There's nothing glamorous about working out of your basement. But when you first launch a business, a home office is the way to start. Especially if you bootstrap, you need to be frugal. And office space ain't cheap.

In 2015, the average office space cost per employee was $7,000 in Chicago, $6,080 in Boston, and $4,194 in Atlanta. It was an unimaginable $14,800 in New York City, and prices have undoubtedly risen since 2015.

Co-working spaces, while more affordable than private office space, still require some level of commitment and investment.

Move too soon and you'll waste your precious cash. Move too late and you may drive yourself (and your teammates) nuts.

How do you know when you're ready to take the next step?

1. You have a steady revenue stream.

First and foremost, without money, you can't move.

You must be secure in your cash flow and have a strong pipeline for the rest of the year. If you don't have the money, stop right here.

I founded my current business, FreeLogoServices, with an old friend. We both worked out of our homes for years. We didn't even think about renting space until we were hitting $600K a year. This is a high benchmark, but I just wasn't comfortable making a move any time sooner, though other businesses could successfully move out with less.

2. You need a professional image to recruit talent.

When you first start out, you'll likely be working only with a co-founder or other trusty sidekick. In this case, appearances are not as important. Working at home with a former coworker or old friend can work perfectly well.

But as you grow, you'll need to hire people with broader expertise. To do this, you'll likely have to expand beyond your immediate network. And hiring someone to work full time in your basement will be a tough sell.

For my current company, our first move was to a co-working space in Cambridge, MA. Renting this space enhanced our image as a tech startup. Working in one of America's top tech hubs was cool, and being surrounded by other innovative startups was exciting.

When it was time for us to rent our own private office, I used this same line of thinking. We upgraded to a cool, historical building in downtown Boston. Built in 1870, the expansiveness of its tall windows and high ceilings evokes creativity and innovation. But with old heaters, worn wood floors, and rustic barn doors, it also feels scrappy -- just like my team.   

It's the perfect balance. Rarely do people walk in and not comment on the space.

3. Your current situation is draining your productivity.

Having a cool office space is exciting, helpful for recruiting, and can be a point of pride for team members. But there will come a time when the novelty wears off and reality may outweigh hype.

When we leased our Cambridge space, distractions eventually defeated us. First of all, it was almost impossible to reserve conference rooms. The system was surprisingly low-tech, and we had to simply write our name on a whiteboard to reserve a room. But as the co-working space got more crowded, people would just erase names and write their own.

We also lacked privacy, as the space had an open layout. And some of the startups around us lacked a general awareness of other companies. We heard people reprimanded and belittled in front of others. A few times, these scuttles turned into screaming matches.

It became increasingly difficult to get work done, which was a sign it was time to move.

4. Your team physically can't fit anymore.

This one should go without saying. But if you don't have desk space for each team member, that's a problem.

About a year ago, we launched a new custom website product and built out a team to support it. As this business has grown, so has our team. We currently have a full room of web builders, and space is tight. We asked back an intern this winter break, and for a couple weeks, he's sitting in our lounge at a coffee table. (Talk about dedication.)

We still have an extra room in our office, so I'm not concerned. But if we didn't... it would be time to go.

Published on: Jan 16, 2018