Having a decent office does play a very important role in the early stages of a company.
It is very difficult to recruit talent without a good office Perhaps rightly so, people create perceptions and first opinions about a company by looking at the office.
Ideally, startups should try to co-locate with someone… could be another startup or an early-stage company that has some spare space. More people around makes your team feel like a larger company, and there is learning from others too. Of course, shared pantry, conference rooms and other resources helps save costs.
No cubicles and dividers… one room with everyone sitting on similar sized tables is ideal.
Bright and cheerful places make happy colleagues. Dull and dark places also make it difficult to hire people. Investing in a better office, with better lighting and decor eventually pays out in the form of better people accepting your offer.
Spend as less as possible on things that you do not need – copiers, fax machines, coffee machines, etc… rent ACs if you need it. Keep capex low…
Working out of home in the initial phases is not practical beyond a point. No matter how serious and committed you are to your venture, working out of a ‘non-office environment’ [i.e. home or Cafe Coffee Day type outlet] just cuts down on your productivity. It is not just about inadequate infrastructure and support system, an office environment and the people around you just add to the feeling of being a real company.
Without an office, business plans tend to get restricted by space available Inadequate or no office space and working out of coffee shops does leave you vulnerable to taking decisions based on restrictions of space.