This FAQ Business Podcast episode we look at the pros and cons of working from home. We start with sole traders, but we talk about working from home right up to the corporate level. We cover a vast array of considerations – the workspace itself, distractions, legal issues, team spirit, loneliness, costs, hot desking and so much more!
If you do decide not to work from home we look at alternatives including coworking spaces (hot desks and offices), enterprise spaces, subleases, commercial leases and even touch on rent to buy.
Another solo episode in our thought leadership series. Fingers crossed finally starting to feel better, hence a longer episode with more to consider.
Listen to the episode on all good podcast services, watch on YouTube or if you prefer to read, check out the transcript below.
Disclaimer – All information provided today is general in nature. The numbers given are purely for example purposes and are NOT reflective of real-life results. They are simply to make a point. In an imperfect world you’re unlikely to achieve such perfect results! Please reach out to Jane if required for personalised advice or coaching.
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Season 2 Episode 21 FAQ Business Podcast transcription | Working from home – pros and cons
Something contemplated, especially by growing businesses, is whether you should be working from home or from an office, location, warehouse or whatever is appropriate for your business.
00:14 Working from home versus working at an alternative location
Are you even a real your business until you do this? How does working from home versus working from an office or a workspace affect your worker relationships, professionalism, your money, and whether you need office or warehouse facilities?
Today’s podcast, we consider whether you should be working from home or an alternative location.
00:41 Welcome to today’s FAQ Business Podcast with Jane Tweedy
Welcome to the FAQ Business Podcast for business owners, covering four pillars actionable education, inspiring leaders, businesses like you, and thought leadership where we challenged your thinking. Hosted by myself, Jane Tweedy, I’m founder and lead trainer of FAQ Business Training, where we want to avoid you getting ripped off or ripping yourself off. We’ll feature an amazing diversity of guests with lots to educate and inspire you. Let’s jump into today’s episode of the FAQ Business Podcast.
Hi there, I’m Jane Tweedy host of the FAQ Business Podcast and today we’re looking at the issue of working from home. Now, clearly there’s going to be some instances where working from home is not even an option.
01:29 There are some instances where working from home is not an option
If you’re opening a cafe to serve the public and have people come to a cafe, clearly you need a cafe OK we’re not going there today. What we are looking at today though, is whether you’re a sole trader, you’re a sole trader with a few remote workers, you have a small team or a growing team and whether working from home is an option for you and your staff members.
Let’s look at what options there are things like coworking spaces, subleases and having your own premises and what are the good and the bad that come with each of these.
So we’re going to go through, first of all, the sole trader sort of scenario, and then everything else is going to be more talking about the spaces themselves.
02:12 Sole trader – operating from home cheapest option
So let’s get started. When you’re a sole trader or have a few independent team members, then obviously at that stage you tend to have the most choice of where you can operate. Operating from home is obviously the cheapest option. You don’t have to pay to rent anywhere else, you don’t have the hassles of renting anywhere else. You can just literally set up at home.
02:34 How professional do you want to look?
But is it that easy? Not always. We’ve also got to look at other things like how professional do you want to be? If you are having people come to your home and they’ve got to trapes through your messy house to get to your little, tiny office, is that a good look? Whereas I’ve been to people’s home salons, for instance, that are at the front of their houses or down a separate alleyway and they are completely separate entrances and in those cases they are very professional. You do not feel like you’re going into someone’s home because you don’t go into someone’s home.
But in those cases, do you have access to a toilet because people do need to sometimes use a toilet facility and quite often I find those tend to be in the house. Modern houses are often designed with a home office immediately off the front door. So they can be sort of segregated from the rest of the house.
03:29 If you are looking for a house keep the layout in mind
So definitely if you’re looking at buying a house, consider that when you are looking if you’re building a house, even better, design a home office solution at the front of the house, especially with like a bathroom and kitchenette type facility in it. Because that’s going to really help you to have a house that genuinely works from work from home and resale value for the future, let’s face it, many more people are working from home, so that might be a good resale feature for you. But obviously speak to your real estate agents, etc beforehand.
04:03 Why pay for office space if customers don’t come to you?
Sometimes I see sole traders start up literally day one and want to have an office space from day one. And I do question that because a lot of them are doing it for a purely ego driven reason. They perceive that they’re going to look more professional and they feel really professional by having a separate office space. But honestly, is it more of an ego trip? Do you actually have customers coming to visit you? Because if you don’t, what’s the point? It really becomes a lot more ego. Is your ego writing cheques that your business can’t cash.
So having a business run from home is definitely a lot cheaper. Let’s face it, there’s no commute options. However, there are some drawbacks and some costs and still some things we need to consider. First of all, you can’t just operate a business from home in some localities.
