In today’s world, business enterprises have been on the rise. According to Philippine Statistics Authority, there were 1,000,506 business enterprises operating in the Philippines since 2019– and this has continued to grow without signs of slowing down.
Until today, National Capital Region remains the hub for business and industry, resulting in hundreds of firms opening up daily in the region alone. As a result, the need for a low-cost base of operations has grown.
While renting office space for your business makes more sense than buying a commercial property, it is still almost out of the question due to its cost, especially for startups with limited capital. For example, the monthly cost of office space for lease in Metro Manila in 2022 was ₱1,037. The situation is made more difficult by the region-wide increase in rental rates that the high occupier demand has caused.
So, to adapt to the soaring office rental prices, seat leasing has become the smartest solution for many businesses to start and operate their enterprise. One of its notable benefits is that it allows you to operate your business without too much financial burden by providing fully-equipped workstations. Also, as the pandemic subsides and work arrangements return to normal, it assists your business in transitioning from remote work to on-site work.
Since you are in a business, you know how crucial it is to operate your business cost-effectively. In this article, we will discuss the benefits and drawbacks of seat leasing for your business.
What is Seat Leasing?
Seat leasing is a business model allowing foreign and domestic start-up companies to run operations without investing in their office space and equipment.
It is a model which allows your company rents workstations and office spaces from seat leasing providers, with necessary office equipment, such as computers, internet connectivity, air-conditioned facilities, and other amenities.
As a result, your company can quickly establish offshore operations while maintaining a cost-effective investment. You can also use security and other services in their lease agreements, such as maintenance.
What Are The Types of Seat Leasing?
After understanding the meaning of seat leasing, it is critical to understand its types of services. These are the three types:
Warm Seat Leasing
In a warm seat leasing arrangement, the leasing company provides your employees with fully equipped workstations with all necessary office equipment, such as computers, phones, and internet access.
In addition, support staff, such as IT technicians and administrative staff, are stationed at the workstations to assist your employees with any administrative or technical issues.
Cold Seat Leasing
It is similar to warm seat leasing. However, no support personnel are present in your workstations to assist your employees.
Your employees are supposed to be independent and handle any technical or administrative issues they might experience alone.
Moreover, they are responsible for establishing and maintaining their workstations while the seat rental provider still provides all necessary equipment and facilities.
Co-Working Seat Lease
A co-working seat lease is a leasing arrangement in which you share a single workspace with other employees from other businesses.
If your business comprises small teams, you will benefit most from this arrangement. Also, if you are hiring employees outside your region, you should consider this type of seat leasing.
The main benefit of this leasing for your business is that you don’t have to spend money on office amenities like the pantry, conference room, and reception area.
In sum, the ideal type of seat leasing depends on your business needs and budget. Warm seat leasing is suitable if your businesses require a fully-equipped workstation and support workers. Cold seat leasing is perfect if your businesses are self-sufficient and wish to handle technical and administrative difficulties. Finally, co-working seat lease is great if you want a flexible and cost-effective option to set up a remote office.
How Do Seat Leasing Services Work?
It is a business arrangement where you rent office amenities and supplies from another company for your business operation. It is a cost-effective option for your business to launch without having to spend money upfront on renting or purchasing office space.
You usually pay a monthly fee for your desk space, utilities, and other office facilities when you seat lease. You may also be required to pay for your internet and phone service.
Why Is Seat Leasing Important?
Seat leasing is critical for your business since it allows you to save money, scale your operations, and boost efficiency.
One of its advantages is that it might save your business money. When you seat lease, you save the upfront fees of renting or purchasing office space. Rent, furniture, equipment, and utilities are examples of such expenses.
It is also an excellent method for scaling your operations. When your company expands, you can add more seats to your lease. This is far easier than acquiring new office space to match your expanding needs.
Additionally, it boosts efficiency. Your staff is more likely to be productive when their workstation is cozy and well-equipped. Seat rental companies frequently provide a range of amenities, like high-speed internet, ergonomic furniture, coffee, and snacks, that can increase your employees’ productivity.
Overall, it is a fantastic choice for your company if you want to scale your operations, increase productivity, and save money. If you’re considering leasing seats, conduct your research and pick a provider who can accommodate your company’s needs.
Seat Leasing in the Philippines
Seat leasing is becoming more popular in the Philippines. It is a low-cost solution for your businesses to obtain office space without committing to a long-term contract. There are a variety of seat leasing companies in the Philippines, such as PrimeOutsourcing, which provides competitive and cost-effective alternatives that can help your business save up to 40% or more on outsourcing costs while allowing you to focus more on your business.
