How Much Can You Save when Using Virtual Office vs. Physical Office?

The goal of any business is to generate as much revenue as possible while servicing their customers to the very best of their ability. A virtual office is a great way to save tens of thousands of dollars per year in office expenses. Virtual office rental accomplishes this for many businesses by offering a physical office for important meetings, a private place to work as needed, and mail drop off/forwarding that adds a level of professionalism to any business.

Save money on staff

After all, where you reside says a lot to customers about how much value you can offer. Setting up a Virtual Headquarters, you get the prestige of the virtual location you rent, without all the expenses. Virtual services also including other essentials such as reception and access to other virtual professionals to help the business run smoothly.

The cost savings run into the thousands of dollars per month and hundreds of thousands per year for some businesses. Consider the benefits over running a physical office you don’t necessarily need to run your business successfully.

Virtual office vs. Physical office costs

Leasing costs (hundreds vs. thousands)

Leasing costs may be one of the biggest savings an SME can expect when choosing a virtual office over a brick-and-mortar option. Depending on the city you work in — the office vacancy rates, unemployment rates, and the physical location — a cheap lease can go up into the $5,000 range for a small office! Higher vacancy rates can drive prices down, but they’re usually low for a reason.

You can choose from multiple locations to rent a virtual office, which you’ll list on your marketing materials and also have limited access to. Virtual location, and the service provider you choose will also affect monthly prices, but will generally cost hundreds rather than thousands per month. No safety deposit or first and last are required either.

Last, a virtual office is rented by the month, not a half-year or annual lease for a physical location. Meaning, if you have to move locations or otherwise cancel the service, there are no early-termination fees or lawsuits for infringing a lease to worry about.

Monthly obligations (zero overhead vs thousands)

Typical maintenance and utilities to run a physical office include electricity, water/sewage, Internet, software subscriptions, office supplies and more depending on the business you’re running. These costs easily run into the thousands of dollars. A virtual office will provide all the amenities of a normal office for hundreds rather than thousands, without requiring you to pull the company credit card out constantly to pay for the upkeep of your building and staff.

If you own the physical office you occupy, you get the privilege of paying for all maintenance costs including electrical, plumbing, appliances, paint, and any other part of the property prone to depreciation and/or damage from weather, vandalism or accidental damage by employees. There’s no way to estimate these costs as they’ll vary greatly.

Employees (hundreds vs. thousands)

At the bare minimum, a physical office requires the presence of a receptionist and/or security guard to greet incoming guests and direct them what to do while on the property. Cleaning staff is also essential in most office environments, but you’ll occasionally find leased managed office buildings where the owner provides cleaning to their commercial tenants.

It’s estimated that the total year-end cost of each employee is their yearly salary, divided by 2, then add that total to the original salary expense. This is because physical employees create a lot of costs including recruitment, training, tax obligations, vacation pay, medical and other benefits. The example below assumes a yearly salary cost of $50,000/yr:

  • $50,000 / 2 = $25,000
  • $50,000 + $25,000 = $75,000/yr

This number is representative of the typical salary for an experienced receptionist or administrator. Cleaning staff may be outsourced or hired in-house and can cost upwards of $30,000/yr on the low end. Management, marketing, sales, accounting, and other experienced professionals will cost much more. Such costs are unavoidable if your business model requires this kind of staff. However, consider if they could work remotely and use their own tools and devices. Being conservative, if you only require reception and cleaning staff, yearly costs of a physical office, just for employees, will be over $100,000/yr just in salary expense.

A virtual office, complete with reception, can start in the low hundreds per month, depending on your needs. Everything in a virtual office is managed for you, too, so no cleaning or other office upkeep expenses will be incurred.

save business money

There’s no comparison when it comes to cost savings

Given that we work in the digital world, it only makes sense to include a virtual office in our list of digital tools. It should be obvious now that on-the-move businesses, which don’t need a physical office space to use daily, can save multiple thousands of dollars per year using a virtual office.

For some of you, a physical office is a necessity but consider what happens when you want to expand operations across the country — or globe. Making the move to open up a new office can be dangerous. Having the ability to rent a legitimate office for hundreds, without spending ten or more thousands of dollars per month in lease and overhead expenses is a no brainer. Virtual office rental usually includes reception, call and mail forwarding, and you and your team gain access to the facilities when you need them.

The cost savings are many and can definitely benefit startups or firms that need to keep on the move, with no time to sit down in an office.

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