04:57 I can run a business from home and still go to venues and clients, etc
If you’re running a business like I do, which is more about business training and consulting and things like that, which I can do remotely, then running a business from home is honestly no big deal at all. I can obviously go to venues to run events and things when I need to, I can go to client’s premises, so I don’t need to have client’s coming to me.
05:17 Customers coming to your house may need Council approval otherwise insurance is void
And in my area that means it’s fine, I can have a couple of workers even come to my house that is fine, I don’t need Council approval, but as soon as I have customers coming to my house, even one, I actually need approval from Council to run that business.
So please make sure you check with your local Council as they are all different. Everyone has different rules and regulations but the reason I bring this up and it’s really important is because if you run a business from home illegally, because it had to be approved to be legal, you are actually potentially making your home and contents insurance null and void.
So do consider that, it is a risk that you are taking on potentially unaware that you’re doing so okay, so please check out, do you need a DA development approval from your local Council, and if you do and you do operate your business without it, you are risking your insurance. So please bear that in mind, okay? Because they do have out clauses on insurance that basically say if you’re doing something illegal, we ain’t insuring you. So something to be mindful of.
06:25 You can have interruptions and distractions while working from home
The other negatives of working from home is of course the interruptions and just the fact that you’re at home. So, for instance, you might have a pesky little pet like I do Gabby, who will come in and bug me. The other day, I chucked her off my desk five times. Literally it was just a circle, she came up and chucked her off, chucked her off, it was just constant. That’s not ideal, it’s disruptive. But some days it’s nice to have her nearby and things.
06:53 Have a space where you can set boundaries while working from home
But of course I can shut the door because I have that luxury of having an office with a door, which is something I would make sure that you try and have is somewhere in your house that you can go and shut the door so that when you’re behind that door, you’re at work. When you’re not behind that door, you’re not at work. It helps to minimise interruptions from your family, from your pets, but also it helps to signal and set boundaries to others in your household. Yeah, I’m working don’t disturb me.
So that can be something that can be important. So do you have the space in your home to have a standalone office space? If you don’t, then I’d seriously consider whether it’s going to be possible because you are going to start causing resentment and things with your family.
07:42 Operating from the dining table can affect the whole family
I’ve been to people’s houses where they are operating, for instance, off their dining table. Fine, if you don’t bother using the dining table, ever. But if you do, it’s not ideal because the family are experiencing that clutter with you and they’re experiencing the inability of you to shut down from your business.
08:02 It can be lonely working from home particularly for an extrovert
Another issue from working from home can be that it can be quite lonely if you are working from home all the time, particularly if you’re extroverted and you need to feed off the energy of others just consider how you can replace that sort of loneliness that you would have not had had you been in a workplace.
Now I see a lot of people that are ex-corporate suffering from this because they’re used to being in a busy environment certainly pre-Covid days and what you need to consider is that if you are going to work from home by yourself, how can you replace that staffing kind of team around you?
08:40 You can connect with people through networking groups
One way of doing that is through networking. So definitely connect with your local networking groups, build relationships with people, and then you’ll have people you can go on coffee dates with and things.
In fact, some of the local ladies even do a sort of coworking day. Which is just unofficial, but they just go to one of the clubs and they just grab a table together, and then they just sit together and they work on their own businesses and their own projects but if they want to, they can have a chat to each other. They can share a coffee break and that sort of thing and that can be quite a nice thing to do.
There’s lots of ways we can make this work. Okay? So for every negative, there’s always something we can do to counter it.
09:17 Think about the growth of your business
What about it may inhibit your growth? There is that kind of limitation of size if you are on, for instance, particularly if you were in an apartment, there’s walls that confine you. You don’t have anywhere else to expand out to. If you’re lucky to be on acreage or something sure, you’ve got space, and plenty of people do that and they add containers for storing stuff. They add in an outdoor workspace. So there are things that you can do to make that better.
Definitely having that proper space, as I mentioned, where you can shut the doors is a good idea. Being able to shut things off and have those boundaries is a really good way to be.
09:59 There is no commute cost when working from home
There’s no commuting costs when you’re working from home, you literally walk from your bedroom into your office a few doors away. It is really easy. And that can be, again, a boundary issue just to make sure that you remember to shut off from work. Because it is too tempting and easy just to continue working.
There is no point paying, if you work remotely, no customers come to you, just to have that ego office, it really isn’t. Unless some of these other issues can’t be overcome. You don’t have a separate workspace, you can’t avoid distraction.
10:38 Distractions are not always people and pets, it might be the household chores
And distraction and interruption isn’t just the people. It’s the fact that when you’re at home and you go to grab yourself a cup of tea, the dishes need doing, the clothes need putting out, so when you’ve got the stuff around you, It is hard sometimes to turn that off.
