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Discussion Starter #1
I would GREATLY appreciate anyone who can share their experience with making the transition from a home-based business to a commercial space. I am sure there has to be thousands of you out there.

I have been running my business from home for close to six years now. I have enjoyed steady growth, and the business has completely taken over my home. I even have 2 employees here with me.

My output/space/storage capacity are maxed out. And my wife really wants me out of here too! I am ready to take it to the next level and rent a commercial space. But I'm a little scared...

Despite my success and good customer base, I can't really say that I have a $2000 surplus every month. This is what I would basically need to cover my new rent.

However, my hypothesis is that in a very short amount of time, my space would pay for itself simply by existing in public view on an actual street. I live in a relatively small town, and EVERYbody I ever talk to knows about the other screen printing place in town. I could be terribly wrong, and this is why I am posting this thread, but I would bet that they get a very large percentage of their local business for no other reason than simply because they are "that screen printing place" that people see when they are driving around town. Not everyone comparison shops online for 2 hours before making a purchase. Its a lot easier to just go to "that t-shirt place" on the corner and call it a day.

Almost none of my business is local. It's nationwide/web based. I think I could cement myself a nice foundation of local business with a commercial space. My rent would be an investment, and not a cost.

On one hand I think paying rent is a big risk when I can't exactly afford it. On the other hand, I also think the exact opposite. My cyber-only business is a house of cards, and a real brick and mortar entity could give me more stability I have never known.

I am reliable, and I do a great job for a great price. I know just having a shop doesn't guarantee success. But assuming I continue to do what has given me this much success thus far, is a commercial shop a no brainer?

THANKS!!!!
 

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Sounds like you need to get a place. Choose the location carefully. If you open a shop on main street you will enjoy more local business. Some of this business will be good profitable work but you will also open the door to a steady stream of folks who want to spend hours discussing jobs that never materialize or who want a single shirt etc...

In addition if you open a shop on main street you will post hours and will need to be open those hours. Most home based business don't realize the flexibiity they have and how often they take advantage of that flexibility.

I don't know where you are located but an out of the way warehouse location will have significantly lower rent than a traditional retail location.

I reccomend making the jump - Good Luck
 

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This is just a suggestion, but why don't you build on or build an outbuilding. I mean a large two car garage with a few windows instead of garage doors can't cost that month and you are still close to home. This eliminates the walk in waste of time. And it gets everyone out of your house!!
 

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Based on the comment you made about not having the extra $2000, it seems to me that it would be foolish to take on that expense. I can only assume that you are "expensing" a lot of things for you to not have an extra $2K after being in business for 6 years. The biggest risk you will be taking is that most commercial landlords want a 3 year commitment. Yes, that's a 72K commitment. What happens if you don't see a change in 18 months? You are on the hook for an additional $36K. Also I'm sure you are aware of electricity expense from you home but the type of space you get needs to be considered also. What type of power are they using...single phase etc... Before you know it hello Mr. $1000 electric bill! I personally would not jump into a space unless I had 6 months minimum set aside to cover expenses. Once you get a space THERE WILL BE EXPENSES POP UP THAT YOU NEVER THOUGHT EXISTED. TRUST ME! If you do get one, consider parking for you, your employees, and most important, your customers. I could go on for pages on this subject but you get my point. Good luck!
 

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Discussion Starter #5
Thank you everyone for your responses.

CSW- I hear what you are saying about walk-ins. Even with no walk in's, I have rarely made any sale without spending 45 minutes explaining things first. This is true for people who buy 1000 shirts, 1 shirt, or go somewhere else and buy no shirts at all. I'm not sure anything will change by having this steady stream of walk-ins hassling me. I am already constantly being hassled by phone-ins. That is just part of every sale. There is no way to eliminate the half hour long "what's the difference between screen and digital printing" conversation. Thank you for your words of encouragement.

Nikon66- Thank you for the suggestion. I cannot build an addition. I live in a neighborhood with relatively small plots of land. If I lived way out in the country I might definitely do this.

EGS- Thank you very much for your comments. I was not looking for people to just say "go for it." I appreciate your words of caution. I don't have a $2000 surplus every month because my lease payments are close to what I would pay for rent. I also pay myself a salary and I pay 2 other employees. I started my business while I was working as a waiter and have gradually amassed a lot of very expensive equipment. Every cent I have ever made thus far has pretty much gone into expanding. I have $2K. I don't have $2k "extra" every month.

Every commercial property I have seen in town has been vacant for 18 months. To me it seems there is not a commercial landlord out there that has an ounce of bargaining power. I think I can set my own lease commitment. Yeah, the extra expenses such as utilities are definitely a consideration too, and I am sure there are a million things I am not thinking about.

I am still trying to answer the question: Is a commercial space an investment or an expense? If there was nothing good about having a commercial space, why doesn't everyone work from the privacy of their own home? And does there exist a single person who has jumped from house to commercial property who hasn't initially lost money on the move? I know I am going to take a loss at first, but will it be worth it in the long run?

Thanks again everybody!
 

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I am still trying to answer the question: Is a commercial space an investment or an expense? If there was nothing good about having a commercial space, why doesn't everyone work from the privacy of their own home? And does there exist a single person who has jumped from house to commercial property who hasn't initially lost money on the move? I know I am going to take a loss at first, but will it be worth it in the long run?
It is both.....it's always going to be a monthly expense but from what I've read here you have no local business and only one competitor, so you could also say it's a investment in local business.

