Does Your Business Need More Space? A Lender Weighs In On Why & How To Expand

“Do you think a brick-and-mortar store is a logical expansion to a successful online retail business?”

“Would you pay to professionally decorate your office with the intention of impressing potential clientele?”

“Is a more expensive office space worth it if it offers more reliable Internet connectivity and better AV capabilities?”

These are typical questions that business owners and consultants in many different fields wrestle with in the ongoing process of figuring out their operational expenses. One of the main reasons why business owners look for more capital is to expand – and ironically, over-expanding can lead to a whole set of problems. Yet a cramped, non-ideal workspace can actually cramp output.

A recent study by CoStar Group found that buildings in Manhattan with best-in-class digital infrastructure were able to charge as much as $7.50 per square foot for office space rental. For companies in technology, advertising, media and information (TAMI), the study found that being in an office space that’s Wired Certified as having the fastest and most reliable internet connectivity can actually help attracting top-drawer talent.

There is no single formula to determine the right amount to spend on a physical workspace – but some experts have helped countless business owners find their way to the right space. In this post, I speak with Victoria Treyger of Kabbage, an automated lending platform that has helped more than a hundred thousand small businesses and consultants expand wisely. She considers several common scenarios in which a business might consider physical expansion, and shares her feedback on why and how it’s worth the risk.

Lena Katz: When is it best to move your creative business (photography, stylist, agency) from a shared workspace to one’s own office or studio?

Victoria Treyger: Shared workspaces are best when you’re seeking new ideas and collaboration. It’s great for businesses with limited budgets or smaller teams, or even for more established companies that can benefit from a hive of collective creativity. It’s typically time for a business to transition to its own office or studio once it’s amassed a large enough client base to support the costs, has enough projects that require dedicated focus without distractions, or built a team that needs dedicated space.

Katz: At what point should independent consultants should move from a home office to a real office?

Treyger: The primary catalyst will be people, whether they work for you or are your clients. If you find you’re spending most of your week at the local coffee shop rather than your home office due to meetings, then it’s likely time to consider a separate office. However, a home office is certainly a real office. Working from home or remotely is a viable option for many independent consultants and companies. So much work is done online today, and if working from home is the best way to operate your business, then why change?

Katz: As a retailer, what is the smart method to expand from online seller to bricks-and-mortar? Are there other models that are smarter than moving into a full-time space?

Treyger: This is the most exciting time in decades for innovation in retail, with blurred lines between online and physical stores. More and more innovative brands are starting online with bold and unique product offerings and then moving to a physical store. M.Gemi, Everlane, Casper and Away are four of my favorite brands that started online and then opened a retail store. The key is to focus the online experience on perfecting your unique brand promise, building a loyal customer following, and testing new products. Once you have established a passionate customer base and an incredible customer experience, going offline allows you to take your brand awareness to the next level.

I recommend starting with a pop-up store or a kiosk. One company that helps you select optimum kiosk locations is Built by B8ta. Once you have tested the first physical location, you move on a full-time lease in one or multiple locations. There is significant analysis that should go into choosing a full-time brick and mortar store.

Katz: How should a food entrepreneur shop for commercial kitchen/retail space?

Treyger: For a food startup, pop-up stores and food trucks are two good options. Both give you a great opportunity to test customer demand and try different locations. You can also test space-sharing concepts. For example, if you’re a baker you could work out a deal with a local restaurant to use their ovens when they’re closed.

My rule of thumb is to focus on the data around where your potential customers are, rather than go for what you think the “hot” locations are. Choosing a retail location should be based off information about rents, foot traffic during key times of the days and days of the week, and an analysis on how many potential customers you may reach per location. Most importantly, don’t forget your brand – the ideal location allows you to showcase your brand in the right light.

Katz: Do you think a pop-up is a good business model?

Treyger: Generally, yes, but there are some down sides. Pop-ups are a great way to test a new idea, product or business method. The pop-up model provides the opportunity to have a short-term lease, from a couple of months to a single night, to try something new to expand the business without high risk or committing to large upfront investments. For chefs and restaurant owners, this is particularly a great way to try out new dishes or experiences that are trending. For example, a restaurateur in D.C. Built a Game of Thrones pop-up that timed well with the launch of the new the season.

The one downside to pop-ups is staffing. You still have to do all the work to hire the team needed to run the pop-up store, and sometimes hiring retail or restaurant talent for a short-term assignment is challenging.

Katz: What variables should an owner of a small business take into consideration to determine how much to spend on rent, and how much space do they need?

Treyger: It’s always smart to start small and really understand how the cost will drive growth before investing big. With more than 150,000 customers from nearly every industry, Kabbage sees a variety of ways funding can boost a business’s growth in a meaningful way. Similarly, as we help our customers understand the total cost of the capital in really simple, easy-to-understand terms, a business owner thinking about a new location, should understand the total cost of the space – from utilities to taxes – and make an educated investment.

Read more about how your business can take advantage of modern workplace trends with our Where we Work Infographic.
This article was written by Lena Katz from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to