Working from home vs coworking – what’s best for startups?

When entrepreneurs start out in business, they will usually lack the funds to rent their own dedicated office. As such, many will initially work from home in order to save on costs while they get their business off the ground. Others choose to work from a shared office space – known as coworking – which is far more affordable compared to a dedicated office.

We explore some of the pros and cons of working from home vs coworking in this article, as well as considering a few other options.

Pros and cons of working from home

Working from home (often referred to using the acronym WFH) has become normalised in recent times, not only for business owners but for office workers more generally.

WFH initially took off as a result of more commonplace flexible working policies, bolstered by the statutory right to request flexible working, and compounded by the pandemic.

Since more people have now experienced working from home compared to the office, more is known about the benefits as well as the disadvantages – here are a few:

Advantages

Cost-efficient

Working from home is cheaper than renting office space, with the only costs being increased energy bills, particularly in the colder months.

Furthermore, a certain proportion of household expenses can be offset in the annual self assessment, reducing the overall tax bill.

No commute

One of the biggest benefits of working from home is saving time and money on a daily commute to the office.

Entrepreneurs are notoriously time-poor, so gaining some extra time each day by cutting out the commute can free up more time to work on the business.

Furthermore, there are environmental benefits, especially where commuting involves driving.

Family-friendly

Parents will often find the flexibility of working from home can make it much easier to fit work around childcare responsibilities. This can help to improve their overall work-life balance.

Productivity

Some studies show that working from home can increase productivity compared to an office environment.

However, there are differing opinions, which probably depend on the type of home environment as well as the personality traits of the individual.

Privacy

It is generally safer, from the perspective of data protection, to work on confidential documents in a private space compared to a shared environment. The same goes for sensitive phone calls to clients.

Disadvantages

Distractions

Depending on the home environment and personality of the entrepreneur, working from home can actually reduce productivity.

Demands of other family members or simply being in the proximity of a TV and sofa can serve to draw attention away from work.

Loneliness

Starting up a business can feel quite lonely at times, and the sense of isolation is compounded for entrepreneurs who live alone.

The lack of daily office interaction can reduce morale and overall sense of well-being.

Overwork

The absence of a physical distinction between work and home can lead to entrepreneurs neglecting their downtime and working at all hours of day and night.

This is particularly a problem if someone does not have a dedicated home office and instead works in their living room, bedroom or kitchen.

Pros and cons of working from a coworking space

Coworking spaces have mushroomed over recent years, partly in response to a growing cadre of freelance workers looking for a low-cost office environment.

• What are the starting costs of a limited company?
• 7 working from home expenses you should be claiming

Many established businesses choose to switch from traditional offices to shared working hubs to reduce their outgoings and take advantage of collaboration opportunities.

Some of the pros and cons include:

Advantages

Office environment

Working from a coworking space helps to maintain a healthy separation between home and work. This can avoid blurring of lines between business and personal life and reduce the risk of overwork and consequent burnout.

Collaboration

Since coworking hubs house a number of different businesses under one roof, there are many opportunities for networking.

In some cases working in a shared space can lead to collaboration, and it generally aids the free flow of ideas.

Socialising

One of the biggest gripes of freelancers and entrepreneurs starting out on their own is solitude.

Although this depends on the type of business, working from home can be lonely, and many decide to join business hubs so they can have at least some degree of face-to-face interaction.

Disadvantages

Expense

Although it’s generally much cheaper than renting a dedicated office, coworking spaces can cost at least £100/month and often much more depending on the location and facilities.

Opening hours

Most coworking hubs are only open during traditional working hours (eg Monday-Friday between 9am and 6pm). Anyone with a radically different working routine may struggle to fit into the opening hours.

Distractions

The regular distractions of an office environment are naturally present in a coworking space, notably people talking on mobile phones or having video conferencing calls.

Some places offer quiet zones and meeting rooms to cater for those who require a more serene environment.

Are there any other working location options for startups?

Aside from working from home or using a coworking space, there are some alternative options for entrepreneurs looking for a place to work:

• Dedicated office – if there is a generous budget (eg as a result of seed investment) it may be possible to rent a dedicated office for a business. This can be more appropriate than a coworking space if there are other business partners or employees at the outset, but in the case of a sole entrepreneur, it will have both the negatives of adding cost and reducing opportunities for networking and social interaction.
• Coffee bars – digital nomads have been taking advantage of free WiFi in cafes well before coworking spaces became popular. The suitability of working from a coffee bar varies drastically and will depend on a number of factors such as the type of clientele, quality of internet and seating, and the willingness of the management to allow customers to work on their laptops.
• Library – many public libraries have closed down over recent years, but most libraries will allow members of the public to use their free WiFi. However, phone calls will generally not be permitted.

Please note: When using public WiFi in coffee bars and libraries, care should be taken to ensure it is sufficiently secure. It is often safer to use your phone’s 4G connection to create a hotspot.