Solution 1: Share Work Space
Many, if not most, small businesses and entrepreneurs use commercial space to house their operations, and sharing these work spaces is often a smart business decision. It's best to share with others whose needs are similar to or mesh well with yours, often someone in the same or a similar profession. And, once you start sharing space with others, it will be much easier to start other types of sharing, like tools, storage space, subscriptions, or employees. Those are all discussed below.
Issues Common to All Types of Shared Spaces
Regardless of what type of business you have and what type of space you're looking to share, there are a few basic issues you'll need to sort out:
- Responsibility for the space. One of the first questions that will come up is who has ultimate responsibility for the work space. If you've joined with others to find a space to share, you'll probably have equal responsibility from the beginning. However, if one person owns a building, then the others could buy a share of the property to become owners, or pay rent for the space they share. If one person is already leasing the space to be shared, then the sharers need to decide whether they'll join as primary tenants or become subtenants. Note that any time there's a tenant/subtenant arrangement, it's important for the primary tenant to have the landlord's approval. You'll likely need to give your landlord the same information about your subtenant that you had to provide about yourself when you first leased the space, such as income, rental history, references, and financial condition.
- Making decisions. You'll need to decide how to make decisions about your shared space, on issues from appropriate use to appropriate decoration. You might defer many of those decisions to the owner or master tenant, if there is one. If you have equal ownership or responsibility, then you'll have to figure out how you want to make decisions together. Chapter 4 describes options for decision making.
- Dividing costs. No matter who owns the space—whether it's one of you, all of you, or a commercial landlord—you and your sharing partners will have to decide who will pay for what. Often, sharers use different amounts of space, sometimes even for different purposes. If your use isn't equal, either in terms of time or space, you'll need to come up with a payment arrangement that's fair to everyone (and flexible, in case people's needs change).
- Use of common space. Most work spaces have some common space, even if it's only a small entrance area at the front of a warehouse. And it could be much more than that—in many shared office suites, there's a reception area; an administrative area that includes storage space, work space, and office equipment; a separate conference room; rest rooms; and possibly even kitchen facilities. No matter how much common space you have, you'll need a clear agreement about how it will be used and paid for. You could:
- split the cost of the common space equally regardless of how much private space each sharer uses
- pro-rate the cost of the common space based on how much private space each sharer uses
- pro-rate the cost of the common space based on how much of the common space each sharer uses, or
- limit use of common space to tenants who want to pay for its use, and then split or pro-rate cost among the users.
- You'll also need to discuss how you'll keep the common space clean (be sure to get one of those signs that says "Your mother doesn't work here," so that people will remember to wash their own dishes); what standard of tidiness you want to maintain in the administrative area; how you'll calendar use of the conference room, and how you want the space to look.
Sharing office space makes sense for many types of professionals, including doctors, lawyers, psychotherapists, massage therapists, acupuncturists, chiropractors, financial planners, and the like. Many of these professionals do administrative work from home and need office space only for meetings. Office sharing works particularly well for people who see clients or patients, because it can cost a lot to maintain an office with a reception area (especially if it's staffed) and private meeting or treatment rooms, and sharing the expense makes it more affordable. It's also a good value for professionals like realtors and salespeople, who spend little time in the office.
Shared office space may include any of the following:
Reception area. Professionals who see clients or patients will need a reception space where people can wait. If you're sharing space, you'll have to figure out how you want that space to look and function. Depending on your professions, the expectations of your clients, and the other needs of your businesses, you may want to share an actual receptionist to greet people, sign for packages, answer phones, and so on. (See "Sharing Employees," below.) If you don't need (or can't afford) a receptionist, you might tell clients or patients where they can wait and how to let you know they have arrived. For example, some therapy offices use a light-switch system: When patients arrive, they flip a switch that turns on a light in the therapist's office to let the therapist know—without unduly disrupting an ongoing session—that the next patient is waiting.
Private offices. Most shared offices contain private spaces for holding confidential conversations, treating clients, or simply working without interruption. These can belong to one person alone or can be shared between two or more people if they can work out a schedule that allows each person to use the space privately or they are comfortable using the space at the same time. Anyone who needs complete flexibility in scheduling will need a private space, whereas professionals who limit their schedules to specific hours can share the private space with others, alternating days or mornings and afternoons, or even working out a schedule on an ad hoc basis.
