From start-up to enterprise: when do you need an office?

When is an office needed?

Start-ups in the early growth phase find themselves in a dynamic and exciting environment. The enthusiasm for new projects and collaboration in small teams characterize the everyday life of these young companies.

With increasing growth and rising employee numbers, a new challenge arises: the search for a suitable office. In addition to aspects such as location, size, and equipment, companies must also ask themselves: "When is the right time to move from the home office to a larger office?"

Every beginning is small

Many start-ups begin within their own four walls. Whether it is a cosy home office or their own living room – the beginning is often humble. Even giant companies like Google and Amazon started in garages and are now Fortune 500 companies with hundreds of thousands of employees.

The right time to move into a larger office has come when the home office is no longer sufficient. As soon as the first employees are hired, an appropriate office should be rented. Initially, many start-ups look for smaller offices on the outskirts of town to keep costs within limits. With a growing number of customers and volume of orders, the number of employees also increases. A new, larger office becomes necessary to meet the increased requirements.

The search for the ideal office

More employees also mean a higher demand for better and more easily accessible infrastructure. Companies look for offices in central locations, which often proves difficult due to high demand and limited supply. Offices are generally not flexible. When employees switch to part-time work or new teams are added, the company faces the challenge of finding an office with suitable capacity. Established corporates also face similar problems.

Flexibility in everyday office life

Companies go through alternating phases of growth and contraction. Office and company growth does not proceed constantly but fluctuates between times of upswing and consolidation.

It may happen that an important customer is lost, or employees have to be laid off. Digitalization leads to offices being less in demand, as home office models are on the rise. External circumstances such as a pandemic can also lead to offices being less utilized. Unused desks represent a financial problem. Like start-ups, large companies must also find a flexible office solution to adapt to changing requirements.

Challenges in finding an office

The dilemma between growing and shrinking companies is great, and ideal options are rare. The optimal use of office space is difficult because offices cannot adapt to the spatial changes of a company. There are several reasons why our conventional office concept should be reconsidered:

Long lease agreements

Those looking for a workplace are often confronted with long lease agreements that make the search for a suitable office difficult. While longer contract terms often mean savings in the long term, they can become problematic if the company has to lay off employees and wants to move to a smaller office. For start-ups, long-term leases are particularly challenging as they can rarely predict exactly how they will develop.

Capital tied up by the rental deposit

Many landlords require a rental deposit at the beginning, which must be deposited when renting an office. This deposit often amounts to three to six months' rent and can be difficult for a young start-up to raise, as equity is usually very limited in the first few years.

High initial costs for infrastructure

Especially in the city, the demand for offices is high. Companies benefit from good networking and the central location, but the costs are correspondingly high. For smaller start-ups in particular, these high initial costs are a problem.

Many companies therefore go a step further and rent out their free workspaces or rent additional desks. Perhaps you have also considered implementing this idea in your company and found that the selection of possibilities to sublet on a short to medium-term basis or to rent unused workspaces is limited.