Save Business Cash Flow By Renting Shadow Office Space

by Doug Smith, President, The Woodhaven Group

A few years back the sales of your company was showing a large increase.  You were anticipating even more growth beyond the original financial plan.

So you did what a lot of managers did at the time.  You rented more office space to accommodate more employees.  It was an exciting time for everyone.

Then the bottom fell out of the economy and you did what you had to do……..eliminated employees to reduce expenses.

What was left was unused office space.  This now unneeded space is referred to in the commercial real estate industry as  shadow space.  You are still paying rent but it is not being used any longer by your company.

There is a solution to this problem.  Aggressively seek out other business people needing office space.  In many cases this may be one person proprietors that were layed off from their own companies and need office space to start a new venture but cannot afford prevailing rental rates.

Where do you find these prospects?  Try the following sources who will know businesses needing space:

  • Outplacement firms
  • Chambers of Commerce
  • Associations
  • Small Business Adminstration
  • CPAs
  • Insurance Agents
  • Networking Groups

You can negotiate short-term rental rates that will cover a substantial portion of your own rent payment.  In some cases if you originally negotiated well,  the rent charged may be above what you are currently paying.  Then add-on for office furniture (you probably still have some of that on hand too) and utilities.  There might even be an opportunity to offset the cost of your receptionist.  Throw in a charge for the use of conference rooms that can be scheduled around your own meetings and now you have turned a problem into a source of positive cash flow.

Effective use of shadow space can become a win-win situation for both your company and the new start-up entrepreneur.

Use this cash flow strategy the next time you find yourself with unused office space from having downsized your company.

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