Conference room(s). Especially for businesspeople who may need to meet with more than one person at a time, a shared conference room is a great amenity in an office suite. Some sharers, like one of the authors of this book, may use only the conference room and not even maintain a private office. And others might prefer the conference room to meeting in a private office if the latter is too small or—yes, it happens—too messy. In some office suites, there can be competition for the conference room, so it's important to have a process for scheduling its use.
If you're considering a shared office arrangement that involves sharing a conference room, talk beforehand about each person's anticipated needs for the space. If some of you plan to see clients only at certain times that the others are willing to work around, or intend to use their own private office space for meetings, you may be able to share your meeting space without any problems. But if it looks like there will be significant competition for the conference room space, you might need to reconsider either the number of people or the configuration you're planning.
You also need to work out a system for scheduling use of the room. Google calendars (or other online tools) are a great way to do this, because everyone can see the schedule in real time and access it remotely. Once you've established a scheduling system, it's also important that everyone use and respect it. Especially if you schedule meetings one right after the other, the first person needs to be sure to get out of the space in time for the next person to use it. See Chapter 4 for communication and conflict resolution tips that can help you deal with any disputes that arise about shared space.
Administrative space. In an office setting, administrative space is often used for tasks like faxing, copying, and assembling correspondence. You'll need to agree with your office mates on how this space will be used and by whom. You should talk about what type of equipment, employees, and functions the administrative space will have. Often the administrative space houses noisy equipment (such as a copier) or tends to draw a crowd (for example, if it contains the office refrigerator or microwave), so you'll want to make sure that your planned office configuration allows everyone to get their work done.
Some sharers may use more of the administrative space than others, which you'll probably want to account for in your sharing agreement. You may not know exactly how this will play out once you begin actually sharing the space, so your agreement might need to start out flexible and then become more specific as you figure out who is using how much of what.
Here's a sample office sharing agreement for a group of compatible professionals—a few lawyers, a financial planner, and a website developer. We chose office worker types because that type of worker tends to need many of the resources we're discussing here—as opposed to some other types of sharers who might not need certain resources, like staff—and we wanted a sample agreement that covered as many of the potential issues as possible. This agreement can be used for other types of work-related sharing as well, as discussed below.
Sample Office Sharing Agreement
This office sharing agreement is made between Benjamin Coke, Suzanne Clarkson, Tamara Lester, Marilyn Mertin, and Robyn Troxel, who intend to share the office suite located at 2525 College Avenue in Rockland. Ben is an accountant, Suzanne is a financial planner, Marilyn and Tamara are lawyers, and Robyn is a web developer.
- We agree that we will share the use of the office suite in order to save money and resources, and have the benefit of one another's knowledge, skills, experience, and company.
- We'll share the entire suite at 2525 College Avenue as described in this Agreement. All of us will share use of the common areas, Ben and Suzanne will each have their own private office space, Tamara and Marilyn will share a single office as described below, and Robyn will use the space more occasionally, all as described in paragraph 7, below.
- Only the people listed above are sharing the office space.
- None of us may sublease our individual space without the consent of each of the other people who are sharing the space.
- Our lease on the office suite begins on July 1, 20xx and has a term of three years. We each intend to stay for the entire term of the lease. If any one of us wants to leave, that person is responsible for rent until a replacement tenant is found, and will participate in the group's decision on the best way to look for a replacement sharer. We'll agree at that time on a process for advertising the space and choosing the new tenant, and the person leaving will take the lead on doing the necessary tasks to find the new tenant.
- Each of us is a lessor under the lease with our landlord, Janice Lubner, and we are jointly and severally responsible for the rent and any other expenses under the lease.
- All five of us will share use of the common areas, including the reception area, kitchen, conference room, and the room we're describing as the administrative space. Ben and Suzanne will each have a private office. Tamara and Marilyn will share the third office and they will work out their own schedule as to use. Robyn will use the conference room as meeting space and otherwise will work off-site. The administrative space will contain a desk for one staff person (discussed in paragraph 14, below), a fax machine that we will all share, a copier that we will all share, and a work table for common use.