So you’ve got to learn to do that and also learn to communicate with those in your household. Pre-Covid I used to find that a real problem, my partner would come home and say things like, oh, why haven’t you done the dishes? Why isn’t the dishwasher not emptied? And I’ll be like, hello, I’m working from home, I’m not at home. I’m not a stay at home wife or something.
So that caused some friction for us. And I actually found that Covid was great for that because he was working out in the lounge area, in a sort of study area off the lounge. I was working in my office, and we could both hear each other talking to people and stuff. And it became very apparent that we’re both working all day.
11:37 Covid has opened up more working from home opportunities
So that stuff stopped so Covid had some benefits. And also it has opened up this opportunity to work from home. So now we do have the situation that many corporates allow people to work from home whereas they didn’t in the past or allow you to work a hybrid model some days in the office, some days at home.
11:56 It can cause potential issues with shared spaces at home
Which again causes potential issues because your office space may need to be shared with another person. I do find that sometimes when I’m talking to people they say, oh yeah, I’m not in my usual office because I’m having a meeting with you and my partner’s in the office on a Zoom call to someone else. So just bear that in mind that you may need multiple office spaces.
And let’s face it, that’s part of the reason why the demand for houses has gone up through the roof, whereas demand for apartments has gone down. People are wanting to move further away and have more space because they have less commute, they need more office space at home.
So those are the types of things to look at when you are sort of a sole trader.
12:40 If you have a team they might need to access shared equipment
What about if you have a team because the team obviously has different issues. First of all, obviously is it practical? If there’s specific specialist equipment and things that people need, then you need to ideally be in the same space so that you can access that equipment. So say, for instance, you needed a 3D printer, then having one central 3D printer and one central office space is obviously going to be a lot cheaper than having 3D printers set up at all your staff members localities.
What about things like bouncing ideas? One thing I used to find about the corporate environment was it was really good to be able to just go, okay, I’m having this issue or I’m trying to do this and it’s just not working.
13:21 Connecting with people and being part of a team is important
And hearing from my team members what their input was, just having those chats with people. But even just those coffee chats or those chats as you were grabbing a cup of tea, were just useful to be able to connect with people and get to know your teammates and feel you’re part of a team. And that is one thing I think you need to be extremely conscious of.
If you have a team and you are allowing people to work from home is how you’re going to maintain that team spirit. For instance, I have been contracting to an organisation where everybody works from home or works remotely and there were people in the team I’d never even met. I didn’t even know who they were.
I saw them down the street, I wouldn’t even recognise I work with them. So we really need to think about that type of thing because it does cause issues.
14:13 You can organise meetings just for connection and communication
I know some people during lockdowns, they did have special meetings that were designed just for connection. So they’d have like a trivia Friday afternoon trivia or something like that.
So do make sure you’re contemplating how you’re going to get the team still together, still communicating with each other, because it is not okay just to leave them all to them for themselves and their own little silos. Because if you do, they’re not a team. There’s no team and that can create a workforce that isn’t very engaged with your business because they really are just isolated independent workers. So something to think of.
14:53 You might need to think about a central drop off point
What about things like not having a central drop off point. So by not having a central location and premises you don’t necessarily have somewhere that your customers can come from and go to if they need to. You might not be able to have a showroom type facility. Think about what your business is.
On the flip side though, if people can drop off or pick up closer to their own location because you’ve got workers spread more, maybe that’s a benefit. So again, some of these things that can be benefits but they can also be cost to your business so you just got to consider which one weighs up more. But that sense of team I think is really the biggest issue.
A lot of managers have a lot of issue about the productivity of working from home and that used to always be the argument in corporate. We can’t have people working from home, we don’t know if they’re going to do any work and kind of that sort of attitude and really it showed a lack of trust in the workforce.
15:52 Working from home can benefit family life
But also there are some benefits of the working from home with a team because for instance, if you have a little kid that has a swim carnival, you might want to go to the swim carnival because you’re at home not hours away in the office you could actually duck out to their swim carnival and come back and still do a full day’s work around it because it could have been in your lunch break or you could choose to do some work in the evening to counter that work during the day.
So I really do like that and I love that concept from working from home that people don’t have to work nine to five structured all the time. So consider that as part of your work from home.
16:29 The team could have some set hours and some flexible hours
Is it also a flexible work from home arrangement? It’s not nine to five. Everyone has to work nine till twelve for instance, but then in the afternoon you can mix it up as long as you do your 8 hours we don’t really care when you do them. So think about things like that because that to me makes a massive difference to how people perceive their office and how they get on with people and get on with their clients and all that stuff and how they engage with you.
