Managing your finances is absolutely key when you’re running a business. If you don’t keep your overheads under control, your profits will suffer and you might end up running out of money completely. One of the most common reasons that new businesses go under is that they simply spend too much before they’re bringing in enough revenue to cover their overheads. Renting an office space is one of your biggest costs so if you’re starting to grow the business and you’re looking at moving into an office, you need to work out whether you can realistically afford it. However, a lot of business owners go wrong here because they just consider the rent on the office, which isn’t the only cost that you have to bear. This is the real cost of renting office space.
You’ve considered the monthly rent of the office and you think that you can comfortably afford it, but what about all of the utility bills? The cost of running an office can be incredibly high because you’ve got a large space with all of the lights and heating, then you’ve got to consider all of the computers and other equipment that you’re running for 8 hours a day. Those costs quickly add up and a lot of businesses find that, even though they can afford the rent, they can’t actually afford the cost of operating the office every day. When you’re looking at offices, it’s important that you ask the real estate agent what the average monthly cost is likely to be. Factor this into your financial projects and make sure that you’ll actually be able to afford to keep the office running before you sign the lease.
Businesses create a lot of waste and you need to put it all somewhere. There are certain things that need to be disposed of properly and can’t just go into landfill, and that will cost you a bit extra as well. When you’re trying to calculate your costs, make sure to include the price of bin hire and removal. You also need to think about any extra costs involved with disposing of electronics because you’ll usually have to pay more. If you just throw them in with the normal rubbish, they’ll cause damage to the local environment.
Waste removal is a very important part of your public image and if you’re creating a lot of waste, that doesn’t sit well with potential customers. Environmental responsibility is a big concern for most consumers these days and if you’re seen to be a very wasteful company or you’re not disposing of waste in an environmentally friendly way, it could seriously hurt sales. That means you might need to invest more money in using recyclable materials around the office to reduce waste, so you need to factor that in as well.
Maintenance is something that business owners always forget about but it’s a big problem, especially if you’re renting an older office space. Ideally, you’d rent a brand new office that isn’t likely to have any maintenance issues but most businesses, especially new ones, probably can’t’ afford to do that. You can save yourself a lot of money on rent if you use an older office but be aware that you might end up paying out more in maintenance costs.
If you have issues with the plumbing or electrics in your building, it can be incredibly expensive to fix. If, for example, you have a leak in the building, you’re going to have to call out an emergency plumber to sort it out. They’ll charge a premium for coming out right away and then you’ll have to deal with all of the damage, which will cost you as well. If you have a problem with the electrics and the building is unsafe, that will need to be sorted out immediately as well. As well as the cost of the repairs, you have to consider the loss of earnings as well. While this maintenance is being carried out, you’ll have to shut the business down. Depending on the severity of the problem, you could be out of action for a while and that’s all lost revenue. A single maintenance issue can cost you thousands and you’ll have to find that money from somewhere, so just be aware that a cheaper office isn’t always cheaper in reality.
The best way to avoid this is to pay for regular checks of the building at least once a year. If you can fix smaller problems as and when they come up, you can avoid any serious damage that is going to cost you a lot of money.
If your office is going to function properly, it needs to be properly furnished. If you’re moving into a new office, this isn’t as much of an issue because you’ll have a lot of that furniture and equipment already. However, you’ll most likely be moving into a larger office so you’ll still need to buy some things. If you’re moving into an office for the first time and you have to start from scratch, it’s going to be expensive. All of the simple things that you take for granted like desks and chairs will cost more than you realize. On top of that, you have to equip all of your employees with computers and printers etc. It’s not just a one off cost that you have to bear either because those devices become obsolete every 5 years or so and need replacing. Consider that the average computer costs around $500, if you’ve got an office with 10 employees, that’s $5000 you’re paying out. That’s before you’ve even paid for the software licenses that you need, so it can quickly add up.
If you don’t invest in all of this stuff, your employees won’t be properly equipped to do their jobs and you won’t be in a position to operate the business effectively.
The cost of an office space amounts to a lot more than the monthly rent. If you don’t consider all of these costs when you’re budgeting, you’ll find that you can’t afford to operate an office and you can quickly run out of money.
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