- Tamara has leased the copier, which is also a fax machine, and we all agreed on the model and lease terms. Each of us will pay one-fifth of the cost of the lease by reimbursing Tamara quarterly in advance, on the first of July, October, January, and April. When we first take possession of the space, we'll all contribute in equal shares to the purchase of two cartons of copy paper, and for the first six months we'll keep track of copies made and fax pages received. At the end of six months we'll tally up, and if there's a significant discrepancy in use we'll adjust the cost of paper in a way that we all agree is fair; we'll also pay for toner in proportion to our use or as otherwise agreed.
- Each of us will have our own phone line(s) installed and will maintain our own voicemail.
- We'll all meet together on the first Monday of each month for lunch in the kitchen, to discuss any concerns we have about our sharing arrangement. We'll try our best to reach consensus on any issues that come up; if we can't, we'll use a majority vote.
- We agree to keep the common areas tidy and to keep our own supplies in our private offices. We'll cooperate to supply the kitchen with dishes and silverware by bringing our own extras from home, and we all agree to clean up after ourselves, including taking our old food out of the refrigerator at the end of each week. The landlord is providing cleaning service once a week.
- We've set up a Google calendar for scheduling the conference room and we agree to use it on a first-come, first-served basis. We agree that none of us will use the conference room for more than eight hours a week, or for any meeting longer than half a day, unless we clear it with the others first by sending out an email asking for agreement.
- The total rent on our suite is $2,600 per month. We agree to divide the rent as follows:
Ben $725 Suzanne $725 Tamara $450 Marilyn $450 Robyn $250
- Ben and Suzanne are going to hire an administrative person ("the admin"), who will also serve as receptionist for the entire suite and will greet visitors, accept packages, and sort mail for all of us. Except for those tasks, the admin will work exclusively for Ben and Suzanne unless a special arrangement is made for the admin to undertake specific tasks for another sharer. Ben and Suzanne will have a separate agreement regarding sharing the time and expenses of the admin.
- Each of us is a sole owner of his or her business and we each will have our own stationery, telephone number, and professional liability insurance (if appropriate to our profession). None of us is responsible for any acts or omissions of any other tenant, unless we enter into a professional relationship with each other or do other types of work for or with one another.
- If any of us has a conflict that we're not able to resolve through direct discussion, we agree to all sit down together and try to reach a resolution. If we can't, the people in conflict agree to attend at least one mediation session with a mediator they agree on, and to share the cost of the mediation. If this doesn't help to achieve resolution, we're each free to pursue whatever remedies we think are appropriate. We all agree to act in good faith and give one another the benefit of the doubt in any conflict or potential conflict.
- We won't terminate anyone's tenancy before the lease term is up unless the person breaks the terms of the lease or of this agreement. In that case, a vote of three of the other members constitutes agreement of the group to ask the person to leave. Anyone whose tenancy is terminated involuntarily has sixty days to leave, and isn't responsible for helping to find a replacement tenant as described in paragraph 5.
_____________________ Benjamin Coke ________ Date
_____________________ Suzanne Clarkson ________ Date
_____________________ Tamara Lester _______ Date
_____________________ Marilyn Mertin ________ Date
_____________________ Robyn Troxel ________ Date
This agreement is for a situation where all of the tenants are on the master lease. Some landlords don't allow that, however, which means that one person will have to become the master tenant and sublet the other spaces to the rest of the sharers. In that situation, your agreement should include a provision that all of you are bound by the terms of the master lease.
A number of Nolo products may be helpful if you're entering into a commercial lease. Negotiate the Best Lease for Your Business , by Janet Portman and Fred Steingold, explains the standard clauses and provisions of a commercial lease and offers advice for reaching a fair lease agreement with your landlord. And eForms are available for download from Nolo's website, www.nolo.com, to create or amend a commercial sublease or get a landlord's written consent to a sublease.
Shared Retail Space
Although it's not as common as sharing office space, retail space can also be shared. In some sense, that's what artists do when they participate in cooperative or consignment stores where the work of different artists or craftspeople is displayed and sold in one retail space. Each artist generally manages an individualized display and pays a share of the sales proceeds toward the expenses of maintaining the space.
