PERSONAL FINANCE
The idea is there. You have started it at home. This could be baking cakes, selling a product online or even professional services from being a freelance lawyer to a freelance journalist. Demand is on the rise and you are getting more and more customers through word of mouth. Business is going well and you need to grow. It is time to move forward and take your business to the next level.
You are probably very excited about growing your business and with this excitement often underestimate what it takes and the costs of moving it out of your home.
Generally the first shock to the system is to realise that the profitability you were working on as long as you were working from home was astonishingly high. Moving from home into an office with fees, charges, rent and deposits suddenly re-calibrates your profit and loss account — something to consider carefully as this will also tell you how scalable your business is.
I have listed below a few items to really consider and the approximate costs of running a business out of your home. First off, you are probably thinking about whether you need to hire. Apart from what you will be paying in the form of salaries, costs to consider are visa costs, health insurance costs but more importantly the deposit you need to put down. Most free zones will not give you that deposit back until you shut down the company so do not forget that this deposit is cash sitting at the free zone that you will not be able to access. Rent is a yearly fixed cost — on top of that, compared to other parts of the world, you pay in one to possibly four cheques — that means cash up front. You need to understand whether you have this upfront cash to move out of your home. Also keep in mind: once paid, the rent is hard to get back. Free zone or Dubai Economy? Depending on what you do, you may or may not need to be licenced by the latter. The process can be a long one so get ready and be prepared to go through the paperwork. We forget often that as we are working from home, bills are non-existent — electricity, the Internet, water, air-conditioning, etc, does add up when we move out of our home. You need to put down a deposit on each one of those as well which again translates into cash that you cannot touch. Setting up an office does cost. Unless you find a furnished office, this could end up being up to a minimum of Dh100,000 to redo the layout of the office space. You can potentially consider co-working space or places like the Dubai Accelerator or coffee shops as long as your trade license does not require you to have an office space.
In the excitement of expansion and hiring to be able to meet demand we tend to forget the extra costs involved. This is where the real economics of the business comes into play. Have you thought about a salary for yourself? The good news is that if the numbers work once you include all the costs mentioned above, then you are really onto something great. This means it is possible for you to grow your business without having to affect your pricing, and your costs reflect the actual cost of running your business.
The move from the house to an office space is a big one, and requires careful consideration.