If you are considering this business model in the Philippines, there are a few things that you should keep in mind:
- Location: Ensure that the leasing provider is in a prime and convenient location for your clients and employees.
- Amenities: Make sure the provider offers the amenities important to your employees.
- Security: Ensure the provider has adequate security measures for your business.
- Reputation: Research to ensure the provider has a good reputation.
By considering these factors, you can choose a seat leasing provider that will meet the needs of your business.
Seat leasing in the Philippines is a matter that should not be taken lightly, especially now that several different seat leasing companies are available. You should make careful business decisions to ensure the long-term success of your enterprise.
Factors to Consider When Choosing a Seat Leasing Provider
After knowing the significance of the seat leasing industry for your business, let us now understand further the significant considerations that you should keep in mind when choosing a seat leasing provider:
Business Goals
Your business goals are a significant factor when choosing a seat leasing provider. It is essential to be clear about what you want to accomplish. Make a rundown of the things you need to evaluate your business needs. This will assist you in defining the services you require and choosing the appropriate seat leasing company.
Costs and Expenses
Another crucial consideration that you should remember is the cost. Choosing a provider at a lower price can benefit you by lowering your expenses. However, the cheap seat leasing provider is not always the best option because you get what you pay for.
You should compare various seat leasing options, identify what they offer, the benefits and the drawbacks, and how they work for other businesses. This does not mean that the best option will not be the cheapest, but you need to consider more than just the price.
Expertise
When choosing a leasing option for your company, you must consider the service provider’s expertise, as the success of outsourcing is dependent on the service provider’s quality of work. Thus, selecting the best seat rental option suited to your business needs is essential.
Company Values
Your chosen company should share your values and care about your business goals. When your provider shares your mission and vision, they become an extension of your team and are invested in your development. Hence, finding out about the company’s values and cultures is critical to ease your way into seat leasing.
Legal and Regulatory Considerations
Legal and regulatory considerations are pivotal when you are choosing a seat rental option since they can affect the progress of the general business processes. The service agreement, payment terms, and intellectual property rights must be clear and guaranteed to prevent issues in the long run.
7 Benefits and Drawbacks of Seat Leasing
Benefits of Seat Leasing
Seat leasing services can offer numerous advantages to your business. Here are the many seat leasing benefits you may consider for your business:
Cost Efficiency
If you have startups and small-medium enterprises, seat leasing solutions are cost-effective options you must consider to keep your business running.
Small and medium-sized businesses (SMEs) and startups frequently face financial constraints due to the growing demand for commercial spaces with the recovery from the pandemic.
Renting office space can be expensive, particularly in urban areas, and it increases because established businesses are willing to pay a premium to occupy these spaces. For example, in Makati, the average monthly rental price of office spaces was ₱1,350.14 per square meter.
However, seat leasing can offer you a solution as it provides a less expensive alternative to conventional office space. Rather than leasing an entire office, you can rent individual seats or work areas in an office space. Because you share the costs with multiple businesses, it may be significantly less expensive.
Flexibility
In response to your business’s future needs, contracts for seat leasing are typically straightforward and adaptable. This allows you to increase or decrease your office space you use as needed without worrying about costly cancellations or long-term leases.
Seat leasing is also a good option if your work has shifting schedules because it operates around the clock, even on weekends and holidays, to maximize business efficiency.
Data Security
Your business can also benefit from the strong security measures that seat leasing companies provide.
For instance, numerous companies have established stringent security measures to prevent unauthorized access to their facilities through keycard access, security cameras, and security guards. They also ensure that firewalls, anti-virus software, and other security measures protect their computer networks and systems to prevent data breaches and hacking.
With seat leasing, your employees are protected, and you can also ensure the security of your business’s confidential information.
Access To Full-Furnished Spaces and The Latest Equipment
It also enables your business to access fully-furnished spaces with up-to-date equipment equipped with modern hardware and software to ensure the security of confidential data without the burden of financing your equipment.
Seat leasing can also offer customizable services for your business to suit your needs. Hence, seat leasing promotes productivity and ease in conducting business.
Additional Capacity and Services
If you want additional capacity for your business, this business model can provide it by offering coworking spaces for your employees.
It also allows you to offer additional services for your employees, such as game rooms, meeting rooms, quality furniture, and pantries, to promote employee comfort, productivity, and satisfaction in the workplace.
Focus on Core Business Functions
As a business owner, you must focus on the core business functions instead of non-core tasks, and seat leasing allows you to do that.
