Ordering Your Office à la Carte
For entrepreneurs, leasing a suite may be just the ticket
To launch his computer-consulting business, Joseph Williams needed a real office -- complete with a receptionist, conference room, and sophisticated phone system. But he was short on funds. And he didn't want to take time away from wooing clients to set up shop. So, he leased an executive suite instead. That first month in business, Williams spent a mere $2,000 to rent an office, from which he billed $30,000.
Like Williams, most entrepreneurs aren't much interested in the mechanics of running an office and don't usually have the capital to set one up -- roughly twice the cost of starting out at an executive suite. Keeping overhead down, especially during the early stages is always of interest, though. That's why many budding businesses opt for the executive suite, or business center. Equipped with a mail room, a word processing team, conference rooms, the latest technology, and a kitchen that always has fresh coffee brewing, they're basically offices-for-hire with a guaranteed level of service.
Unlike traditional commercial leases, which typically require a commitment of three to five years on at least 5,000 square feet, executive suites offer shorter terms on less space with services tailored to need. Rent a conference room on an hourly basis, say, or a furnished window-office overlooking Manhattan's Park Avenue for just three months. Move in on the spur of the moment. And expand or contract space as business demands.
"Entrepreneurs often don't know what their long-term requirements are," says Kathryn J. Donohue, president of HQ Business Centers in New York City, one of more than 150 franchised HQ suites operated worldwide. "In three months, you may have outgrown your office space if your software company really takes off. Or, you may be out of business."
First launched 30 years ago, today there are about 4,000 executive suites in the United States. Most offer attractive package deals. For a monthly fee of about $700 (more in high-cost cities such as New York and Los Angeles), you can get a small, windowless private office, a receptionist, a telephone secretary to answer and route your calls, plus shared use of conference rooms, a kitchen, and the reception area with your neighboring suitemates. If you need services such as word processing, videoconferencing, desktop publishing, even translating, you can buy these a la carte.
That's where they get you, though. You only pay for what you use, says Donohue. But those extras will generally cost top dollar. Copies run about 13 cents each. Word processing is often billed in 15-minute intervals, even if your job takes five. And phone service for faxes and regular calls can be higher than regular rates. "It's 50 cents for a local call," complains David Carr, who runs the two-person New York office of Los Angeles-based Wilshire Cellular from a World-Wide Business Centre suite. "They really kind of gouge you on that."
Some business centers are more flexible than others. Howard Materetsky, a financial planner who leases three offices at an Alliance Business Center on Long Island, N.Y., brought in a photocopier and fax. Most executive suites don't furnish a computer.
Many business centers allow network "reciprocity." That means if you lease from a World-Wide in Cleveland and you're visiting New York, you can use a conference room -- free of charge -- at World-Wide's Manhattan location.
MOVING ON. There's another possible plus: networking. "How else would I have met Herb Anspach [a Whirlpool Corp. ex-president] if he hadn't been leasing an office down the hall? He's given me a lot of advice and referrals," says Steve Shannon, an outplacement specialist who has been using HQ in Boca Raton, Fla., for the past five years. With large corporations using suites more and more to establish beachhead field offices, hallway chitchat with seasoned professionals is a real possibility. Motown Record Company, for instance, is leasing 100 offices next year at an HQ Business Center in New York to see if it wants to open a full-fledged office in the Big Apple.
Most businesses, though, outgrow the executive suite at four or five offices, says Joanne McDaniel, vice-president for marketing at InterOffice Management, an operator of 40 business centers nationwide. At that point, you may need a full-time secretary -- a sure sign, she says, that it's time to move on.
Try telling that to Joe Williams. Two years after opening his business, he has hired 10 full-time consultants and reaped $1 million in revenue. He's still leasing an executive suite. "Anything that keeps me away from my customers is costing me money in the long run," he says. "I might miss a customer sale if I'm trying to figure out how the devil we're going to answer the phone today."
By Barbara Hetzer in New York