Office
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For those of you who have gone Indie - have any of you started out working from a home office till you got fully up and running, as a temporary solution? How did your clients react? Where did you hold client meetings?
What are the issues with this?
It would seem to me, that after legal fees, the biggest expense is setting up the office - lease, furniture etc, and the rent you have to pay PRIOR to the revenues starting to roll in
I started by leasing space from a local CPA firm and 3.5 years later, I’m still here. With my transition money, I bought nice office furniture for my office and a nice computer setup…spent about $15K total. My wife & I painted the walls in my office the weekend before I made my move and I was ready to move in when I left.
Looking ahead, I think owning my own building is inevitable. These guys are great, but if things go as I hope, eventually we'll run out of room. I hope to find space close by so we can maintain the healthy cross-referral practice we now have. Obviously, it won't be as tight as it is today, but I still expect it to be good. We were friends beofre the move and we'll be friends long after I leave if it's done right. Several here have mentioned making use of the temporary office complexes, which give you infrastructure for a reasonable cost and require little or no upfront investment...probably not much more than a good computer system. One thing I wouldn't do is make long-term decisions when you're trying to leave, since your first choice probably won't prove to be a long-term solution, especially if it's made in haste. There's an LPL indy...his name escapes me...lives in Hawaii and runs his practice out of a very nice house. I think his logic was to put the money he'd spend on commercial space into his home and make it work for a business. What I saw looked very nice, but I still struggle with the idea of having clients come to my personal space on a regular basis. Certainly, on a temporary basis, while you are looking for suitable space, operating out of your house is fine. I'd simply explain to clients that you wish to take your time and acquire the best space for your practice. I think most people understand being deliberate when you're looking for office space, especially with the real estate market in turmoil. If you don't go crazy, there's no reason to think that you won't have enough transition money to get your space leased, your furniture bought and your equipment set up. I would think you could get at least 12-15% of trailing twelve in loans and transition assistance.Thanks Indy. While the idea of working out of home seems attractive and practical, it spooks me a little. Just doesnt feel right. And you mentioned one of the big reasons, wanting to be able to meet with clients in an office.
With 6 partners out of the box, there was no way we could ever work out of our homes, but, I’ll leave you with this comment heard from more than one client at the time we left our old firm…
'Good thing you weren’t working out of your house. I would have had some serious questions…'
C
I did it for a period of time. It was ok for my situation, but I wouldn’t recommend it.
There is virtual space and subleases. Look at Craig’s list. I was able to get some virtual space for $100 month for my advisor clients. They gave a mailing address, client pick up the mail, and gave access to about 4 conference rooms as long as the are available. You can also sehedule a room. Do you go with a Regus that charges you by the hour. Will kill your budget eventually.
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I slid right into an office with three empty rooms. I have since filled them with advisors and a CPA who is renting to get his own gig started.
I’d bite the bullet and get the office space.
In today’s environment of distrust, the reassurance clients have in seeing you in a “real” office is almost necesary. In fact, the delta between your likely retention of existing clients if you worked out of a home office vs. leasing professional space would probably pay for the office. Assuming you kept is reasonable.
[quote=Northfield]In today’s environment of distrust, the reassurance clients have in seeing you in a “real” office is almost necesary. In fact, the delta between your likely retention of existing clients if you worked out of a home office vs. leasing professional space would probably pay for the office. Assuming you kept is reasonable.
[/quote] Interesting perspective. Probably makes sense. If you think about it, if you are generally at 1% with fees, it would only take about $2mm (more or less) in assets to pay for the office. I am willing to bet there would be $2mm worth of clients that would not move with a guy working out of his house.I’ve talked with the guy in Hawaii and his book of business is different than 95% of us…he has acct minimums and only about 200 households. Majority of clients don’t live in Hawaii. He has a niche…and it works well for him. I know of 2 other setups out of homes and they seem to be very happy and enjoy it, with no negatives. I know of several accountants who have thriving businesses run out of their home. Most new homes incorporate a home office. I personally wouldn’t do it, but working out of your home, if you have a nice home, is very economical. I couldn’t think of any clients of mine who would care where I was located. If I had a home office and someone questioned it…I would ask them who they think really pays my overhead…me or the client?
