either way I cut my costs, but I still have the same location, sign on the building, a conference room to meet in, etc.

    The only tricky part is finding the right company to sublease the space.

  • Tyler Garlick

    I would have to agree it’s overall a good idea. My only grief with the issue is will you get the same amount of work out of your employees? For example, when I work from home I have a large amount of distractions. Xbox, whinning dog, you name it. Adversely, when i’m in the office, I’m there strictly for work purposes. Maybe that type of atomosphere could be made at “home.” I know it’s harder for me to do so.

  • http://www.bellephotos.com/photoblog/ Daniel

    I’ve seen the office from the freeway, and I think the sign does look great. But why not put a .com at the end of the MWI? That way, people know that they can find it on the web, and they might just be curious enough to check it out. What about a simple slogan underneath the logo: MWI: we make websites.

    As for the office, why not have a single office space just to meet potential clients. I doubt the clients rarely go throughout the entire office, so why not just have a meet and greet room where you can talk through projects with the client, and then everything else is done in virtual offices. In fact, make it a benefit for the client by telling them their going to save money because you don’t have such a huge overhead.

    As for the workers working from home, why not have a few standards in place that they must have before they can work from home. i.e., isolated from rest of the home, adequate internet connection, etc., it could be like you’re franchising the work space and making the important part of work environment standards in each viritual office.

    Just some thoughts.

  • http://www.mymailcase.com Matthew Prestwich

    I believe that the most important thing is to have a place to go to work. This is more important than impressing clients. My business is the same way. Very few clients come to my place of business (unfortunately a lot of people trying to sell me stuff DO come to my location…if I could just turn THEM into clients!). I meet most of my clients in their homes or at their workplace.

    However, I think that it is the job of a business owner to be a sort of ‘benevolent dictator’ over your employees. You have to be able keep an eye on your employees, especially if you are paying them any kind of guaranteed wage or salary. As an owner and manager of a business I notice that my employees are constantly pushing the envelope of how much time they can waste before I say something to them. Don’t get me wrong, my employees all have good character and are motivated to get the job done, however I believe that it is human nature to try to waste time at work. I did it when I was an employee. Looking back, I would be suprised if I was more than 60% productive as an employee. At crunch time I could step up and perform and I would probably be close to 100% productive, but the rest of the time….60% was it. As a manager it is easy to say “well…I’m not going to say anything to that employee because, well, he/she is very talented and at crunch time….he/she can really deliver.” I think that most employees will quickly figure out what the minimum they can do to get by is and then do slightly better than that.

    It is a constant battle of carrots and sticks to try to keep my employees productive. As much time is wasted at work, I am certain that time wasted working from home would be even much greater. I think it is critical that there is a place to go to work, a time everyone has to be there, a white board with goals written on it, daily accountabilty to those goals, and a good share of ‘benevolent’ whip-cracking. There is no way that I would trust any group of employees (salaried or wage earning W-2′d employees) to consistently and effectively work from home.

    I also believe that it is much easier to collaborate when everybody is working at the same place. In the past, I had outsourced a big part of my business to an outside enitty. It seemed like we just ended up duplicating all of our work. By bringing that essential function back into the office the synergy was much greater and the accountability was better.

    With that said..maybe it would be better to have an office, but a smaller less expensive one. I know that in my office building we do not have to pay any Common Area Maintenance charges and the utilites are all included in my monthly payment (about $14 per square foot per year, month to month lease). It is not the most chic location in the valley, but its not bad :)

  • http://www.smoothharold.com Blake Snow

    You know where I stand, J man. I tell prospects all the time that our offices are virtual. Everyone just says “okay” and we move on with the needs discussion. Though I can’t substantiate the claim, I don’t feel that I’ve lost any projects by a lack of a formal office.

  • http://pushtwentytwo.com Michael Verville

    I too often wonder why we have over 5000 sq/ft of office space when we might only have 2 or 3 clients/prospects visit a week. Like you, we have our name on the building, we also invested a lot of money into designing something cool and interesting both for employees and clients.

    I think the key is not to overthink it but realize it has an impact on vendors, employees, prospects, clients, friends, family, etc. It says you are for real and have a presence. Even in today’s world, people want stability, a place to go to, a place to be welcomed, a destination.

    I do not think that our office has specifically got us any new work but it sure has gone a long way in reinforcing our presence, who we are and what we do.

    We know it is worth it when prospects/clients notice our sign, like our space, invite themselve over, and comment on how nice it is see our team when they do come. It truly is an investment worth making though it is hard to pin down an ROI.

  • http://www.sbba.com Paul Johnston

    Ditch the space.

    I agree with the points made in previous comments. Office space is needed for two reasons: clients and employees. As a client, I could care less about whether a company has a nice office. All I’m interested in is results. I think it adds credibility to state your offices are vitual so you can save overhead. There are other ways to give prospects a sense of stability.

    The challenge will be keeping employees motivated and productive, not wowing clients. Rent some very inexpensive space somewhere if you ‘need’ to get employees working together. Go buy a home and ‘rent’ the basement from yourself. Or convert an entire home into a trendy office. Cut your payment way down.

    Office space = overhead. Overhead = costs passed to clients.

    It is very appearant from you entreprenur series that you need and should be paying yourself. Your employees, clients, prospects, and competitors expect that you be paid. Two ways to increase profits: increase revenue or cut costs. Doing both is always a good thing. Bury your ego and ditch the office, signage, and all uncessesary overhead. Then when your biz is squirting out profits, you can still keep overhead low and use funds elsewhere.

    I admire your entrepreneurial drive. The fact that you asked this question tells me you already know the answer. Ask your employees if they’d rather have a nice office or a pay check instead. Ask yourself if you’d rather have a paycheck or a nice office.

  • http://www.russpage.net Russell Page

    I don’t like working at home that much because I like separating the two. Didn’t Chris Knudsen write a post once about the challenges of working from home?

    http://www.chrisknudsen.biz/?p=119

  • http://www.chrisknudsen.biz Chris

    Russ, thanks for the reference. I think for developers and designers it could work with very few bumps. Marketing and sales is rough especially with small kids at home – as I noted above.

    Josh, if you do decide to go the home route, I would have a in person company meeting at least once per week to talk over the challanges and clients projects in person. It also helps keep the company’s identity in tact. Either that or make sure you all get together for lunch once per week.