But it's also possible to put two full business operations together in one space. A book store and a coffee shop are an easy fit; likewise a pet store and a groomer; and then there's always the lawyer in the laundromat or bowling alley.
If you share space with another retail business, figuring out how to share costs might take some time. Even if you split the space right down the middle, one business might require more parking, employee work space, storage space, window display space, signage, electricity, water, or other resources than the other. Many businesses have some of the same type of equipment as a professional office, so retailers may also share a fax or copy machine, phone system, cash register, or other equipment. An agreement like the sample office sharing agreement above can help you identify, consider, and make decisions about the different issues that apply to retail businesses.
Think outside the box. We heard from one book store owner who shares space with a somewhat unlikely companion: a photographer specializing in portraits of children and pets. It turned out to be a good fit. Many customers did business with both of them once they joined forces. They share not just rent and utilities, but also a fax machine and advertising costs. The bookseller gives the photographer a discount on books; the photographer takes photos for the store's website. The share allows both of the businesses to be in a more attractive location than either could afford alone.
Shared Creative Studios
It's very common for artists to share studio space. Many artists need a place where they can fire up loud machinery; use products and media that have an odor, are messy, or require certain conditions (for example, a particularly cool or warm temperature); create the best lighting for their art, whether that means lots of natural sunlight or a wall of klieg lights; work on large pieces over a long period of time; or invite the public to view their art or performances. Although artists who've hit the big time can create a separate space in their home or elsewhere for artistic pursuits, most of the starving artists we know have to rent studio space—often affordable only by sharing with other artists.
When it comes to sharing studio space, you'll do best to find a fellow sharer whose work is compatible with yours. The last thing you want if you paint in oils is to share space with a woodworker whose sawdust flies all over the place. Make sure you talk through how each of you plans to use the space: Smells, dust, noise, drips, hours, and visitors are all relevant.
One benefit of a sharing agreement for artists or craftspeople is the possibility of sharing expensive equipment like a kiln, lighting equipment, drafting or light table, or jewelry-making or woodworking tools. For new artists, this may be the only way to afford setting out on your own. A written sharing agreement is crucial here, because you need to be clear about who owns the equipment and, if you share ownership, who has the right to buy out the other if the arrangement ends.
Another benefit of sharing is bulk discounts for buying supplies in larger quantities than one person would use alone. Here you only need an agreement about who will make the initial cash outlay and whether you'll divide the items equally or in unequal shares. If you don't know how much each of you will use, you'll need to keep track of how much you use so that you can settle up later.
If your studio space is large enough for both of you to use at the same time, you'll need to decide how to share equipment when you are both there, as well as things like whether and what type of music can be played and whether visitors are allowed while you're working. If the space can only be used by one person at a time, you'll need to set up a schedule. You can choose a set schedule (for example, one of you uses the space in the morning and the other in the afternoon) that will remain the same over time, agree to come up with a schedule on a regular basis (for example, weekly or monthly), or come up with a system for signing up in advance to use the space (once again, the Google calendar can be very useful). You'll also need to agree on whether you want to share time equally and pay equal rent, pay unequal amounts based on your anticipated use, or pay based on your actual percentage of use.
Finally, you'll have to agree on acceptable uses of the space. Where will you keep works in progress or finished work waiting for transport? Do you both want to participate in open studios in your area? Do you want to open the space for selling at other times? Does the studio have to be kept clean to accommodate potential buyers?
Shared Commercial Kitchens
Cooking is another field in which equipment can be very expensive, making sharing a great idea for caterers and producers of artisan or other specialty foods. Perhaps you are a bread baker selling to local organic food stores, and your best friend from cooking school makes cookies that she sells to individual consumers on her web site. You could rent a commercial kitchen space together with the right type and size oven for your needs, agree on a schedule, and split the cost of rent and utilities.
You can also join a shared commercial kitchen—these are available in larger metropolitan areas. Many such kitchens are sponsored by "incubator" programs, which provide resources and work space to small start-up businesses. These kitchens have the advantage of being already licensed by the health department, so you don't need to worry about that regulatory hurdle. They provide all the necessary equipment, and you schedule time as needed. Most allow you to do anything there—cook, teach a cooking class, or even film a cooking video.