COVID-19 shocked the world, emptying schools and office spaces. Many buildings sat unused, leaving employers and businesses with massive costs for their empty office spaces. As business starts to move more online, your company may be considering cutting costs on office space and utilizing assets elsewhere.
Alternatively, perhaps your company is changing its work model or downsizing. Maybe you’re just looking for a few tips on how to minimize your bottom line and make your money work for you. Whatever your reason, here are six ways to cut costs on your office space.
1. Run Your Business From Home
Imagine eliminating your office space while increasing your company’s productivity. The COVID-19 pandemic caused a huge shift, sending people home to work remotely. While offices sat empty, employees sat at their kitchen tables and home offices.
You might be thinking, “But if I send my employees home, will they actually get anything done?” Don’t worry, the findings from this survey done in May of 2020 answer that question with a resounding yes.
On average, over 50% of workers reported being more productive from home than they expected, and overall productivity when working from home rose by 7%.
With the time saved from a lack of commute, work-from-home employees were able to devote more time to their jobs. If your company is looking to save money, cutting the cost of a physical office is a great place to start.
2. Make Sure Your Office Space Is the Right Fit
It’s the age of downsizing and right-sizing! Make sure the space you have is the space you need. If it isn’t, don’t be afraid of changing things to help you get more for your money.
Bigger Isn’t Always Better
If you need at least some of your employees to be able to collaborate in a face-to-face setting, the work-from-home option may not be possible. In this case, consider downsizing to an office space that accommodates your on-site employees while saving you money.
In some cases, businesses can be spread out over multiple floors or even several buildings. By consolidating your workspace to a single floor or office for your face-to-face employees, you will be able to cut costs while streamlining productivity.
Open Up New Floor Plan Possibilities
If downsizing isn’t an option for your company, consider transitioning your office to an open floor plan. With this option, your costs are minimized by eliminating the cubicle space delegated to each individual employee. This could allow your company to move to a slightly smaller location, or even just save on furniture costs.
While an open floor plan may work well for your company, it’s important for you to still keep a few spaces removed from the main area. These will allow you to hold meetings with smaller teams without interrupting the workflow of others and have private conversations when necessary.
Consider Coworking Spaces
Coworking is a lot like working at your local coffee shop, but with a more formalized structure to help you focus. They’re designed to take away the distractions of the coffee shop while giving you a clean, quiet, and flexible space to work. These types of office spaces are used by companies like Starbucks, Uber, and Netflix.
Coworking spaces allow you to rent a full suite, a private office, a dedicated desk, or access to a space with open seating. Prices range depending on which options you choose, and you can save even more money by splitting a private office space with a coworker. Minimizing your office space shouldn’t mean compromising your experience.
By renting coworking space, you save money while ensuring you can do your best work in a professional working environment. Depending on the company you choose to rent from, you can also enjoy a variety of perks!
Examples of perks can include:
- Free coffee
- Free snacks and beverages
- Free photocopies and printing
- 24-hour office access
3. Reevaluate Your Parking Needs
Whether you end up streamlining your office space or switching completely to a work-from-home model, it’s a good idea to evaluate how much space your company actually needs for parking.
You might find you need less than you originally planned, and this is another way for you to save money. Just make sure to plan ahead and keep a few visitor parking spaces!
4. Renegotiate Your Lease Agreement
If you’re already meeting with your landlord to discuss changes to your parking needs, you may want to try renegotiating your lease agreement. The pandemic rocked the rental market, so many landlords would prefer to keep their tenants even if it means changing their original agreement. This increases your potential negotiation power. You may be able to get your landlord to reduce your rental rate or provide you with a rent abatement if you agree to extend the term of your lease.
If you’re signing a new lease or renegotiating your current agreement, here are a few things you can do to make sure you’re getting the absolute best deal:
Having both a broker and a lawyer on your side of the table arms you with the knowledge of if you’re getting the most for your money. This team can also help protect you from unfair agreements and hidden clauses or fees.
Limit Rent Increases
Try to put a cap on surging rent increases by negotiating a fixed percentage rate for the annual rent increases. You could also try to tie rent increases to some real-world index, but this may be a risky move for your business because it depends on what you think the market will do.
Include a Cancellation Clause
If your landlord wants a five-year lease and you’re worried you won’t be able to utilize the space (or that you’ll eventually outgrow it), negotiate for the right to cancel the lease after three years if you pay for unamortized costs.
Keep Your Options Open
Make sure you have the option to renew your agreement and try to lock in the rental rate when leasing a new space. You can always renegotiate if the market is lower!
Maintain Your Rights
It’s important to minimize restrictions on your ability to sublease your office space. You want to have options in case your company outgrows the space quickly or if you choose to move to a completely remote office setup.
By maintaining your ability to sublet office space, you can keep yourself from getting tied to rentals that no longer meet your needs.
5. Sublet Your Space
If a rent reduction or abatement isn’t possible, review your lease agreement to see if you have the option to sublet your space.
You may find that you aren’t able to downsize or convert your office to an open floor plan but still have unused or unnecessary office space. By renting a part of your office to another tenant, you can make space you didn’t use before work for you, putting money back in your pocket.
The cost of renting office space in America can be astronomical. Some locations cost upwards of $1554.16 per square foot. Subletting your space can be a great option because it helps with your overhead costs, but it can also be a great option for smaller businesses who still need space but can’t afford it.
This can also be a great way for you to transition your company to online work more gradually. In some cases, you can opt to assign the lease to the new tenant once a portion of your office is leased, turning your physical office space over to them when your company is completely ready to work from home.
6. Invest in Green Energy
If none of these options is the right fit for your company at this time, there is one big change you can make to your current office space to save money: go green.
You might be thinking, “How will spending money help me cut business costs?” The answer is simple: return over time. Even simple alternatives like opting for LED lights rather than incandescent bulbs or compact fluorescents can save you and your company more than $1000 per year. What could your company do with an extra $1000?
You can also use water and energy-efficient appliances to ensure even greater savings. While these changes might sound minimal, NASA found that businesses and public institutions consume more than 25% of the water used in municipal areas.
These types of changes not only help your company’s environmental impact but can also save you money on utility bills without a major increase in your budget. If nothing else, try adjusting your thermostat by a few degrees and turning off lights in empty parts of your office.
Make It Make Sense
Like with any new change, you need to consider how each of these options could affect your company’s bottom line when determining the best fit.
Minimizing the amount you spend on your office space shouldn’t have to be a huge or painful endeavor. Utilizing any of these changes could help you cut the costs of your office space, leading to increased savings and efficiency for your company.