16:57 If you make the business a place people like then you will get loyalty
Because if you make it a business place that they love to be in, then they’re going to want to stay, which is what you want, right? Loyalty. And I love that people can make their day much more suited to their needs and build it around the rest of their life. Because, let’s face it, we shouldn’t just be living to work, we should be working to live.
17:17 Think about the physical aspects and location of the work space
So what about the physical aspects of these spaces? As I mentioned, if you’re working from home, a separate office space really is a must if you can get away with it. Having a room where you can lock the door is great. So, for instance, I used to have an office space off our living room and it was open to the living room and was between the kitchen and the living room, so there was no way of avoiding it.
So a if it got messy or whatever, it could be seen. But also it was just that I couldn’t work from there, say, and have a 7:00 o’clock in the evening meeting because the TV is on next door to me. Whereas now what was the spare bedroom during Covid became kind of pointless because people couldn’t travel. We turned that into my office.
18:02 Having a set office space might require giving up space in other areas
The only complication now is, okay, we don’t really have a spare bedroom, so now what do we do with travellers? So anyway, we just have to sort that out when that happens coming up soon but having a separate home office really does make things hugely more beneficial. So being able to have that office space, which is my office space, I can do with it what I want. I can shut the door, I can keep the cat out, I can keep disruption out, keep kids out, I don’t have to see the dishes or anything is really good, okay.
18:33 Consider your office space if buying or building a new home
And as I mentioned earlier, if you do have a new home or you are looking at building a new home or buying a new place, do consider is there a separate, accessible office space? So it might have been a sort of granny flat type set-up that would be good to be an office. Or it could be, like I said earlier, just off the front door, it could be that space, or it could even be the old master bedroom that would then have storage it would then have a bathroom facility already built into it. You might need to alter it a little, but it might be quite a useful set up for a home based office.
19:07 Another option is to add a little space on the outside like Kate Toon’s cave
Another option, if you have room at home, is to put a little office outside. And I know Kate Toon, for instance, she has her ‘Toon Cave’ and that is a little small space, I think it looks like it’s about four or five metres by three metres, just a little space outside and you can build those fairly cheaply and easily and they kind of demountable, so you can kind of take them away with you. So they’re kind of like a kid’s cubby house, but a little bit bigger and obviously you want to make sure it’s lined, got some aircon, got some power and all that sort of stuff. Okay, but do consider whether that’s an option for you.
People have even started doing things like having caravans on-site converted into a home office space. So anywhere on your premises can work.
I do have a couple of clients that are in industrial or acreage type areas that have built purpose built facilities at their places. So one is a trades business and they have built themselves a massive warehouse thing and office space on site. So they’ve had that luxury to do that because it’s a big acreage property in an area which is semi-industrial, semi-residential, so they can get away with that there.
20:20 Don’t forget to check with Council and get approval
So obviously check Councils for things like that before you even get started. But in their case, it was definitely a viable option. In fact, their neighbour even has a helipad of all things as you need from working from home.
I have another client, for instance, that has an escape room on their property or escape rooms. So they had the main house and then they have another area which has the escape rooms.
So again, make sure that your council okay all that but if it is okayed, then why bother spending additional money somewhere else when you already got that property available to you?
20:55 If you don’t have space try a coworking space
So these are all considerations for you. Working from home, there are lots of options, but do try to have your own space sharing the space with a family dining table and that really doesn’t work so well and it’s hugely distracting for you and just really makes it hard to set boundaries.
The next option up and this is for some people that do find that too annoying. I was speaking to someone recently and she’s taken a coworking space at The Creative Fringe in Penrith. So there’s a few different coworking opportunities in Penrith. There’s WOTSO, there’s The Creative Fringe, and in these spaces you can either hot desk or you can have your own little private office. So in this case, the lady has a very small office, only like a three by three. So only like a little bedroom size office in a coworking space.
But the reason she did it is because she does have a young family and she does have too much distraction at home. So she loved the idea of going somewhere else and having her own space. Now she’s actually introverted, so she wasn’t doing it for mixing with other people, which I suppose is why she has an office and not a hot desk.
22:08 Do consider that a hot desk is still a shared area so could be distracting
So a hot desk is where you’re just in an open area you’re sharing with others. So obviously you need to consider that if you’re moving from home to get away from distraction, and then you’re moving to a hot desk where people around you are potentially talking either to you or talking on the phone or whatever, then is that going to be distracting to you? Are you needing privacy to talk about trade secret type information? Being in a coworking space where you’re in a hot desk type environment may be completely unacceptable.
22:36 So weigh up all the pros and cons to find what works for you
So always look at whether these work for you okay? So like I said, there’s pros and cons with everything. We just need to weigh them up. So you can have a hot desk that you regularly use and you pay a fee to use it regularly, or you can pay a higher fee and just use it one off as needed. A lot of these spaces have meeting rooms and things available as well, so that can be another option is work from home but when you need to meet a client rent a space at one of these localities.
