What do startups consider before choosing their working environment? A startup is a vital early stage of the business life cycle and can refer to virtually any industry- fashion, grocery, tech, entertainment, nutrition etc. Innovation, small teams, young age, and flexibility are some of the attributes of startups. There are six forms of startups: Scalable, small business, lifestyle, big business, buyable and social startups.
Regardless of which form a startup takes, deciding the work environment where the organization carries out its daily duties and meets clients is vital towards achieving productivity and growth. This article will offer some tips on selecting a workspace for startups. The focus here is to provide information on coworking space and renting an office, so startups can identify the working environment that fits their business needs.
According to the Harvard Business Review, a coworking space is a membership-based workspace where diverse freelancers, remote workers and other professionals work together in a shared communal setting. Coworking spaces are structured to provide unique services to their users as they offer a range of services such as open, private and industry-based workspaces. On the other hand, Office renting is a traditional way of acquiring real estate property for one’s enterprise.
Co-working spaces and renting an office building are two very different things. In this blog post, we’ll explore factors that differentiate the two options so they can be used effectively by startups of all sizes.
1. Cost
Money is a vital resource for the survival of every startup. Research from Failory and CB Insights shows that 90 per cent of startups fail, and the second leading reason for this failure is poor financial management. Hence Startups need to be prudent in their financial decisions and be conscious of their long-term implications. Below are some of the resources that require finance;
2. Securing a work environment
Securing a working environment requires the allocation of financial resources. One of the advantages of a coworking space is the provision of a cost-effective working environment, even in a pricey urban centre. Coworking space is relatively cheaper than renting an office. It offers a flexible payment structure in the form of membership fees and daily or weekly payments. Instead of using a sizeable amount of capital to secure an office space, which might be unutilized actively all through the rent cycle, coworking space providers understand the issue of finance, among startups as such offers a need-based working environment that is affordable.
Although coworking space offers a flexible payment plan, payment is per individual and determined by the type of co-work space required. Hence, when considering the best option in a coworking space, the price is a bit high for a team with large numbers that need to work regularly. However, working for a prolonged duration is what startups usually do. Hence, renting an office space is a better option in this case. Regardless of the duration spent developing the business and the team size, the payment is one-time and does not change. For example, according to Nigeria Property Centre, the average cost of securing an office at a catchy location in Lagos is 4 million naira per annum. While Enclave offers an open space for 35000 Naira per month
3. Amenities
Every startup needs tools and facilities to help them execute its business. These amenities altogether are capital intensive. Then, is it advisable to purchase or leverage coworking space?
Yet, another vital area where coworking space stands out by relieving startups of the need to purchase amenities or subscribe to services. The membership payments ensure the provision of power supply, furniture, basic office supplies, and support services without incurring additional costs. A startup could even get access to exclusive services and amenities that may not be available in an average traditional office. While startups that operate in a rented office space may enjoy some facilities installed in the office, the running and maintenance costs of these facilities and services are solely on their business.
4. Productivity
Consistent productivity is no doubt vital to achieving a business goal. Often, a startup aims for scalability, longevity or to grow to a point where they sell their innovations to successful companies. Coworking space operators provide opportunities to enhance the productivity of their users through the avenues of collaboration, cooperation, networking and mentoring provided in the workspace community. Since startups that use coworking spaces share the same work environment along with other professionals and startups in their industry, they benefit from this community through their positioning.
5. Security and privacy
According to Richard Myers, President and CEO of Alternawork Incorporation, physical safety and cybersecurity are essential to the survival of every startup. Using coworking space implies that the space operators have some control and influence over a startup’s security system. While on the other end, renting an office space gives a startup a lot of control over its security. Generally, coworking space is a public space, though it offers some level of privacy based on the membership type. However, it does not guarantee 100 per cent privacy for all startups using their workspace.
In some cases, the service provided by a startup may require protecting the identity of its clients. Bringing the client to a coworking space has breached privacy regardless of the in-private services offered by the facility. Cybersecurity is another challenge attributed to using a public network. Every startup has its unique confidential and potentially sensitive information. The possibility of a cyberattack in a public network is higher compared to a private network. Working in a rented office space guarantees the use of a trusted network that could ensure the security of data and other online resources.
As you can see, cost, productivity and security are three essential factors that every startup needs to consider before choosing between a coworking space and renting an office space. Identifying the basic needs and the available resources will help startups ascertain the working environment that could help them achieve their business goals.
