November 2013 | Servcorp

One of the classic constraints of a traditional leased office is that it ties up your resources at the very time when you may need them most. It can become a dangerously high fixed cost that drains cashflow and sucks the life out of an otherwise promising venture. SME Advisor spoke to Servcorp, the world leader in serviced office provision, about the tangible benefits of a flexible serviced office and its liberating impact on cashflow and resources.

When Dubai SME recently unveiled its list of the supercharged businesses featuring in the elite Dubai SME 100, one of the key factors that these top companies had in common was strong cashflow. Yet during the qualification process, no less than 72 per cent of them said the No.1 risk facing their business was threat to cashflow (largely from late payment of receivables and high fixed costs). Moreover, it's no coincidence that in a 2009 survey of the global SME sector, the management consultancy Booz & Co. found that lack of cashflow was the foremost factor driving young SMEs out of business. The harsh reality is that cashflow is easily impeded and lost through the steady dripping tap of expensive commitments – and a key culprit here is office accommodation that is not only surplus to requirements but impossible to exit, or even change.

Especially when a business is in the first two years of its life-cycle, it's extremely difficult to predict its future shape and success. Indeed, many SMEs can barely see beyond their next working capital cycle. Typically, the young SME will be vulnerable to sudden losses, unexpected lapses in markets, uncertain investor commitment, and the rising costs of bringing extra staff on board. There are also the expenses incurred for more positive reasons: the shift to larger offices, marketing to fresh markets and the raft of hard copy and online promotions and collaterals. If it is tied to a costly office contract – one that would be challenging to support even in better times – it's especially unlikely to weather the storms of changing markets, needs and fortunes.

Yet consider the alternative: the Serviced Office environment gives an SME a great deal more leasing flexibility – in fact, if we take Servcorp as an example, you can lease a high-quality facility from a period of one month through to three months, six months and 12 months (with all the added convenience of ‘pay as you go'). You can pay month by month, with the only up-front cost being a two-month security deposit. This means that if the business isn't progressing according to plan, there is – quite literally – no harm done (you can even come back once you have better funding in place and have a valuable second attempt to kick-start your entrepreneurial dream!).

From good to great…

Another aspect of this all-important flexibility is that if your business is progressing exceptionally well, you can then trade-up to a bigger serviced office without having to complete an existing lease agreement – you simply switch over. Plus, the new office space will come complete with the same facilities as the last office, with whatever new ‘extras' you may ask for. You can get everything you need for the new staff, so you won't have to contact telecoms providers to install the extra equipment and connectivity you need. Nor will you have the do the rounds of furnishing specialists, purchasing desks, storage space and seating. Again, in a business environment where capital is king, the serviced office gives you the key to preserving all-important funds and facilitating better and better cashflow. Everything will be in place from Day One, and what you see can be adapted in a totally ongoing way, according to your budget and your appetite for growth. So all in all, you can get huge cost savings because you're not squandering capital in infrastructure set-up.

Support you need, when you need it

Another key cost saving results from the fact that you'll also get first-class staff support. Core job functions such as receptionist and PAs (the latter are highlyqualified PAs who will be able to handle a wide range of marketing activities, for example, not to mention basic bookkeeping needs). By arrangement, these support staff will even be able to travel with you overseas to vital client meetings and conventions. You'll have telephones and e-mail answered in a completely bespoke way, which you can alter and customise for your business as many times as you wish. Perhaps you want any missed calls forwarded to your mobile? Or for reception to give a personal message that you can be found Downtown? In the case of Servcorp, for example, you simply access Servcorp Online, click on ‘My Communications' and specify exactly the wording and phrasing you want.

What's more, each month you can specify the kind of package you want your all-inclusive charge to cover – so again, if one month you are reaping the benefits of an influx of client business, you can upgrade the services you can enjoy as a result (and of course, vice versa).

In stark contrast to a traditional leased office, the serviced office payment model is like staying in a hotel – for example, at a hotel you know what the basic room rate is, but you can upgrade to a larger suite, or add in visits to a spa, day trips, etc. as and when your budget permits.

Making you feel at home

There's sometimes a kind of residual prejudice against serviced offices whereby some people believe that they can't be decorated as you wish – but nothing could be further from the truth. Of course they can. So you can put up artwork of your choosing or repaint entirely according to the needs and style palette of your brand. Plus you can bring in your own furniture – meaning that if you're moving from an already-furnished environment, you don't have to pay for storage or double-up on furnishings you already have.

Committing according to your pocket

The ongoing thread here is that the Serviced environment gives the ability not only to lessen your costs when you need to, but to predict exactly what your outgoings will be each and every month. So you're relieved from any uncertainty surrounding the largest element of your overheads. If cashflow is king, the flexibility of the Service onestop solution means that you are able to conserve valuable resources and budget in a way that lets you use your money where it matters most – building your business.