Obviously, there’s also meeting rooms and function rooms at other places as well. So just consider whether you can do that as an option rather than having a permanent expense of a permanent office somewhere else.
23:18 Coworking spaces have small offices or hot desk style
So many of these coworking spaces have small offices or they have that hot desk type arrangement. So whichever suits you best, obviously the offices are going to be a little bit more costly, the great thing about going to something like a coworking space is it tends to be quite a low-cost option.
What I mean by that is you’re not spending heaps of money sorting out leases and that you’re just signing their standard contract and there’s no sign-up fees, bond fees, and that typically. So you are saving a lot of money by going to these places, and they typically only lock you in for a month at a time. So after a month you can walk out and leave.
23:58 Maybe a sublease is better if you need storage space
Another option to do that if a coworking space doesn’t work for you is to sublease. So that is where one person owns one premises, but they might have an office or two to lease out. They might have a warehouse that they’re only using half their warehouse space, so maybe they have another portion of the warehouse to lease out. I’ve seen a number of people start out like this interior design businesses or interior staging businesses where they’ve had a need to store stuff. So they’ve started off sharing a space. Then they got too big for that and had to get their own warehouse and things.
But the great thing about that is, again, you’re not paying as much setup cost, so there’s nowhere near as much drama at the start. You are just getting the space to use as it is. So if you don’t like it, it’s not really going to be great because you can’t tailor it because it’s their space, not yours. But it does allow you to test the waters to see is having your own warehouse space or your own industrial space, is that going to work for you?
25:01 Maybe you could have a room in a shared office
A lot of places do this with coworking spaces almost, but they are subleases, places that have, for instance, there might be a relationship counsellor and then there might be some other rooms available in there. So there’s also a massage therapist in one room, in another room there’s a kinesiologist. Those people rent that space permanently. So they only have one office though, in a place that had ten office spaces.
25:26 This could be a really good way to cross-promote
So that can be a really good way of doing it. A lot of people are doing this complementary discipline type arrangement and that can be a really good way to cross-promote other businesses. For instance, in Penrith is a business, originally they were just a little tiny podiatrist and they thought wait a minute here, we need things like a treadmill and stuff. They’re expensive, what if we shared that with a physio that also only needs a treadmill every now and then?
25:51 This is how One Point Health got started
So what they did was they actually started One Point Health. And what One Point Health is is a conglomerate of different businesses. So massage, chiro, podiatrist, all in one locality. But that’s great because if you’re seeing a physio or something, you might need to also see a podiatrist so they can cross to refer amongst themselves.
So they have become quite a big business. They now have locations in three or four different areas. So these sort of hubs are becoming quite a popular option.
26:25 Great thing is certain parts would already be set-up for you
The great thing for you if you go into one of these is that they have the rooms, they have the admin, you don’t have to worry about that side of it, they have all the systems, they have all the general staff and they have that specialist equipment like treadmills and things so you don’t have to provide it. You just come in and do anything that you need for your particular speciality and that’s it.
You can have a permanent space, maybe it’s only you come in there once a week. It’s totally up to you and the arrangement with that facility. So definitely look into this as an option because it can be quite a good one for you.
26:59 Another option is a standard storage unit
Another option, rather than going full blown in having your own warehouse or office space, is using something like a storage unit facility. Now if you just go rent a standard storage unit, just be careful because again, insurance type issues, are you covered for running a business from there? Particularly if you are actually going in there to do your pick packing and stuff you’re wrapping in the actual storage unit. So just make sure that you’re allowed to do that and also make sure you’re declaring it to your normal insurance as well for your business to make sure they know that you’ve got this additional premises.
27:31 Some are providing more facilities to suit businesses
But some of them, they’re getting more clued up about the fact that businesses are doing this and they’re providing more facilities to help the businesses run in those localities. For an example, Kennards Self Storage, no affiliation with them whatsoever, they just happen to be the closest people to me. They have some very new models at some of the locations, not all of their locations.
So they have the standard storage type units available. So they have from little storage units that are like a backpacker might use right through to massive units, right. But what they also now have is things called enterprise spaces. So you can actually rent a proper little unit that is set up as like an industrial park type unit. But it’s a much smaller scale, 30 to 150 square metres. So it has a little office space and it has the storage space. So that can be a great option for you.
28:24 Some also have a meeting room you can book as well
They often also have business facilities on site. So they have a meeting room that you can book as well. You don’t have to have people coming into your little storeroom because they can actually come into the meeting room space. So this is a really great in between, that you’re too big for home but you’re too small for that full on commercial space.