Another thing…as we trudge down this path of socialism and jealousy of people who work hard for our money. Do you really care what other people think? Most of the successful business people I know could care less what people in general think about them. If you work hard, are honest, present yourself as a professional, why care what others think. There are some people who try to make everyone like them, talk a big game, but in the end are less than successful.
Isn't this some of what has put us in this over stretched position. Buying the nicest car, building the biggest house, having the nicest clothes and going on the best vacations..just to brag about them. I have a neighbor who seems to have a new vehicle every year...always bragging about what he makes...how much he's lost in the market like its a big deal. He makes 80k gross, and at 40 has 80k in his 401k. He would probably sh*t his pants if he knew what my wife and I bring in every year from our ventures and the balances in our retirement accts. We don't discuss with anyone except our accountant and banker. SO if you, and not anyone else, think having a home office is cool and would make you happy...go for it. Don't worry about what I think or your buddy advisors, just do it, do it right and work hard for every client. After a few months, you working out of a nice home office will be a mute point.Spears, you have a valid point. But I think the bigger issue is whether or not you can find enough clients (or convince enough current clients) that a home-office advisor is acceptable, given some of the recent problems with Madoff, etc. I don’t think it’s a issue of “stature”, more an issue of legitimacy. Personally, I might be concerned that the person I am entrusting my life savings to doesn’t even have a real office. I don’t mean that as a put-down. I think it’s an acceptable alternative. I just think many people like the comfort of walking into a “business” office, with a business name on the door, etc. as opposed to someone’s house. With a home-office, you get the feel that there is major separation between you and your money.
But you're right, if you haev primarily remote-location clients that don't come to you, why not consider the home office? I couldn't do it forever, but it would certainly save money, and would especially nice if yuo lived in a great location.You just contadicted yourself B24. I’m sure Madoff had some very nice digs and If I remember correctly there was an EDJ’s vet in Tennessee who stole millions…with a nice “business office”. I assume there’s just as much concern now about advisor who have nice offices, as to someone working out of a home office.
I think its in the mind of the person who sets up the office. If they feel weird about a home office, then I believe it will make the clients concerned. If your confident in your ability and make the home office a positive, it will work. Just because I perceive it to be a little iffy, maybe because I have an underlying lack of self confidence in my ability....so I make a facade of a nice office, all the nice furniture, signage, brochures etc...to MAKE it look legit, isnt the real reason it wouldn't work.I got an executive suite. I am paperless so I got smaller office and use the conference room, or meet in my space 18 x 15. If you Go that route, I would suggest that you get a smaller office to cut expenses, make it a working place with usable furniture (since it is not for public view who cares what it is) and use the conference room.
When I left AMP I went plush compared to what I had there. After 2 years, I renewed my lease to smaller working space and use spacious conference room that is furnished for me.I did the home office thing for a while… clients never even knew, and I didn’t think it was a big issue… I now own my office and have a few guys in it. The home office, while much more cost effective, I felt started to take its toll on my business… No matter who you are distractions, door bells ringing, the maids, the lawn / pool guy, dogs, etc… while it’s very doable before going indie I did the suit and tie and after the “bath robe” and I found the suit and tie more suitable… to each his own.
[quote=Sportsfreakbob]For those of you who have gone Indie - have any of you started out working from a home office till you got fully up and running, as a temporary solution? How did your clients react? Where did you hold client meetings?
What are the issues with this?
It would seem to me, that after legal fees, the biggest expense is setting up the office - lease, furniture etc, and the rent you have to pay PRIOR to the revenues starting to roll in
[/quote]
Although the legitimacy point is a good point, clients also know that a big office means nothing. $1 million dollar toilet!! I think it depends on your client base. Will clients think of you any less if you work from your home… Many companies are doing it now. I still think a happy medium is a virtual space and an office “desk”. It gives you the presence you want with conference rooms, without the large overhead. If you start having a team, I can see that you may need a formal office.
Good Luck.
