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Outgrowing a home office
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February 29, 2000: 6:35 a.m. ET
Moving into commercial space requires preparation -- and, of course, money
By Staff Writer Hope Hamashige
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NEW YORK (CNNfn) - The goal of just about everyone who starts a business in their home is to get so big that you can't operate out of the home anymore.
As your business grows, it is tempting to move into a more traditional setting, particularly if you and your assistants are tired of tripping over one another in your spare bedroom. But, although you may be movin' on up, it may not be the right time to be movin' on out.
First and foremost, make sure the upturn in your business that allowed you to hire a couple of assistants is not a momentary blip. You must be sure the gains are permanent, because moving out means many more expenses, including some you may not have considered.
How much is enough?
Consider this: Beyond rent, you have to take on additional liability insurance,  you have to furnish the new digs and will probably spend more on equipment such as a new telephone system.
Gene Fairbrother of the National Association of the Self-Employed suggests using the following formula to help determine whether your business is ready to move out of the spare bedroom:
- Determine how much the new office is going to cost including rent, insurance, equipment and employees' salaries.
- Calculate your current profit margin.
- If your profit margin is 50 percent, you will need to double your revenue. If your profit margin is 20 percent, you will need to increase revenue five times.
"Make sure the money is there before you lock yourself into a three-year lease," Fairbrother said.
Create a cushion
If you eventually do sign that lease, it's a good idea to get a line of credit to carry you in the event you get into financial trouble at some point, said Clarence Stanley, director of the Bronx, N.Y.-based Small Business Development Center.
If your savings are low, but business is good, it might be the right time to get a line of credit, Stanley suggested, either from a bank or from the Small Business Administration. It's a good business practice to have a source of financing if things turn bad, and the best time to ask for a loan is while the business is on an upswing, not when there's not enough cash to make payroll.
Consider roommates
Even in good times, taking on the additional expense of an office can be daunting. That is why T.J. Taub moved into shared office space when her company, Southwest Public Relations, got too big to operate out of her home.
She and the other business owners who share the office suite near downtown Phoenix share a receptionist and the cost of equipment like photocopiers, office furniture and fax machines. They also have a conference room they all use to meet clients -- a nice amenity that she probably would not have if she gone it alone in a smaller suite.
Combing through the newspapers for ads for shared office space may help  you find new digs, but you also should get out and pound the pavement, Fairbrother suggested. Find buildings you like and ask the landlords if any of their tenants is searching for office mates.
Stanley also pointed out that moving into office space will give you a tax break of about $3,000 per employee if you locate your business in an "empowerment zone." To find out if there are empowerment zones in your area, contact your local planning board or local chamber of commerce.
Don't just move, market it!
A move also can be an opportunity. Make it more than hauling boxes by using your move as a chance to draw attention to your business, Fairbrother said.
"Make a big whoop-dee-doo out of it. Have a party. Invite your customers," Fairbrother said, adding small business owners always should be on the lookout for ways to market their company. "Call the Boy Scouts and ask them if they will help you move in return for a donation. Then call the local newspaper and tell them what's going on."
If you put your creative juices to work, you can make an otherwise dreary task into an event that will everyone involved will enjoy. 
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