28:45 Great thing is these are month to month – don’t require a lease & bond
The great thing about these type of ones is again their month to month. They often don’t require leases and bonds and all that kind of stuff. You’re just signing their standard agreements and that’s it, so much quicker, easier, convenient to set up and you can do it as a trial. Because you can just do it for a few months and go yeah, that was great or no, that didn’t work out or yes, I’m now ready for the bigger option, that permanent space.
So the last one is doing your own office or warehouse space. So in corporate in the past, for instance, working from home was really only allowed under the fair work in Australia rules. Which was things like if you had family then you had to give people that option of some flexibility.
29:30 Thanks to Covid working from home is being offered more
Luckily now with Covid having happened, I think a lot of businesses have realised that there’s a lot of benefit in offering the entire workforce, whether they’ve got kids or not, that ability to work from home. And I know when I worked in corporate my commute each way was an hour and a half and that was on a good day. If something went wrong on the train network or whatever, it could be 3 hours.
29:53 Working from home saves us a lot of time on the commute
So we’re talking a lot of time sucked up in the commute. Whether that’s a good thing to do every day or not, you’ve got to work out for your staff. How far are your staff travelling? Do your staff have to use public transport?
30:06 If you commute on public transport = more exposure to illness
Because that was the biggest issue for me in the winter and particularly with this winter here in Australia, we’re having a shocker, everyone’s getting Covid, or the flu or RSV or something else. Like there are so many viruses doing the rounds at the moment. The problem is if you then catch a train every day and you spend an hour on the train every day that’s an hour each way that you are being exposed to a lot of bugs.
And that’s what I used to find when I used to commute on the train, I used to get sick all the time. Whereas where I found when I started working from home and working remotely, I didn’t get sick anywhere near as much. Bypassing, of course, the long Covid I’ve had the last two months, but we’ll forget about that. But normally, yeah, I don’t get the colds and flu. I don’t get exposed to them as much. So there are some benefits in this whole allowing people to work from home or work more flexibly.
31:02 Have some flexibility as you still need to come into the office as well
So I really do think as an employer, you really need to consider this. Have some flexibility built in. Some people able to work from home, ideally not permanently. Ideally, you still want them to come into the office because you want them to be able to bounce ideas and things and actually have a sense of team.
As I mentioned earlier, when I was working with these remote workers, I didn’t even know who they were. I didn’t know them from a bar of soap. So I couldn’t say to people, maybe you’d be better seeing this person because I didn’t know anything about them. So you’ve really got to think about it.
31:39 Think about the financial commitment of taking office space or warehouse facility
The other big issue, of course, is the financial commitment. When you take on an office space or a warehouse facility, you have to actually have a business plan properly prepared and the full lender version of the business plan. You need to have all your budgeting done.
And you need to have all your numbers in order and a lot of people don’t have that. You should, but a lot of people don’t. So you’ve really got to do a lot more. People don’t realise how much financial type commitment you’re making, but you think about it if you’re committing to rent a space, that’s $50,000 a year to rent and you’re locking it in for three years, that person wants to know that you’ve got $50,000 a year to pay that off, that you’re going to be able to pay that.
32:27 You might want a rent to buy option built into the contract
So it is very much like borrowing money from the bank for buying a premises. And that’s why a lot of people do consider situations where they can do things like, for instance, they might rent for two years, but there might be an option built in. So it’s a rent to buy option. So they can have the place for two years and then at the end of the two years they have the choice to actually buy it out.
That can be a really great scenario for people because often the amount of money that you’re paying in that rent is actually really high and it’s really similar to paying that amount of money in a mortgage. So do consider whether that’s a viable option for you as well. And that can be quite a common one.
33:07 Remember you need Council approval so maybe have a clause if DA doesn’t go through
There’s a lot of legal costs and things in setting up a lease. Do remember, you will need to get approval again from Council, because almost everything in Australia is permitted with consent, so it’s not permitted, if it was permitted, you wouldn’t need to get approval. But permitted with consent means that you actually still need to get a box ticked from Council.
So that costs money, it costs time. So please make sure if you’re entering into some form of commercial lease, that. You have an out clause that says if my DA doesn’t go through, my development approval doesn’t go through, I don’t get accepted to run this type of business from this locality, that there is an out, okay? And some will be reluctant to put that in. It doesn’t matter. It’s like, well, if it doesn’t matter then put it in.
Because if it doesn’t happen, it doesn’t happen, but you think it will so what’s the big deal? So be very careful of that. There’s also a lot of causes that.
34:04 Maintenance becomes your responsibility with a commercial lease
You’ve got to watch out for. So there are things like the fact that the maintenance and upkeep becomes your responsibility for most cases in commercial. Residential, it’s the landlord’s responsibility. Commercial very different. A lot of people get caught out by that.
