This is the 64 million dollar question. There are so many variables to this, but cash plays a major role. Other considerations are: The type of business, target customers, geographical location and your brand.
In the service industry – such as – Consultants, manual labourers, home & car insurances services it is easy for these businesses to start up with no office address, just a spare room or even a corner of a bedroom would do just fine. The basic requirements would be a smart phone, a laptop, printer and stationery. One level up are virtual office addresses that could be used, some may not allow you to meet clients at their location but they give you the opportunity to put the address on your business stationary and websites. Others – for an extra fee will give you access to a small meeting room that you can use when you have appointments with clients.
In the retail business for example selling fashion goods online you can get away with having an online shop, instead of a physical shop but you will still need a physical address for returns and deliveries. Having an address will also give people confidence to shop with you.
A physical office address might also help in some instances, depending on the image that you want your business to project and some businesses may also want to attract passing trade so may need office space, like estate agents and hairdressers.
Pros and Cons of using your home:
Its much cheaper, you can avoid the daily commute of dodging smelly armpits thus saving you time and travel costs. You can also have whatever you want for lunch – without the price tag!
On the flip side it can be less productive. If I don’t have framework or some written goals/objectives to meet, then it becomes a bit difficult to get motivated. Sometimes, speed and quality are sacrificed when we work from home. It can also be a challenge to meet clients if you do not want to bring them to your house and meeting at Starbucks or in an hotel lobby is not always ideal.
Working alone can be boring and I am supported by recent studies which reveal that the number of people who don’t have someone to bounce ideas off or discuss important issues with, has tripled over the last 2 decades.
Pros and Cons of working from an office:
There are clear working boundaries and less distractions such as the TV, the fridge and even taking a quick nap. Although working in an office can create the impromptu “water fountain meetings” however paying for office space can force you to focus on putting more effort into your business and consequently be more productive and profitable.
The main disadvantage here is the cost of paying for office space and the associated costs of travel and extra resources required.
Some businesses do have to operate from an office no matter how small they are. Would you trust a lawyer or doctor with no office premises? Your decision should be based on the type of business model you have and whether you will need regular contact with your customers/clients. Are you self motivated? If you are easily distracted, then you might benefit from having a structured working environment that a rented office can offer.
Finally do you like working alone or do you prefer having people around you? Assess the cost/benefit of each option and this will help you to choose the one that suits you and your business.