Credit Crunch Boosts Executive Suite Inquiries from Small Businesses
In December 2009, officebroker.com recorded an 82% rise in inquiries from businesses seeking executive suites for 1-3 people when compared to December 2008. The figure rose to 195% when compared to December 2007. Could the credit crunch be encouraging more new business start-ups? officebroker.com investigates...
Could the credit crunch have encouraged a rise in new start businesses and the self employed?
Despite a tough year which created challenging conditions for businesses across the US, 2009 produced a significant increase in inquiries from start-up and small businesses. Initially this would seem unlikely, given the current stringent lending facilities and steady decline in business confidence.
But according to officebroker.com inquiry figures for December 2009, the number of inquiries for executive suites received from businesses seeking space for 1-3 people rose by 82% when compared to December 2008, and by a massive 195% when compared to the same period in 2007.
When looking at inquiries for single desk space in the US, figures in December 2009 again produced a significant increase, this time by 134% when compared to December 2008, and by 263% when compared to December 2007.
This increase is partly related to the natural growth of officebroker.com as a company, which has shown considerable improvement and a rise in inquiries throughout 2009, as shown in our report: US Inquiries Show Excellent Growth Rate for officebroker.com.
However aside from company growth, another significant cause for this increase in inquiries is likely to be a rise in demand from small businesses.
This is an interesting observation, given that the US only emerged from recession in Q3 2009 - and even this is unofficial, as the National Bureau of Economic Research is unlikely to make an official determination for some time. So why are a growing number of small businesses choosing to make inquiries about new office space at this difficult time?
Contrary to popular belief, an economic downturn can provide a number of opportunities for individuals looking to start up their own business.
To start with, office space is often cheaper and can be obtained under more favourable terms for the occupier, which is especially appealing when funding and bank loans are hard to come by.
Executive suites such as those available through officebroker.com provide flexibility, short-term contracts, little or no deposits, and usually a number of services thrown in that make the whole process easier and more manageable than a conventional lease (take a look at our breakdown of serviced versus conventional offices for more details!).
Aside from workspace, other business necessities such as product supplies and office furniture are also often less expensive during a downturn, as competition for business usually encourages suppliers to drop their prices.
The result is a cheaper environment for new businesses, which helps remove the need for large amounts of start-up capital and can give the venture an important boost.
Another possible reason for the rise in small business inquiries is that, aside from a natural desire to run their own enterprise, many new business owners have taken the opportunity to set up on their own following redundancies at work. This is potentially a huge audience - as recent figures state that 1.6 million US jobs have been lost over the last two years, and the financial sector alone has lost 548,000 jobs since the start of the recession. 85,000 jobs were lost in December.
This places more pressure on jobs both now and in the future, and this feeling of instability may be another deciding factor in the decision for business owners to take the plunge and start up on their own.
Therefore this suggested rise in self-employed and start-up businesses has the positive knock-on effect of boosting US industry, creating jobs and filling gaps in the market, not to mention helping to fill office buildings and business centers throughout the US.
Judging by the sharp rise in inquiries for small office space in December, which is traditionally a quieter month given Christmas and the New Year, these impressive figures suggest that this trend is showing no signs of slowing down, and 2010 could see the creation of even more small businesses throughout the US.
For more details of flexible executive suites available to rent anywhere in the US, and for a free service to help you find the office that best works for you and your business, search online at us.officebroker.com or speak direct to one of our regional consultants for friendly help and advice.