A MATTER OF PERSPECTIVE: 12/16/13

The First Office

To rent or not to rent?
Choosing to move from the basement to a real office space was a big step. Ben and Jeremy reflect on factors leading to their decision, and lessons learned in the process.

Benjamin Wills

Making a commitment to leasing office space pained me in the same way as taking out a mortgage for a house.

The big difference between office space and a house is that office space is a tool to create better output from the business and a house is a long-term consumable item. So, with that fact in mind, we had to decide the right time to purchase the “tool.”

I would like to say we went through some great analysis of return on investment, but I think it was more that I was tired of sitting on lawn chairs in the basement or sitting at the dining room table. Not to mention, our wives probably were tired of suppressing child noise all day so we could make phone calls. In some sense, we had anecdotal evidence that moving to a real business office complex would increase our productivity.

Productivity from the change in venue came in a variety of forms.

It came when we were able to sit and concentrate longer at a real desk. It came when we were able to create a feeling of stability to our prospective clients and employees. It came when we were able to make and take calls efficiently without the bean grinder and crowd noise from a coffee shop. The list goes on, but the bottom line is that we knew we had to move when we kept feeling restricted by our home or coffee shop alternative. There are only so many prospects you can attract with a PO Box as your address!

When we did set out to lease, we made the lease commitment short and inexpensive by only going one year in a small, four person office. A one year lease gave us the ability to grow into another space easily.  A one year lease gave us the room to have made a mistake without a long, burdensome contract. A one year lease gave us the education we needed to grow wisely into subsequent larger and longer leases.

One of the few mantras I repeat is: “Vendors will always take more money.” 

If you go small and need to grow more quickly than expected, generally people are willing to take your money to help you grow. The opposite is true also in the fact that vendors don’t like to give back money. Making negotiations back down to right-sized will be arduous. 

As the commitment time and costs escalate in your leasing, be more conservative in what you buy. Growing into bigger and better is so much less costly than the opposite.

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Jeremy Wills

Our first office was Ben’s basement. 

I still remember entering the home, conversing with his kids who were being home schooled, passing through the kitchen to grab a cup of coffee, and heading down for the day. The basement was a little darker than I would have preferred, but that was secondary to the low (non-existent) rent.  Eventually, after picking up our first regular contract employee, we “upgraded” to my basement, complete with a folding table and chairs. What I most recall is not going upstairs for fear that my kids would see me, grab hold of my legs, and not let go. 

A real office was low on the priority list in the early days.

Cash flow was tight, and we had a pecking order of where the money would be spent as it came in. However, eventually the time came where we recognized the inefficiencies of working from my home. We saw the inconvenience of ensuring I was there to let the others in, the distractions the work-from-home experience inevitably causes, and the transaction costs of the guys having to haul stuff in and out routinely. 

The circumstances of finding our first office were providential.

It happened when I was making calls into the local chamber companies to solicit business. During the course of one of the conversations, a gentleman suggested I contact a local property manager thinking he or his tenants might have IT needs we could fulfill. As it turned out, the property manager had an IT project need which we contracted to do, after which we discussed providing ongoing support services. It was during that conversation Ben and I realized we could negotiate to provide IT support services in exchange for a reduced rent expense. And with that, we found ourselves needing to make the tough decision.

Tough decisions have no playbook.

There is no perfect system with which to make decisions, given the fact that every decision has a unique set of circumstances.  However, there are healthy decision making processes that, if taken, help one to make the best possible decision.

First, don’t make the decision prematurely. To the degree the decision disrupts or impacts the current state, to that degree one should spend time waiting and “reading the defense,” so to speak.  We certainly waited for quite some time before pulling the trigger on an office. It afforded us time to evaluate the pros and cons of working from home versus the potential of an office. With time comes more information and better criteria for making the best decision.

Secondly, remove the desire to think linearly. The danger in this line of reasoning is that one might start at the wrong starting point and draw wrong conclusions from the get-go.  Rather, exercise a non-linear thought process that stimulates thinking in multiple directions and believes there are multiple starting points from which a problem or opportunity can be viewed.  In our case, non-linear thinking shifted our line of reasoning away from our natural tendency to look strictly at what renting an office would do to our P&L and had us considering a different starting point; this starting point made us think an office would cause us to be more productive, an office would prepare to onboard additional staff more quickly, and an office would present a different feeling for ourselves, our customers and our prospects—all causing more business to take place.

Lastly, once the decision is made and action is taken, weigh the results. Those might be measured immediately or over time, but they will certainly help in making future decisions. Once again, in our case, we have now just completed our fourth move. And, with no exception, Ben and I were able to leverage our past experience to provide confidence in making a decision to move with much more at stake during this last round — which, conincidentally took place just weeks ago!