From traditional physical location to coworking: advantages (and disadvantages) of each type of location

You may not have thought about it yet, but starting a new business venture not only involves finding and validating the right business model, it also means deciding where to locate the corporate headquarters and, more generally, choosing the right work space for the business.

In this regard, it is worth warning you right away: it may seem like a trivial choice, but it is not, also in view of the fact that Covid-19 introduced new parameters to be considered and pushed entrepreneurs toward new solutions that, in some cases, turned out to be even more advantageous than the classical scenario.

Each option available to you, from home working to private office via shared space and virtual office, has its pros and cons. It is, therefore, precisely the analysis of the advantages and disadvantages that will enable you to proceed to the best choice for your new entrepreneurial venture.

How to decide what kind of location your business needs

Starting by analyzing the pros and cons of each option available to you, as just pointed out, is crucial. There are many parameters to consider, and the economic aspect is certainly one of the most important, but it is not the only one: working from home gives you the opportunity to save on the costs associated with solutions outside the home environment, but be careful not to underestimate the importance of being able to carve out a space dedicated specifically to work and the need to be able to unplug.

In addition to economic and psychological factors, you must also consider logistical and, in light of Covid-19, health aspects. The global pandemic has disrupted people’s living habits and, as a result, also redefined the way companies work.

In this sense, more specifically, Covid-19 has accelerated a process that had already been taking place for some years in the world of work, within which the traditional physical office has been increasingly losing its historic centrality. In fact, the pandemic has forced companies to opt for remote ways of working. In recent months the concept of smart working has become familiar to everyone, but it would probably be more appropriate to speak of home working, especially in view of the fact that, especially in the very early months of the pandemic, workers were forced to work from their homes because of the severe travel restrictions and spacing requirements necessary to ward off coronavirus infection. This had important consequences, both negative and positive.

Now it is time to analyze the various options available to you on a case-by-case basis, with their relative pros and cons.

Working from home

One of the main advantages of working from home is, as mentioned above, that you can save a lot of money by zeroing out (or, at least, greatly reducing) expenses related to renting or buying an office, home-office travel, parking, and meals.

In addition to money, if you work from home you can also save time and stress, since you do not need to move from your home and deal with any traffic or public transportation problems.

All true, but be very careful: working from home reduces stress in terms of home-office travel, but it risks increasing tensions within the home and in the family. This is due, above all, to the fact that unplugging and separating the two work-home dimensions, in such a situation, is very difficult.

Not only that, other family members can be a source of distraction, compromising the quality of work. Another source of stress can come from isolation from other colleagues. Networking with colleagues also fuels the exchange of expertise.

It should also be pointed out that not all activities lend themselves to such remote working arrangements.

Shared offices

Working together with other people, within the same space, can be a help or a hindrance, depending on your point of view and the factors you consider. For this reason, you should carefully consider whether to choose the option of using shared offices.

Coworking is a mode of work that has begun to spread considerably in recent years, even before the outbreak of the Covid-19 pandemic. On a practical level, it consists of working within shared spaces that can be rented on very flexible terms, ideal for those who want to have an office at any time without the need to enter into medium- to long-term contracts and without having to worry about consumption, bills and other potential contingencies associated with the more traditional office.

Spaces that offer coworking solutions give, in essence, the opportunity to choose the ideal location (whether a meeting room, private space or open space) in any situation where this proves necessary. Moreover, shared offices are very dynamic spaces that encourage the exchange of skills among professionals.

As always, not all that glitters is gold, and you have to look at the other side of the coin as well: in fact, as mentioned above, working together with others can also be a hindrance, for the same distracting reasons that emerged when we talked about home working. The absence of proper privacy, moreover, can be a limitation for some types of businesses.

The economic aspect deserves separate consideration, because you should know that the savings a coworking solution offers depend on your specific needs: how many days a week do you need to have an office? What does this solution offer you and what does it preclude? What is the expense associated with the home-coworking move? Answering these questions can give you a rough idea and allow you to make a more informed assessment of whether or not it is worth opting for such a solution.

Physical location

The third option available to you is the most traditional one: we are talking about the physical location, that is, the classic office (but not only). However, not always the most established and, in some ways, obvious solution is also the right one. Think about it: do you really need a physical location?

By now it must be clear to you that, in case you decide to have a physical location, the fixed costs you will have to incur will be higher than in the solutions analyzed above. The issue related to home-office travel also remains valid: it represents another important item of expense, as well as a source of stress that should not be underestimated. Likewise, unfortunately, the complications related to the Covid-19 pandemic and, specifically, the need to minimize prolonged contact with other people within the same closed environment still remain valid.

Having a physical location, at any rate, also has several advantages: for example, it provides you with the proper privacy and necessary concentration, neutralizing potential outside distractions. You can, moreover, equip your private office to your liking, according to the specific needs of your business. Not only that: having a physical location also lends greater credibility to your business.

A further clarification is needed at this point: talking only about an office when discussing a physical location is limiting. A physical location for your business means, in fact, much more, and you are about to find out in the next few lines.

Administrative headquarters

When talking about physical headquarters, it would first be appropriate to distinguish between “administrative headquarters” and “operational headquarters“, since these two places do not always coincide. It is appropriate, therefore, to clarify some terms: the “administrative headquarters” of a company is the place where the administrative offices of the company are located, where its management and “political” activities take place. To better understand what we are talking about, it may now be useful to also introduce the concept of “registered office“, which refers more specifically to the place of service of legal correspondence (in the articles of incorporation, the address of a professional’s office may also be listed as the registered office). The “operational headquarters” differs from both the administrative office and the registered office.

Operational headquarters

In fact, the “operational headquarters” of a business is defined as the place where the operations of the business actually take place. Keep in mind that, for certain businesses, it is also necessary to allocate a room in the premises for the storage of goods, so that they are kept in optimal condition before they can be put on the market and sold. Of course, in the case of particularly high numbers, it is necessary to rent a warehouse, with all that this entails in terms of additional expenses. Consider this aspect as well.

The virtual office

The overview of options available to you is not yet complete: it is time, in fact, to talk about “virtual office“. This is a solution offered, mostly, by the same spaces that already offer coworking service. This particular option generally includes an address at which to establish the company’s headquarters, an answering service for paper and telephone correspondence, a dedicated phone number with the possibility of call forwarding, and space rental on a temporary basis.

Evidently, this solution allows you to have several services typical of a “classic” office without you need to purchase or rent physical space on a long-term basis, and it allows you to benefit from lower costs and more flexible conditions.

Not every type of business, however, is suited to these working conditions. For example, a business that needs specific equipment is unlikely to find it in these “virtual” spaces. Not only that: such flexible conditions require very precise organization and risk, moreover, making it more complicated to solve sudden problems since coordinating all the different resources of the company, in the absence of a central structure to refer to, is more difficult.

Now, you have at your disposal all the information you need to proceed with choosing the type of business location that is best for your business. Analyze all of the concrete benefits you can enjoy from each option available to you and try to reshape them to incorporate the benefits into the solution you decide to adopt.

To accomplish this, remember Socrates‘ teaching:

“The secret of change is to focus all your energy not on fighting the old, but on building the new”.