Servcorp News 2013| Top floor, bottom line

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Top floor, bottom line

August 2013 | Servcorp – Published in SME Advisor Magazine

Whether aiming for small-scale success or multinational development, the central idea behind any business is to make an impact. Sometimes, this is simply thinking about how to optimise your existing daily operational practices in strategic new ways. The best way to make this happen is having an inspiring space in a location that fits your needs. Enter the innovative concept of a serviced Office, an ideal solution for small or growing businesses, multinational branch offices and those with constantly changing needs.

The serviced office concept really caught on when businesses realised that sharing office space and operational costs reduced their overheads and increased their possibilities. Along with this realisation came a variety of initiatives from the serviced office providers, which ‘raised the bar' and ensured that top-flight serviced offices really felt like home and added value to just about every aspect of a business' operations.

So it's no surprise that, in line with this idea, serviced office space is expected to double in the next five years, and represents 12 per cent of the global office pie. According to an Emerging Markets Serviced Offices report by Instant, in the last 12 months alone, there has been a 21 per cent growth in this sector in emerging global markets such as Turkey, Brazil, Qatar and India – to name a few. All of which is certainly reason enough to pay attention to what has become a powerful evolving trend.

Getting competitive advantage – let's look at the figures!

In today's immensely competitive business climate, industry turnover is higher than ever before. Workers and market trends are both transient, but this is not to say that everything is impermanent and that there is no long-term. It is merely important to realise how modernising your business outlook might be to your immense advantage.

As a company potentially on the lookout to make some changes, a serviced office can be a temporary solution for a permanent business address without interrupting the flow of your operations or losing your competitive edge.

The simplest way to define a serviced office is a fully-managed office solution that is immediately available to move into. Typically this includes flexible rental options, low deposits and a number of business services and facilities that smaller businesses may not be able to afford. Overall, a serviced office makes it easy for a business owner to expand or shrink their workspace with contracts that allow them to choose the exact level of service needed.

For example, the minimum term for a traditional office lease is three years, but with a serviced office, it can start at just one month; a 12 month lease is required only if you intend to officially establish and register your company. Once this has been decided, your attention naturally moves inside the office. However, a leading serviced office provider takes care of all basic essentials to save you on the cost and hassle. The beauty is that you can walk in with your laptop and be operational from Day One. There is someone to handle your calls, manage your office requirements and you don't have to worry about repairs and maintenance, because a serviced office provider is also your dedicated landlord.

The approximate cost to run your business in an office for two people from Dubai is AED 37,153 per month. This figure includes your rental, phone and internet connections, office appliances, electricity bills and incidentals but not your HR fees. With a serviced office, you can save about 30 per cent by paying approximately AED 25,500 and enjoy all the additional perks.

In line with your vision

Consider any potential expansion plans you may have, whether it is to keep up with the international presence your competitor is acquiring or simply because you think it is time to broaden your market outreach. Say you wanted to expand in three months' time or need to change the location of your office: unlike a conventional office lease, a serviced office gives you the flexibility to downgrade or upgrade your office – or even terminate so you can move to another location. The minimum lease term available in a prime CBD building is three years, while a serviced office lease can range from one month to 12.

What's best is the unique pay-per-use-only system, so you can book and cancel as your requirements shift, whether it's a seasonal office you need, space for a day of executive interviews or a fully functional administrative support that will afford you the time and energy for your core responsibilities.

A serviced office may also be the right choice to build a more impressive customer interface without too many intimate glimpses ‘behind the scenes', ensuring that your brand's intellectual secrets stay secure. Can you afford full conference facilities and integrated suites on your own premises? If your business is based on direct interaction with clients and you have many visitors, it gives you just the style of facilities to match their expectations because you have discussed and designed it with your service provider. It can be a classic décor, something funky or somewhere in between.

The technology ‘edge'

Another advantage is the range of updated technology which is readily at your disposal, instead of having to invest in multiple infrastructures. You can effectively increase your IT setup, improving scale and efficiency while minimising cyber risk. Have you costed-out the financial implications of growth? In terms of connectivity (a must in today's world), a non-serviced office set-up usually includes basic broadband internet access with 10 MB, contract period limitations, no technological support and periods of potential downtime, with an average price of AED 1,500. If you opt for a serviced office, your business could utilise up to triple the data, have no blocked websites and a network that is both built and maintained in-house, for under AED 1,100. Also, you never miss an urgent call or message, because information is relayed by either your secretary, or outside office hours by the system, all in real time.

The people benefit

Ultimately, physical aspects aside, optimal use of office space with strong cross-departmental communication and a comfortable workplace lead to happy workers and in turn, higher productivity. With a serviced office, you can plan the exact shape of your office space so that there can always be dialogue between key departments, for example Sales and Creative.

On that note, for both IT and personnel support, a typical office structure's pricing based on a full-time, salaried junior team member is AED 8,000. A serviced office offers the same benefits for as low as under AED 1,100! This is a big potential price difference and equally big savings. This way, you also get in-house and on-hand support from a well-trained team, without the extra steps and coordination of outsourcing.

There are numerous other financial benefits. The topmost reason is reduced initial costs for starting a business or setting up somewhere new. This includes real estate related expenses as well as recruitment and salaries, even if it's a small team.

Budgeting strategies

Choosing a serviced office allows for forward budgeting, like planning ahead for any space upgrades that your business needs are likely to demand. You can go through your business forecast with the serviced office provider, identifying growth ‘hotspots' and determining how much it will cost for a certain amount of additional space, for example if you have a project that requires extra team members for a certain month or business quarter, building this into your forecast while you're still in January or even the beginning of the fiscal year.

Another plus factor is lower maintenance fees for utilities and repairs. There is no property depreciation as time progresses and you have the flexibility to make changes without heavy fines. Finally, there's the plus factor of improved client relationships – and thereby, ultimately profits – because of a highly professional, elegant setting that creates confidence in your customers.

The idea of a serviced office is that whatever industry you're in, you have an instantly operational set-up with all the right tools and without the steep start-up fees. Finding the right office is vital for any company, but a serviced office heightens the benefits and the immediate rewards; which means more cash, better cashflow, and therefore more opportunities for investment partners, stronger creditworthiness and more ability to invest in fixed assets, as and when required.

And isn't that what we all want?