If, like many small business owners, you want to cut costs, one prime place to look is your office space.
That typically can come to as much as 5 per cent of total revenues for many small companies, according to Ken Gaebler, who heads Gaebler Ventures, a Chicago-based small business consulting firm.
It’s also an area where it’s easy to find yourself overextended.
But, “Every dollar you save on office expenses is a dollar that can be used to grow the business,” says Gaebler.
“It’s best to be as frugal as possible.”
Thanks to the Internet, videoconferencing and other technology, it's easy to run your business virtually.
If appropriate, you can use independent contractors to do most of the work. Or, you can have a full-time staff telecommuting from their homes.
Office vacancy rates are on the rise. For the first quarter of 2010, they increased to 17.2 per cent, the highest level in 16 years, according to Reis, a real estate research firm.
As a result, many landlords are happy to re-negotiate agreements with existing tenants. To get the best deal, make sure to ask for at least one month's free rent.
But, also discuss other concessions, such as inexpensive renovations, a lower base rent, and the option to expand to a larger office at your current rate.
Another possibility: If your cash flow allows it, ask your landlord to accept prepayment of, say, three months rent in exchange for a sizeable reduction in rent for the duration of the lease.
That can mean subleasing from another company with extra space. If the business is in a cash flow crunch and looking for a quick source of added money, you'll probably be able to negotiate a discount of at least 25 per cent.
Or join forces with another business and move into a shared office together.
Then again, you might also consider subletting your own space, if your landlord allows it. Best is to ask your fellow tenants whether they need additional space; that way, you can be sure you're doing business with a firm you know and trust.
Gaebler points to a struggling entrepreneur working down the hall from him who recently decided to look for someone to take over his small, $1,000 a month office space. After knocking on many doors in their building, looking for someone interested in subleasing, he eventually approached Gaebler, who, as it turned out, needed the extra space. He agreed to take it over.
Some municipalities offer tax and other incentives to businesses moving into their areas.
In addition, economic development zones provide such benefits as low-interest loans to companies willing to set up shop there.
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