Is An Office Necessary?

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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It seems like the first thing most people do when considering opening a small business is shop around for office space. The cost of renting or buying space has a fairly standard place in the business plan and it simply makes sense that your business needs a home, just like you do. But is an office truly necessary for your business?

Office Alternatives

An office simply isn't the only option, especially with today's technology. It's becoming rarer that you'll need to meet with every client in person or even that you'll need much more than a laptop computer to run the majority of your business. When you combine that fact with the cost of office space, it makes sense to consider alternatives. If you can entirely avoid renting office space, you'll have more money – perhaps hundreds more each month – to spend on other things your business needs.

The alternatives are as varied as the types of business you may run. It's easy for some firms to work remotely, from their homes or coffee shops. It is equally easy to rent a share of space – at a co-working space or a business center – as you need it. There are even people who simply work wherever they are, traveling regularly with their laptops – these digital nomads, as they are sometimes known, may not even have a home, let alone an office.

Deciding What You Need

As you're developing a new business, or evaluating an old one, it's worth considering exactly what you need in terms of work space.

• Do you need storage space? If you have paper files or inventory that you need to maintain, storage space may be a consideration. Office spaces often provide a limited amount of storage useful for a small business, but there are alternatives with lower costs.
   
• Do you need to hold face-to-face meetings? Whether you're meeting with clients or employees, an office often represents an easy meeting place. There are alternatives, of course, but it's worth considering how often you plan to hold meetings, as well.
   
• Do you need to be able to directly supervise workers? There are certain jobs where you need to be able to see exactly what a worker is doing — and asking them to come to your home to work can be a little uncomfortable.
   
• Do you expect clients or customers to drop in unannounced? In retail situations, for instance, you need a space your customers can expect to find you during working hours.

There are plenty of situations in which an office is necessary to the health of your business, but there are also plenty where an office is just another expense. Of course, you can also use combinations if that's the best fit for your business. Perhaps you need a small office you can work from, while the rest of your team works remotely.

What an Office Represents

Some of your clients may view an office as a symbol of professionalism. While it may not be worth it to get an office just for appearance's sake, it may be worth considering an alternative that helps you with that issue. It's important to do some research into what your clients will expect and how they feel about different scenarios. If you're in an industry where you can expect to never meet your clients face-to-face, a professional-sounding mailing address could easily be enough.

By working out of a business center or a co-working space that provides you access to a conference room, you can appear more professional to those clients who may have concerns. Alternatively, you may want to play up the fact that your organization doesn't need an office. There are plenty of clients who appreciate flexibility and a lower bottom line. It comes down to a question of how you want your business to appear.

If You Need an Office Space, Get It

There are some businesses that absolutely need office space, or perhaps even more commercial space – like a warehouse or a retail space. If that's what you need for your business to succeed, go for it. Find the best possible space and rent or buy it. Build it into your business plan and your cost estimates.

You aren't tied forever to one office, even if you buy the space. You can always change up where you and your staff work later one. Make the decision that is right for your business today. Evaluate what you need at regular intervals and you'll come up with not only the most cost-effective approach to office space, but you'll have the space you actually need to grow your business.