Today’s column is for employers and managers who are tasked with starting a new operation or rapidly expanding an existing one, and who need to find an office space to cope with the increase in staff. Just how big should the office be? Do you want to load up on extra space while waiting for sales to rise, or try to office-hop to keep up with expansion?
After salaries, the cost of office deposits and rent is the largest financial drain on a new or expanding business. Many foreign firms starting up in Japan are told by their newly hired CEOs that they need to have a lavish facility to impress clients and make it easier to recruit new staff. They then spend hundreds of thousands (of dollars) on Western size desks, high-tech chairs, separate offices for managers, and a front entrance complete with dramatic signage that would make an investment banker envious. Indeed, I have come across companies that have spent the better part of JPY 50 million (US $480K) to house their first five-to-ten staff.
While it is true that a spiffy office can draw in more candidates, if you don’t have the cash, you can still have a presence in the Japanese market without spending big bucks. And besides, the best candidates are not the ones swayed by tinsel, but rather by the overall value proposition.
Luckily, so long as you’re willing to make some compromises and concessions to Japanese business culture and practicality, getting an office and keeping up with growth is possible. Let’s look at some of these:
1. For very small companies not yet ready to pay out 10-12 months rent in deposit, or which are expecting to outgrow a facility quickly, a great place to start in Japan is with a serviced office. In Tokyo we have a wide range of both bilingual and Japanese-only serviced office operators, including Servcorp, Regus, BUREX, Asahi Homes, Mitsubishi, and others. Most of these companies can offer a range of spaces from one person to four-to-five people, along with a good location, impressive front entrance, meeting rooms, and office automation systems. For two-to-three people, you can expect to pay out around JPY 500,000 in basic rent monthly, and an extra JPY 200,000 monthly for meeting rooms, copier, phone, Internet, and other services.
2. However, after you hit four-to-five people, it becomes compellingly cheaper to move to your own office, despite the deposits and build-out fees required. My recommendation is to look for B- or C-class buildings, where the rent is around JPY 20,000-JPY 25,000/tsubo (1 tsubo = 3.3 m²). You should opt for a bit more space than you actually need, so you have room to expand. In calculating just what you do need, I usually advise my clients to figure 2-2.5 tsubo (about 6.6 m²-8.25 m²) per person. For offices with more than five people, this is a good guide for a space that would include a modest front entrance, a meeting room, access ways, and room around each desk for some shelves. For less than five people, the practical low-end office size is around 10 tsubo (33 m²).
3. Once you have committed to setting up your office, consider an open-plan design, with smaller desks and plenty of plants and shelf space. If you do have the extra space while waiting to grow, rather than trying to put in larger desks, I would recommend putting in one-to-two extra meeting rooms instead. One thing you learn quickly in Japan is that people here love having meetings, and you can never have too many meeting rooms! As the company gets bigger, you can always pull out these meeting rooms and replace them with more desks. Surplus or non-critical meetings can then be convened to a nearby coffee shop, or even an “annex” sales office kept just for that purpose.
4. As I said, I’m a big fan of open office layouts (versus individual executive offices) as a means of effectively managing your Japanese and bicultural teams – as well as saving space. I believe the open office plan suits the Japanese business style because it maintains a sense of “shared suffering” by everyone in the enterprise. In addition, there is something to be said for the quick and open level of communication such proximity provides – although some will say it also contributes to easier spread of colds.
5. In an open office, the key is to create an ethos and commitment whereby managers and staff who have strong or confidential words to say learn to take them into an enclosed and soundproof meeting room. With a bit of practice, this approach is very practical and works well to save your workspace from scenes of open confrontation.
6. Probably the single major exception to the open office rule is the CEO, who probably does need to be separated acoustically. This is because practically speaking, any restructuring, major deals, or client problem resolution discussions will occur there first. And, if space gets really tight, the CEO’s office can double as a soundproof meeting room when needed.