{"id":476,"date":"2010-06-20T08:50:50","date_gmt":"2010-06-20T15:50:50","guid":{"rendered":"https:\/\/berkonomics.com\/?p=476"},"modified":"2010-06-20T08:50:50","modified_gmt":"2010-06-20T15:50:50","slug":"sign-short-term-leases-early-on-move-more-often-as-you-grow","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=476","title":{"rendered":"Sign short term leases early on. Move more often as you grow."},"content":{"rendered":"<p><strong><em>Avoid long-term commitments.<\/em><\/strong><\/p>\n<p>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It is statistically true that at least half of the young companies funded by angel or venture investors will not survive three years from funding to demise.\u00a0 The greatest burden of either a growing company or one needing to retract and reduce expenses is the office lease.\u00a0 Although payroll is almost always the greatest cost, companies have flexibility as to how to handle both rapid growth and rapid decline in the personnel arena.\u00a0<\/p>\n<p>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The most difficult thing to deal with in either rapid growth or retrenchment is the office lease.\u00a0 A five year lease may be cheaper than a three year lease, and may provide for more free rent and tenant improvements.\u00a0 Those benefits pale in comparison to the high cost in retaining or buying out a longer term lease.<\/p>\n<p><span style=\"color: #993300;\"><em>[Email readers continue here&#8230;]<\/em> <\/span>From personal experience with many companies in my portfolio and from many board experiences over the years, young companies are unpredictably unstable in their facilities requirements. Flexibility is worth a few percentage points of fixed cost when companies are in high growth mode or are at early stages of proof of market.\u00a0<\/p>\n<p>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It is a hassle to move, requiring time and planning.\u00a0 It is much worse to worry over paying for two leases each month and tying up two large deposits.\u00a0 Then there is the dread of \u201cThe tyranny of the new office\u201d to worry about. But that is a story for the next insight\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Avoid long-term commitments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It is statistically true that at least half of the young companies funded by angel or venture investors will not survive three years from funding to demise.\u00a0 The greatest burden of either a growing company or &hellip; <a href=\"https:\/\/berkonomics.com\/?p=476\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-476","post","type-post","status-publish","format-standard","hentry","category-hedging-against-downturns"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=476"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/476\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}