Through this arrangement, you can prioritize your revenue-generating tasks, such as improving sales, boosting productivity, and expanding. Thus, seat leasing is a sustainable way to lessen the burden on businesses.
Scalability
Seat leasing can also provide scalability to your business. It allows your business to respond quickly to changing market conditions or growth opportunities without being limited by the capacity of your own office space.
For businesses of all sizes, seat leasing is an excellent choice. It can help you scale your firm as it expands and be a cost-effective method to get office space. Seat leasing is a wise choice if you’re seeking a flexible and economical solution to obtain office space.
Drawbacks of Seat Leasing
Although seat leasing has several advantages, it is crucial to consider its drawbacks when starting or expanding your business. Seat leasing disadvantages include:
Less Control Over Your Workspace
One disadvantage of seat leasing is that it lessens your control over the workplaces of your business, which may hinder business facility expansion. For this reason, you must find a reliable seat lease provider that will provide you with quality seat leases.
Hidden Costs
There may be hidden costs, such as IT, plumbing, electrical, appliances, and permits that may disadvantage your business. This may also include the cleaning, repairs, and maintenance costs you must cover during the lease.
Long-Term Financial Commitment
Seat leasing can also disadvantage your business as it is a long-term commitment that lasts for years, which depends on your lease terms. Furthermore, a large amount of money may be required to cover the deposit and the advance rental.
Lack of Customization
Another drawback of this business model is that it may hinder your business from upgrading its workspace. By signing a seat lease contract, you cannot customize your place based on your preferences.
Lack of Security and Privacy
Sharing a workspace with another company also poses privacy and security issues, especially when you are dealing with sensitive information. This may cause a potential risk for the confidential data shared in your company.
Dependency
You may depend too much on your leasing provider, that it hinders your company’s growth in the long run. It can also prevent your company from working to its full potential.
Lack of Branding
Since your company is sharing office space with other companies, this results in difficulty in establishing a unique identity for your business in the market. As a consequence, your company struggles to differentiate itself from competitors.
While it has many benefits, it also has some drawbacks. If you are considering seat leasing, it is important to weigh the benefits and drawbacks carefully to decide if it is the right option for your business.
Businesses that Can Maximize the Advantages of Seat Leasing
While seat leasing is a great business option, not all can benefit. However, some businesses can maximize their operations, such as the following:
Outsource Operations
Today, Business Process Outsourcing (BPO) is one of the most successful industries in the country because of the ease of establishing and operating this type of business. If you are a start up company with limited money in this industry, leasing seats is the most practical option for you until you secure enough to operate independently.
Online Shopping
This sector is expanding quickly as business owners attempt to replicate Lazada and Shopee’s success. You need a well-organized team to ensure any online selling platform’s success. With leasing, your business can rent a few seats and set up its staff in an existing office space that is available for rent, making this viable. It is simple for you to sell your goods, respond to inquiries, place orders, monitor parcels, and work with your suppliers when you have a central base of operations.
Courier Enterprises
The shipping and delivery industry is another business enterprise that can profit from leasing. It allows you to have a centralized system which makes your tracking and monitoring much easier.
Real Estate
Despite the pandemic, the real estate industry is still booming. To start a real estate business, you will need someone to answer the phones, process paperwork, and manage your listings. While locating office space for lease may be appropriate for larger organizations, seat leasing is a cost-efficient idea for smaller or medium-sized firms because these seat rentals come with everything you need to start your operations.
Virtual Assistant Businesses
Clients now prefer virtual assistant firms with an office since they are more dependable and professional. Finding a seat rental option that includes backup internet and power might mean the difference between keeping and losing a client, which is critical for any organization, especially start-ups.
What Prime Outsourcing Offers
As the global workforce moves away from remote work and towards on-site work, seat leasing has become a viable outsourcing option for companies looking for a cost-effective and flexible solution for their business operations. It can also offer your business, particularly if you are adversely affected by the pandemic, access to fully-equipped workstations to support you in all your operations. This can especially benefit small and medium-sized enterprises needing more financial resources.
However, while it has many benefits, you should weigh its pros and cons and assess its compatibility with your business goals. For instance, outsourcing data to a third party may pose concerns about data privacy and security. By taking a thorough approach and researching potential providers’ reputations, you can mitigate any risks and unlock the full potential of seat leasing.
Looking for a seat leasing provider? Prime Outsourcing is a Philippine-based outsourcing company that offers various seat leasing options that benefit your business. We offer cost-efficient and flexible seat leasing choices to provide for your business. Contact us and let us help you achieve your business’ success.