Things like the fit out and stuff, fire safety things. Some things are landlord, but some things are you making sure there’s fire safety egress signs and stuff. You need to make sure that your place is safe. That all falls on you.
34:36 Do you need security?
What about security? Do you need to put in security cameras? Do you need to have a security workforce walking around and checking the place? So you’ve got to think about all these additional potential costs and issues that might crop up.
34:52 Watch out for the make good clause
With the legal contract is also the make good clause. Be careful with this. I’ve seen ridiculous cases of this where your fit out was so much superior than what it was beforehand and yet you’ve still got to rip it out.
And the person after you’re probably going to put in exactly the same set up. So things like that, you want to kind of say, like, if the person after you wants it, then there should be no need to make good.
35:15 The most ridiculous one wanted the interior floor ripped out!
If they want that mezzanine floor that you put in, then why would it be taken down? It kind of seems pointless. So things like that just be wary of and the most ridiculous one I saw was in New Zealand with this really greedy landlord that had this make good clause and they were going to make us rip out the interior fit-out of the floor.
But the joke ended up being on them because when we leased the place, there was actually a massive hole in the floor. When I say massive, I’m talking five metres by five metres or so because it was one of those internal spiral staircases that are used in office spaces. So quite a big staircase. We said, fine, if you really want to harp on about this make good thing, we’re going to make good and put a hole in the floor, which clearly wouldn’t have worked because there was a tenant in the floor underneath.
So they kind of shut up after that because they realised that they were barking up the wrong tree. Things like that just be really wary of. Often you have to repaint the place and stuff like that. Pull down any extra things you put up, patch any holes in walls, all that kind of stuff. So just be very mindful.
36:23 Fit-outs can cost a lot of money, some can cost easily $250,000 plus
Fit-outs are going to cost you a lot of money. I’ve seen people spend easily $250,000, $300,000 on a fit out. Obviously you can reduce some of the costs by doing painting and stuff yourself, but please make sure that you get legally permitted walls and things if they are structural and if they need to be permitted, okay? So please make sure you know what you’re doing.
36:44 Be aware of privacy and acoustics in your fit-out
Don’t do partition walls if you are running something like a counselling business or a beauty salon and you’ve got people getting waxed in one room screaming their head off and people in the next room trying to have a relaxation massage that doesn’t work. So consider things like your acoustics in your fit-out and stuff like that.
37:05 Don’t forget to factor in things like the cost of utilities
What about things like costs for things like utilities? A lot of people get shocked by how much cost there is in running a commercial premises. For instance, there was a cafe owner and her first electricity bill was over $3,000 and she just about had a heart attack because she hadn’t factored in $12,000 a year for electricity, she just hadn’t. And those sort of things can really hit you.
37:30 Will you need to put on reception staff?
So things like security, things like that do you need to have reception staff on? That maybe you’ve never needed to have before because you need someone at the door to greet people and send them around. So maybe your admin, that was kind of a casual work from home when they wanted to no longer can be that. Maybe it has to be a set nine to five type relationship. So you’ve got to think about these things. A lot of this is going to have a massive impact on you and your business.
37:57 Something might be the owner’s responsibility, but the tenant faces the issues
I mentioned about being responsible for the upkeep and things, and I’ve seen a lot of people in a massive conflict with their owners about things like because it’s an outside roof, for crying out loud, that’s leaking. And really the owner should take some responsibility for that. But in a lot of cases, it’s still the tenant that’s actually facing the issues.
38:17 Really consider how it will work – do you need to set up a desk for everyone?
They’re facing mould, they’re facing their stuff being damaged by leaking water. So really consider how this is all going to work. Another situation, though, is whether you actually have, so say for instance, you have an office type set up and you have 20 staff, do you need permanent desks for 20 staff?
Right before I left corporate, I was working for NAB National Australia Bank and they had gone to hot desk. Literally the transition was the day after I left, they were going to hot desk.
So what that meant was you no longer had a set desk that you sat at every single day. Now, there were really great benefits for having a set desk because obviously you had all your stuff there. But we had a team of about six people and it meant that we could all collaborate and talk and things really easily because we were together.
39:03 The team might need to be close to collaborate
But once it moved to hot desking you might have had, say, two of the team together, but you might have had two far away and another one over there, another one over there. And so the ability for the team to collaborate as well was actually lost.
But the inter team collaboration was a lot greater because you now have people in your little pod that were people that you wouldn’t necessarily have dealt with as much before. So it really did help inter team, but did some damage intra team so just think about how that would work for your situation.
39:36 Why pay for space for 20 desks when you only need space for 16 desks?
