Why Pay Rent?
Alternative office options for today's small businesses
by Bridget McCrae
At last count, roughly 20 million home-based businesses were operating in the
U.S., according to research firm International Data Corp. And while it's true
that many of today's successful small to midsize companies got their start in an
owner's garage or basement, it doesn't necessarily mean they have to stay there.
While inexpensive and convenient, a home address doesn't always convey the same
professional, business-like appearance that a separate office can.
Problem is, the step from the bedroom to the boardroom is a big one that
requires significant upfront costs and usually a long-term lease commitment.
Some business owners are finding a "middle ground" in alternative office
options, which offer a haven both to those companies that have outgrown their
homes and the home-based businesses that have an occasional need for a
conference room or office space to present a more professional image to their
clients.
"Small business owners come to us because they need to be less 'mom and pop'
and more professional and credible," says Ralph Gregory, founder of The
Intelligent Office in Boulder, Co., a national franchise that provides a
prestigious business address for mail services, drop-off/pick-up courtesies and
meeting space. Phone calls are answered live and seamlessly announced and
connected to clients, regardless of their current location.
"Telephonically, clients are 'in the office,' but physically they're not, so
there's no rent, furniture expense, phone system cost or even a business phone
bill," says Gregory. With 17 locations nationwide, The Intelligent Office
customizes services to meet each client's needs and budget, though most use
business address services and a live answer secretary with the "follow me"
communications for about $275 a month.
The Intelligent Office isn't alone in its quest to help small businesses
create a professional image without spending a fortune. With 420 locations in
180 cities worldwide, U.K-based Regus provides its clients with training rooms,
meeting space, videoconferencing, lounges and receptionist services. Fees depend
on the level of service desired and geographic location, says David Ford, CEO
for the firm's UK operations, who estimates that a small business will save
one-third to two-thirds of its costs by forgoing commercial space and instead
using Regus' services.
Ford says most home-based businesses approach Regus after realizing that they
can't hold business meetings at their kitchen table. "Working from home just
doesn't give the impression of critical mass," says Ford. "You have to meet your
customer base at some point – and they'll probably want to see your operations,
and a house isn't necessarily the best way to get that done."
Commercial space isn't always the best option either, says Ford, who calls
the jump from home to traditional office both expensive and time consuming. "You
have to get the lights and phone on, pay the rent, sign a long-term lease, buy
furniture and then maintain all of it," he says. "You can end up with
significant costs that our clients don't even have to think about."
Getting Professional
Before Alan Kaplan started his new music production firm last year, he asked
himself a few important questions: Can I afford to hire an assistant? Should I
work from home or lease office space? And, as a nascent music label owner, do I
need a professional address and facilities where I can meet with business
partners and clients?
Kaplan, president of 2-employee Music Universe LLC in Boulder, Co., got all
of his questions answered in an economical fashion for forgoing office space and
a full-time assistant in favor of using The Intelligent Office, a company that
offers office space and services in a unique, a la carte fashion to companies.
For about $250 a month, Kaplan now has access to a prestigious business
address, meeting and conference facilities whenever he needs them, and a
full-time, trained receptionist who answers the phone with a "Music Universe"
greeting, then routes his phone calls to him wherever he is.
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Resources
For more information about the alternative office options mentioned in
this article, check out these Web sites, most of which feature virtual
office tours, a full menu of services and a tool for finding a location
nearby.
The Intelligent Office
www.theintelligentoffice.com
Regus
www.regus.com
HQ
www.hq.com
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"I can be out on the beach, but the person calling me thinks I'm sitting in
my office, taking the call," says Kaplan, who estimates that he saves about
$2,000 a month by not having office space and a full-time assistant. He rents a
3-room apartment to separate his workspace from his home, and relies on The
Intelligent Office to create the professional image that his record label needs
to succeed in a highly competitive industry.
"I realized that I needed an address that wasn't a 'home address,' but I
wasn't willing to shell out the big bucks for office space, or use a private
mailbox, which really doesn't look good either," says Kaplan. "By using an
alternative office option, I've been able to present a professional image while
keeping costs down and it's working out very well."
At Dallas-based HQ Global Workplaces, small businesses can select from two
alternative office options. The first supports home-based businesses by handling
their mail, answering their phones and providing meeting and office space on an
as-needed basis and for a monthly membership fee. The other is designed for
larger companies that require a fully staffed office environment, complete with
office technology, furniture and videoconferencing capabilities.
With 275 locations in the U.S., HQ's fees start at $75 a month and increase
based on the business' individual needs. Joe Wallace, executive vice president,
estimates that the average small business saves about 60 percent over what it
would pay for traditional office space and full-time employees.
"When you decide to move out of the house and open an office, there are a lot
of upfront costs to getting it done," says Wallace. "The leasing transactions
alone are time consuming and expensive. Then there are the upfront costs related
with the transactions, constructing or modifying the space, acquiring technology
and furniture – the list goes on."
Gregory concurs, and expects an increasing number of small businesses to turn
to alternative office options in the near future. "Right now, we're like the
Internet was in 1990," says Gregory. "In five to 10 years, this will be a very
common way for companies of all sizes to do business." After all, he adds, the
freedom that the small business owner gains by leaving the electric bill,
maintenance and furniture purchases to someone else is reason enough to forego
the traditional office space option.
"All of those worries and more are handled by someone else, and for a minimal
monthly cost," says Gregory, "leaving the small business owner to worry about
more important tasks at hand."
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