[quote=Indyone]I started by leasing space from a local CPA firm and 3.5 years later, I’m still here. With my transition money, I bought nice office furniture for my office and a nice computer setup…spent about $15K total. My wife & I painted the walls in my office the weekend before I made my move and I was ready to move in when I left.
Looking ahead, I think owning my own building is inevitable. These guys are great, but if things go as I hope, eventually we'll run out of room. I hope to find space close by so we can maintain the healthy cross-referral practice we now have. Obviously, it won't be as tight as it is today, but I still expect it to be good. We were friends beofre the move and we'll be friends long after I leave if it's done right. Several here have mentioned making use of the temporary office complexes, which give you infrastructure for a reasonable cost and require little or no upfront investment...probably not much more than a good computer system. One thing I wouldn't do is make long-term decisions when you're trying to leave, since your first choice probably won't prove to be a long-term solution, especially if it's made in haste. There's an LPL indy...his name escapes me...lives in Hawaii and runs his practice out of a very nice house. I think his logic was to put the money he'd spend on commercial space into his home and make it work for a business. What I saw looked very nice, but I still struggle with the idea of having clients come to my personal space on a regular basis. Certainly, on a temporary basis, while you are looking for suitable space, operating out of your house is fine. I'd simply explain to clients that you wish to take your time and acquire the best space for your practice. I think most people understand being deliberate when you're looking for office space, especially with the real estate market in turmoil. If you don't go crazy, there's no reason to think that you won't have enough transition money to get your space leased, your furniture bought and your equipment set up. I would think you could get at least 12-15% of trailing twelve in loans and transition assistance.[/quote] Four months after this post, my strategy has taken an unexpected turn. I got an opportunity to buy an office building for much less than I expected and as I write this, I am requesting financing for the purchase price (just over $60K when they were asking $90K), plus about $50K in renovations and improvements. Even in the rural midwest, I had expected to spend at least $200K getting an office up and running. Now, assuming no material unexpected issues arise between now and closing, I'll have roughly 1400 square feet plus about 900 square feet underground renovated and ready to go with plenty of asphalt parking for less than $120K. I'll be on a high-traffic street right across the street from a popular restaurant less than half a mile of a major interstate exit (just breaking ground). Even better, it's within a thousand feet of the accounting firm that I rent from today. I'm seeing all sorts of desks and conference tables for pennies on the dollar, so furnishing the office shouldn't be expensive. The way it lays out, there are two front entrances and plenty of space for three advisors, two assistants, and a nice conference room, which is as big as I ever want to be. The point of this story is that I decided to take advantage of the current real estate market, even though I had no intention of making the move for at least 2-3 more years. I currently have no plans to utilize much of the space, but if/when the opportunity to expand presents itself, lack of adequate space won't hold me back. I keep telling myself that the moves I make today have the potential to pay huge dividends in the next few years and I think getting my own space is one such move. I'll be able to cover all costs of carrying the building for what I'm paying in rent now and own the building free and clear in seven years. Yeah, I know that most of you are in higher rent areas than I am, but it may be worth looking at the numbers now before the commercial real estate market takes it's next leg up.I signed up for office space 5 days a month at Regus, just so I would have somewhere to make calls and do work. They’ve been really good so far. They will also do a virtual office so they will answer phones the rest of the month when you are prospecting.
[quote=B24] Spears, you have a valid point. But I think the bigger issue is whether or not you can find enough clients (or convince enough current clients) that a home-office advisor is acceptable, given some of the recent problems with Madoff, etc. I don’t think it’s a issue of “stature”, more an issue of legitimacy. Personally, I might be concerned that the person I am entrusting my life savings to doesn’t even have a real office. I don’t mean that as a put-down. I think it’s an acceptable alternative. I just think many people like the comfort of walking into a “business” office, with a business name on the door, etc. as opposed to someone’s house. With a home-office, you get the feel that there is major separation between you and your money.
But you’re right, if you haev primarily remote-location clients that don’t come to you, why not consider the home office? I couldn’t do it forever, but it would certainly save money, and would especially nice if yuo lived in a great location. [/quote]
It might save money, but if $5000 in expenses is going to separate you from success it’s time to consider selling cars for a living.