Recently I was talking to entrepreneur that had just purchased an office building for his small but growing company. His business is doing well in a hot market that is set to explode over the next few years. Only, by purchasing a building, he’s set an artificial upper limit of employees for the firm. Several years ago, when I was talking to another entrepreneur about buying a building, he described it this way:
A goldfish will grow to the size of the fishbowl, and no more. An entrepreneur’s company won’t grow larger than the building.
The company will over optimize the number of employees for the size of the building, and not for the needs of the business. Yes, space can be rented in nearby buildings and adjustments can be made, but owning a building results in unnatural acts to not expand beyond it. If an entrepreneur has ambitions for major growth, and major growth requires a significant increase in employees, buying a building is a bad idea.
What else? What are your thoughts on entrepreneurs owning office space?