I do agree with you that right now a lot of commercial space is vacant and I too would think you could work your own deal with the right landlord, twice I have been in your shoes over the years and twice I've chosen not to make the jump, doesn't mean it is or isn't the right thing for you to do which is a decision you have to make with your wife after you weigh all the different factors in your situation.

The one thing I would say is that if you have been successful with a internet based business and have nationwide sales you do have the right stuff to have a store front, if the economic times were different I'd say jump.....still I'd be cautious.

JMHO
 

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We took on more of a warehouse/office space a year ago. We were lucky enough to be allowed to sign a month to month agreement. We only had to pay $800 for 1500 sqft and the space was perfect for my business along with my hubby's carpet cleaning business. Well, after a couple of months, our $35 electic bill turned into $300 due to the cold weather and poor insulation, which our electric in our house stayed the same as it was when I was working from the house. Our cable/internet bill doubled since we had to have it in both places. My gas bill went up since I was driving more to and from my house. I also found that I didn't like feeling like I had to be there all the time and have set hours, but it was just me and it would have been different with employees.

After 6 months, we had found that we were not using the area in our house that we had moved out of, couldn't afford to raise prices at the risk of loosing customers and just really didn't want the added expense. It did actually work in our favor to do what we did because while everything was moved out, we changed a few things around and made more room for me when we moved back in and so love being back in the house.

A couple of things to think about. If possible is there a way that you could move some of the stuff that you don't use very often to a storage unit. Like extra supplies, inventory, machine and such. Storage units can run $100 or so a month. Could it be an option to look for a new home that may have more land to add a building or something that already has a shop? If you are going to spend an additional $2000 a month for a lease, that is a good chunk of money that you could be investing in a larger home. If moving to a new home is not an option, then maybe look for a house that is for sale in a comercially zoned area and see if the owner may let you rent for a year with an option to buy. This is what I would do the next time if I were to very decide to move out again.

Good luck and I feel for you.
Catie
 

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I am still trying to answer the question: Is a commercial space an investment or an expense? If there was nothing good about having a commercial space, why doesn't everyone work from the privacy of their own home? And does there exist a single person who has jumped from house to commercial property who hasn't initially lost money on the move? I know I am going to take a loss at first, but will it be worth it in the long run?
I own several pieces of property, the key word there is OWN. Paying someone rent can only be viewed as an investment if you expand your business to the point that covers the rent and expences and then some. I have a friend that letters trucks and race cars. He bought a house with a very large garage and rents the house and uses the garage for his business. The renter pays for the property and looks out for his garage. He gives them a deal on the rent but that still covers all of the homes expences and gives him a place of business. Just a thought. I built a house and put my business in my walk out basement. I like the fact that I am home and that space was planned for in the new construction.

Just my two cents,
 

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Make sure you have INSURANCE, both business & liability. If you work out your house, and your equipment gets destroyed by a mishap or act of nature, your homeowners insurance will NOT cover it. If a customer or employee gets injured in your shop, you're responsible for their medical bills. If you rent in a commercial space, ,most likely your landlord will require insurance to cover their rental space in case your business causes a fire or other mishap. We paid both business, liability, & flood insurance for 20 years, and was glad we had it all when Hurricane Katrina wiped out our business.
 

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From my prior experience as a renter-in the retail fashion sector-paying rent sucks! Every month I dreaded making out that $2k rent check. Not only do you have rent but you have to consider ALL the other expenses that go along with renting a space such as initial deposits then monthly bills like electricity, water, sewage, internet, phone service, liability insurance which can get very high depending on the required limits by the Lessor, property taxes, inventory taxes, upkeep such as lighting, cleaning and unexpected cost such as broken AC or plumbing issues. The list literally goes on. Granted some of these do not apply to everyone; these are some of the ones I had to pay. Then for me the real kicker was signing a 5 year lease! I did this twice! I tried to negotiate a shorter term but Lessors were not willing. And needless to say you can't just "walk away" from a lease especially when you are a personal guarantor.

I'm definitely NOT trying to be negative. I wish someone would have told me the brutally honest truth about leasing space instead of what I wanted to hear. I have vowed to never rent space again. Instead I would definitely expand my workspace at my house should I need more room.

With all this said if you have projected sales to cover above and beyond rent and are comfortable with the additional expenses and liability then go for it! Honestly, you (and your wife:) are the only one who can determine if this is a good move for you and your business. This was just my personal experience. I wish you the very best of luck!

AP
 

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I know this thread is 3 years old, but thought I throw this suggestion out there anyway. Maybe someone reading this in the future would actually consider this. Virtual office space. A Virtual office space would give you everything you need to have a full blown office without the expense of a full blown office. You pay for what you use. You have 24 hour access, a receptionist to answer your phone call, business phone line services, mail delivery services, all from your virtual office. You can set up meetings with clients there, and can go as you please. There are no long term lease agreements, you just pay for whatever services you use. In my area you could get an virtual offices with everything I mentioned above including for about $99-$199 a month. The whole idea behind the virtual office in t -shirt home based business situation is to run your business from your virtual office, set up meetings with clients, have phone services, or mail delivery services at your office, and have your business equipment set up in your home, and make your orders at home. Just a thought! :)
 
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