Why is renting an office recommended for startup companies?

• Update:2024/4/5

A start-up company that has just been established is still cash-strapped and has limited funds to spend on equipment. Also, depending on the size of the initial office space, the company may grow rapidly in a short period of time and quickly outgrow it. This is why we recommend renting an office.

In this article, we will discuss the appeal of renting an office and how to choose one for startup companies wondering whether they should set up an office.

What is a serviced office?

In a typical office, the user signs a contract with the building owner, pays monthly rent, and uses a single space as a “serviced office. Users must provide their own office furniture and equipment, such as desks, chairs, and copy machines.

A serviced office, on the other hand, is a contract for a single parcel of space that is offered to multiple users. The space is private and can be used in the same way as a standard office. However, most serviced offices are furnished with office furniture. They also have facilities and equipment such as shared meeting rooms, copy machines, and lounges.

For more information about serviced offices, please see the following articles.

Why rent an office for your startup company?

Serviced offices are especially recommended for start-up companies. There are five main reasons. Let’s check each of them.

Fixed costs can be reduced

The most attractive aspect for start-up companies is the cost.

In the case of a typical serviced office, a long-term contract is assumed. If the office size is large from the beginning, fixed costs such as rent will be high. Since the company may not necessarily grow smoothly, you may end up paying extra expenses for a while.

Serviced offices are available for relatively short contract terms, allowing you to rent an office that is suited to your size. Some offices include utilities, internet, and other fees in the common-area fee, which can help startup companies reduce burdensome fixed costs.

Office furniture and office equipment are available

The initial cost of setting up a new office tends to be high, as in addition to the security deposit and key money, office furniture and office equipment must be provided. However, with a rental office, these facilities are already in place and do not need to be purchased.

Relocation costs are also reduced because there is no need to move equipment out of the building.

Good location

Serviced offices are often well located.

Nonetheless, the lower rent compared to a typical office is a major attraction. Not only does this reduce the burden on employees to get to and from work and help create a comfortable work environment, but the easy accessibility of the office will also reduce the amount of transportation expenses paid.

In addition, a good office location can be expected to impress new clients and financial institutions.

Can be registered as a corporation

There are many serviced offices that offer corporate registration. Corporate registration is essential when setting up an office, as it greatly affects the credibility of your business partners.

While corporate registration can be a cumbersome procedure, it is relatively easy to register in the case of serviced offices. However, some management companies do not allow registration, so be sure to check before signing a contract.

For more information on corporate registration of serviced offices, please see the following article.

Optional services available

Some serviced offices offer a variety of optional services. These services range from the use of meeting and reception rooms to telephone service, cafes, and more.

Start-up companies often have a small number of employees and inadequate human resources. By making good use of the optional services offered by serviced offices, you can outsource your business operations and expect to increase your business efficiency.

However, service content differs from one serviced office to another, so it is important to make sure that you have the optional services you need.

For startups! How to choose a serviced office

We have learned that serviced offices have many attractive points for start-up companies. So, what criteria should you use to choose an office to rent?

In this section, we will explain what to check when choosing an office to rent.

Initial and monthly fees

First, let’s still focus on the initial and monthly costs.

A typical office requires an initial cost of six months to a year’s worth of monthly rent for security deposit, key money, and deposit. In the case of serviced offices, the initial cost is usually one to two months’ rent, so this alone can reduce the initial cost.

However, we do not recommend simply looking at the amount. It is important to consider whether the initial and monthly costs are sufficiently low, taking into account the items discussed in the following sections. In addition to the size of the company, it is important to carefully determine whether the services available are commensurate with the cost.

location (e.g. of industry)

Location is a very important factor when choosing an office.

For employees, accessibility is a key factor in their ability to do their jobs. An office with good access to the surrounding environment will help business run smoothly.

The location of your office can also make a big difference in your company’s impression with new clients and customers. If you want to enhance your company’s credibility, you need to be particular about the location of your office.

Availability of private rooms

Serviced offices are basically private rooms that give the company its own space.

However, it is also possible that the service is being offered in confusion with shared office space. In such a case, there may be cases where the office is called a “serviced office,” but it is a free-address office with no private rooms.

This is not always the case, so be sure to check the availability of private office space when signing an office lease.

Availability of shared facilities such as meeting rooms

Even if not always necessary, meeting rooms and other shared facilities are surprisingly important.

Meetings are essential to conducting business. In some cases, you may even invite your business partners’ representatives to a meeting. In such cases, it is important to have a meeting room that can be used in a relaxed atmosphere.

In many cases, shared facilities such as meeting rooms are optional in serviced offices. If there are only a few rooms available, you may not be able to use them when you want to hold a meeting, so it is important to check the extent to which shared facilities are available.

Ease of contracting

Ease of contract is also a major factor for renting an office.

Renting a standard office tends to be a bit more difficult than renting an office space because of the long-term contractual commitment and the need to go through a screening process. In addition, annual contracts also require procedures such as changing the registration of the office.

Serviced offices have the advantage of being easier to contract. However, the terms and conditions of the contract differ from one office to the next, so in order to get the most out of your serviced office, you will need to pay attention to the ease of contracting.

Summary

A start-up company that has just opened for business wants to save as much money as possible until the business gets off the ground. Renting a standard office space can be expensive, requiring a high security deposit and key money, as well as a long-term contract.

Renting an office space for rent reduces the initial cost of security deposits and key money, and the monthly rent is in line with the size of the space. The move-in and move-out procedures are smooth, making it ideal for start-up companies that may need to increase headcount due to rapid growth.

If you are considering renting an office in Tokyo, please consider Tensho Office as an option. You can use the meeting rooms and internet free of charge, and there are no fixed costs such as utilities. With initial and fixed costs as low as possible, you will be able to spend your valuable funds on the development of your business.