But part of the reason NAB went to that model was the fact that they had some modelling done, which at the time showed that only about 70% of the desks were being used.
So therefore, if you’re paying to have space for 20 desks, when you only need to have space for 16 desks. Why not only have space for 16 desks?
So that’s what they did. They also then made the environment more flexible. So if somebody likes to sort of have a catch up on the couch they had couch areas to catch up. They had little pod areas, little breakout rooms and things. So really think about the fit-out of your office. [Please check out our FAQ Business Podcast episodes with Robyn Hawke in Season 1 for more about office fit-outs.]
40:15 Most offices are now open plan with breakout rooms for private conversations
Obviously, most people now are open plan. Very few people have set closed offices, so they tend to just have breakout rooms where people can go when they need to have that private conversation.
But the rest of the time, they’re all open space, even the chief executive. And that’s been for some businesses a long time ago. I’ve certainly had chief executives and things working on the open floor with people, and it does tend to create a better environment because it takes away those levels and that feeling that I’m so far removed from the chief executive. So something to consider.
40:49 But packing up the desk each day might lose in productivity
But as I said, the hot desk, you do lose some things. Every single day they were making people pack up and put things away, which to me seems a loss of productivity. So if you know you’re going to be there all week and, yeah, there’s a chance you might be sick, right? But if you know you’re going to be there all week and not away and leave, then it makes sense for me to set yourself up for a week rather than pack up every single day.
Because when people have to pack up every day, they’ve got to fully log off their computer, they’ve got to take time to get everything ready to log down, give time to log down, put it away. You’re taking up a lot of time each day. So do consider that, because it’s not necessarily ideal.
41:31 Think about what works for you and speak to your accountant first
So as you might have worked out here, there is absolutely no right or wrong answer to this. Whether you should be working from home, working in a coworking space, subleasing, or leasing your own premises, or outright buying your own premises, there is absolutely no right or wrong here. We haven’t even looked at things like tax issues and deductions and things like that as well.
Definitely speak to your accountant about that because having a set workspace from home where say you did a renovation or something to create it, then that might be subject in Australia to capital gains tax. So there’s things like that that you just need to be wary of if you go down that track.
Whereas just sort of working from home, there might be some deductions you can claim a portion of your electricity and stuff like that. So really just think about what you can and can’t do and what you want to be able to do in your business.
42:22 No matter what you choose don’t forget about that sense of team
So as I said, no right or wrong answer every business, every scenario will be different. You have a different number of staff members, you have a different need for specialist equipment, for bouncing ideas. So if people are independent, yeah, sure, it doesn’t really matter if they’re working remotely, but you do still want that sense of team.
So I honestly think that hybrid type models are great but also you need to think about things like if I am working from home, how am I going to counter any loneliness I might incur? How am I going to make sure that I’m not inhibiting my growth? So I need to do things like networking to get out more so that I’m not cutting myself off from the world. So really think about how things would work for you and your business.
What is going to make your team and you the best you can be, the most productive, the happiest, the most engaged and loving your work so that you want to come to work every day. Because that’s where we want to be, right?
43:24 See my podcast about the state of ikigai
I talked about ikigai and I did a podcast about ikigai. But do what we love, do what we’re good at, do what we’re going to get paid for and do what the world needs and if we reach that, we reach the state of ikigai or our reason for being.
43:41 Thank you for listening today and I hope it has helped you
So thank you for listening today, I hope you enjoyed this episode of the FAQ Business Podcast and I hope it’s helped you to think about what you need to consider if you are looking at moving out of your home office space, changing your office space, or going into something new.
Thank you for listening catch you again later.
44:06 Don’t forget to subscribe, follow, and share the FAQ Business Podcast
Thank you for listening to today’s episode of the FAQ Business Podcast available on all good podcast services. You can subscribe today via FAQBusinessPodcast.com.au or directly on Apple iTunes, iHeartRadio or Spotify. Subscribe, follow, share and where able review our podcast or leave us a comment on either YouTube or our blog page.
Thanks for helping us to help you the small to medium businesses who are growing and want to make a difference. Look forward to connecting with you again on the next episode of the FAQ Business Podcast.
Today’s podcast episode featured our host Jane Tweedy. Her details are as follows:
Jane is a Professional Certified Coach with International Coaching Federation (PCC with ICF), business advisor and trainer. She loves working with growing small to medium business owners who are doing the right thing, to help them do it right! Currently, Jane offers at least 50 live sessions a year to train small business owners.Jane offers a variety of services to clients and her online school and membership site went live late 2021. Jane’s focus for 2022 is building the membership and online school out further, and offering implementable small group training – something she finds is often the missing link.
If you are interested in training, speaking, or anything else Jane has to offer, please connect via email@example.com or via the contact forms on our websites.
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