This question comes up on almost a daily basis over on The Elite Nurse Practitioner Facebook group:
“Should I rent out a room in *insert place* instead of getting my own office?”
And the answer is always: it depends.
For the nurse practitioner practice startup, it is a viable option. It is typically a cheap option and limits your risk. But it also depends on what your ultimate goals are…
Do you plan on growing a large practice?
Or are you okay with your practice just being a side hustle that you work 1-2 days a week for half a day?
If you are planning on growing a large practice, then I say skip renting a room in a “salon” or at a “chiropractors office” because you will eventually need to move out of that because you WILL outgrow it. I guarantee you will.
On the other hand, though, if your goal is to just have a part-time weight loss side hustle (for example) that you only operate on Fridays, then a room at another location is just fine.
One of the biggest considerations you need to make in your decision to sublease space at another location or not is this: does their clientele align with your niche practices service line? Essentially, will the customers of both businesses feed off each other? This is CRITICAL. Operating a weight loss clinic out of a gym is a good idea. Operating a Suboxone practice out of a beauty salon is a bad idea. You get the picture…
I want to list out a few pros and cons in regards to subleasing out space at another office/business for your niche practice:
It is cheap and lowers your overall risk of starting a business.
You don’t have as much overhead and busy work that comes with having your own space such as paying utilities, keeping up with the office, etc.
You can leverage the existing clientele as potential new patients. This is in my opinion one of the biggest pros… If you can get into a location where the clientele are similar to your practices target market, then you will practically have instant business because those people will want to utilize the services you offer.
You could potentially be building someone else’s business. Why? Because the clientele coming through that business might just assume you are part of THAT business… If you ever leave, they might not follow you because they still think they are obtaining services from the business you were at.
Moving could be problematic as patients are accustomed to your location. If you ever move, the patients might not follow you, especially if the new office location is far away.
You might not be able to have a Google Business listing. This can be very problematic… Your Google Business listing is critically important to the health of your practice. Google usually limits just one Google Listing per physical location, so the only way around this is if there are separate addresses in the building you are subleasing (which I doubt).
Those are the biggest pros and cons to think of when considering subleasing space in an already established business. Overall, I think it is a good idea ONLY if you plan on keeping your business as a part-time side hustle. If you have plans for growth, then just skip it and find your own office, seriously…
So, if you decide to get a room/space at another business, you need to consider how you are going to pay for that space. This is a critically important aspect of this decision. First and foremost:
DO NOT SHARE THE EQUITY OF YOUR BUSINESS!
I am serious, do NOT give this business a percentage of your profits. That is foolish and bad for YOU. You are the one carrying all the liability; therefore, you should keep all the profits. Never ever share equity of your business with anyone outside of a true partner. This goes for any decision where another party is going to be involved with your business!
Instead, just pay a flat rate. Treat this as “rent” and nothing more. Determining what this rate should be can be figured out on the fair market value of commercial real estate in your area. If the space you are subleasing is 100 sqft and a typical 1000 sqft office rents for $1,000 a month, then you should pay $100-$150 a month. Why a little more? Because that business should be funneling some clients to you, and vice versa! This should be a win-win situation for both parties.
Now, if the business you are subleasing space from is also going to be providing support (such as using their employees), then that number should increase. If they have a receptionist that would be helping with scheduling appointments and what not, then the business should be compensated for using their resources. This will be determined by an honest conversation with the business owner and flushing out those details.
Overall, though, my recommendation is to NOT sublease space at another business unless you absolutely must, or you want your business to remain a simple side hustle. Growing a business is much easier to do out of your own office space. Trust me, you will need more space as you grow and having just a small area in another business will stagnate the growth of YOUR business.