Why Pay Rent? Alternative office options for today’s small businesses

What do you do if your business needs a more professional space than your home office, but you can’t quite afford a business office? Read about alternative office options that won’t break your budget.

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.

“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.”