There’s an ages-old saying that goes “A penny saved is a penny earned.” Quite simple in theory really, but not so easy when you’re trying to run a profitable business.
Everything costs money, from office rent and overhead, to employees and much more. Then there’s those annoying unexpected expenses rearing their ugly head every time you think you’ve managed to squeak by to the end of the month with a few sawbucks in the bank!
One of the most effective ways for a business to save money on the things that cost them most is to take all or most of their business virtual, by getting a Virtual Address, renting an office space, and hiring virtual employees. As you’re about to learn, tens and hundreds of thousands of dollars can be saved every year, depending on the size, scope, and overall needs of your business.
Office & overhead (tens of thousands in savings)
This expense is hard to quantify, as rent, utilities and other expenses will vary greatly from one area to the next. Consider that a modest 2,000 sq/ft commercial space will start at around $26,000/year. Then overhead expenses at half that and going up from there, and you’re already into the tens of thousands and you haven’t even bought any furniture yet!
Very expensive, considering many small businesses just need an official brick-and-mortar address to legitimize their company on paper, for tax purposes and to garner more consumer trust of their brand. Regardless of why you need to rent a virtual office over a brick-and-mortar address, you still only pay a fixed monthly fee when using a virtual service, which relieves the expense of leasing fees, utilities, and other incendiary overhead office expenses.
Equipment and furniture (starting at ~$5,000)
It’s nearly impossible to outfit a small office for less than $5,000. In fact, that number would likely be conservative for 1980, let alone the present digital era and the need for:
- Stand-up desks,
- Ergonomic chairs,
- Ergo mouse,
- Glare-free monitors),
- Fax and copy machines (plus ongoing toner and paper expenses)
- Meeting tables,
- Lounge couches and chairs,
- Bathroom amenities,
The expenses to furnish and maintain an office don’t stop here, but hopefully you’re getting the idea. Read this to learn more about the basic essentials needed to set up a proper office.
Recruiting costs can skyrocket into the thousands, per position, for a growing business (and we all want to grow, right?) From advertising the position online and off, to the use of recruiting firms, to the need for HR staff — time spent calling, emailing and interviewing applicants, and doing background checks.
There are many costs to consider, which can vary from one industry and type of business to the next. Since a virtual service does all this groundwork for you, recruiting expenses can be a thing of the past for you and your business.
Most businesses require reception and administration staff to man the phones, perform data entry, and more. This is a great expense to any company. Often, a small business can’t afford an extra $30,000 a year per employee, to hire someone for this task, especially if the phones ring infrequently and there’s a lot of downtime in between calls.
Virtual services offer on demand reception, that can scale as you grow, while offering the added advantage of 24-hour availability, often at no additional cost.
Onboarding (~$400 per employee)
Onboarding, the process of acclimating and training a new employee, starts at $400 and goes up from there depending on the type of business you run. These costs often double and triple for each position you hire for, since many new hires may not get past this process, either deciding the job isn’t right for them — or management deciding they aren’t the right fit.
Much of this process is streamlined when using virtual services. Only small amounts of your time will be spent on training virtual receptionists and assistant, making onboarding costs a thing of the past.
Employee benefits (salary expense x 1.4)
In this day and age, if you’re not offering health, dental and life insurance to your employees, high turnover is a given. Each employee you hire will want this and other benefits such as matched IRA contributions, vacation pay, maternity/paternity leave, a bonus structure, paid health club memberships, and more. Otherwise, your competitor down the street will steal them soon after you’ve (conveniently) trained them!
Typical costs, according to Joseph Hadzima of MIT is between 1.25 to 1.4 times a typical employee’s salary. Virtual service companies are 100% responsible for the cost of keeping their virtual team on staff, including benefits.
Statutory obligations to employees (approximately $3 per hour worked)
New entrepreneurs are often surprised and financially sidelined when they realize all the mandatory (statutory) costs associated with having an employee on staff in their business. Federal pensions and social security plan contributions, unemployment insurance, disability/worker’s compensation insurance and paid time off are all possible costs you’ll have to bear, depending on what country you run your business in.
As one would imagine, virtual office services take care of the employees they provide to you, saving you thousands in yearly statutory obligations you’d otherwise pay when hiring a full or part-time staffer.
How much can YOU save?
There are a lot of headaches that come with running an office and the staff within it. Whether you can go full-on virtual with your business or not is up to you to decide, but the savings potential should be obvious at this point.
Whether it’s rent savings, employees, or you simply want to get a virtual phone number to streamline and simplify the phone calls coming into your business, virtual services can save anyone who reads this a lot of money every year.