You’ve come up with an innovative idea that has the potential to transform your industry. Maybe you have already landed VC funding or other types of investment and you have some runway. But then again, you could still be building out the fundamentals of your business and aren’t at that point yet. Either way, you will need a budget-friendly office that accommodates your team size while still helping to drive the business forward. 

Why your business doesn’t need a traditional office

As you start to plan out your business and its needs, the first thing that often comes to an entrepreneur’s mind is a physical location to ground a company. But in a world where a large cross-section of employees have adapted to a digitalized infrastructure, a traditional office is no longer a necessity. 

Originally, an office building or space was a signal of how well your business was performing or was expected to perform. But with revolutionary companies like Dropbox, Shopify, and Upwork forgoing their office building for permeant, flexible remote work environment, those days are quickly coming to an end. 

SaaS, tech, and other startups are built on revolutionary ideas and have been known for even changing the function of a workplace. If you don’t need a space to entertain customers or investors, and collaboration can still thrive through digital channels, a virtual work environment might be just what you are looking for. But there is still value to be gained from a physical office space. If your employee count is growing fast and you need a place to ground your collaboration or host clients and investors, a physical workspace could still be beneficial. 

5 alternatives for your startup headquarters

However, the high cost of rent and utilities of a traditional office is no longer a necessity for those to make an impact on their customers and build their business. Instead, this money can be spent on driving actual ROI. 

Here we’ll explore five budget-friendly alternatives to mainstream commercial buildings and office space.  

1. Create a virtual working environment

Instead of renting an office space, you could just work from home. This removes the need for security, rent, and commuting expenses. Since COVID-19, the majority of the people in the U.S. have grown accustomed to working from home. Many companies have established great virtual infrastructures that still allow for vibrant company culture. Research what these companies have done well and use it as a baseline for your own. 

Additionally, virtual work opens up your candidate pool while allowing employees not to be tied to one location and instead enjoy the digital nomad lifestyle or work from anywhere. 

Pros

  • Removes the cost of rent and utilities
  • Gives you a wider pool of candidates 
  • Allows employees to live and travel anywhere
  • Offers flexibility many employees are looking for 
  • Removes commuting time that can be dedicated to actual work

Cons

  • No physical location for employees to gather and collaborate 
  • A remote infrastructure must be established to keep employees engaged
  • Productivity must constantly be monitored and audited
  • Burnout can be higher

2. Share an office with other startups 

It’s possible to get access to shared office space for a fraction of the cost of a commercial office. Many people work out of shared spaces while they’re securing early funding, or if they just need a place to stay while their startup is taking off. Some startups don’t grow as fast as they project. 

This means they might have extra space that isn’t being properly utilized. Call around to startups and see if you can negotiate using unoccupied space for a small fee. Remember, they are not only helping you out, you are helping them out too, so don’t be afraid to negotiate. 

Pros

  • Reduced cost of rent and utilities
  • Allows startups to support each other in areas 
  • Gives you a collaboration space for your employees to work together
  • You have the chance to learn from other startups

Cons

  • Space might be on the smaller side 
  • You have to put up with the other company’s culture, events, and schedule
  • Renting the space could be conditional until the other startup increases its growth
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3. Find a local co-working space

Because many startups and small businesses have tight budgets, using a co-working facility is a viable alternative for meeting, working, and collaborating with other like-minded people. These types of spaces often offer the best value on rent because it doesn’t require an entire office suite. 

A typical co-working location will offer amenities that allow members access to Wi-Fi, conference rooms, and printing services, as well as allowing employees to reserve desks and tablespaces. Membership costs range from $50 to over $300 per month depending on the facility and membership type.

Pros

  • Rent is often monthly without a contract
  • Allows freelancers and startups to pool resources to support different areas of the business
  • Give you a collaboration space for your employees to work together
  • You can choose to leave at any time if you are monthly
  • You often have access to a kitchen, snacks, and employee engagement activities
  • You don’t pay for utilities

Cons

  • Space could get noisy 
  • Privacy is often minimal
  • If you are monthly without a long-term contract you could lose your space
  • You can’t personalize the space to your company

4. Rent a house 

The founder of Apple, Steve Jobs, started the company working out of his garage. Startups have been known to start in the attics and basements of homes. A house is a great place to start out—especially if you have space. You can find homes that are in areas with cheaper rent and tax rates. Sometimes renting a floor of a house can decrease overhead when compared against the cost of commercial space. Alternatively, you could also rent a small apartment for a few months and use that to ramp up to a full-fledged office space. 

Pros

  • Rent is less than a commercial office 
  • It gives you time to scale your business
  • There are a lot of cool areas to find less expensive apartments

Cons

  • You still must pay for utilities 
  • You need to make sure it is legal to run a business out of the house or apartment
  • If you are growing it could be tight quarters and some employees might need to be remote

5. Check with large companies 

Large corporate headquarter are built to include room to grow. They also can have an abundance of open conference rooms and open communal spaces that help drive collaboration. See if you can rent a conference room or a few desks from them. Unlike co-working spaces, they aren’t looking to get revenue from renting their space. 

This also means that you would have access to Wi-Fi and electricity, likely, without any additional charge. Although, depending on the security precautions of the company, you and your coworkers might only have access to guest Wi-Fi and a restricted area of the building. 

Pros

  • Rent is less and could even be free in some cases 
  • You don’t pay utilities
  • You get the feeling and look of a large business
  • Gives you a collaboration space for your employees to work together

Cons

  • Space might be limited to a conference room or a group of desks
  • Movement around a corporation could be restricted
  • Access to the internet could be restricted to guest access only
  • If the company needs the space back, you could be evicted

Bottom line — Be creative when considering your office space

Creativity and innovation need to be at the heart of every startup. This mentality should extend to your office space. Your office space should be a representation of your business – agile, creative, and innovative. This might mean your company is fully remote and taking advantage of the increased candidate pool and the kind of freedom that gets the creative ideas flowing. 

It could be that you’re working alongside other innovative companies trying to make a difference. Whatever direction you go, make sure it makes sense for your bottom line and employees.

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AvatarAnn Basnett

Ann is a freelance writer focusing on B2B startups. She focuses on industry trends for SaaS, FinTech, and Telecom startups.