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Small Business (A Special Report)

Here, There and Everywhere: Shared office space and virtual offices allow small businesses to have a presence in any market they choose

By Gwendolyn Bounds,
The Wall Street Journal, 1357 words
Apr 30, 2007

(c) 2007 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Log on to the Web site for Exemplar Law Partners LLC, and up pops an impressive list of company locations, including New York, Beverly Hills, Atlanta and Washington.

But ask the small firm's CEO, Chris Marston, where he pays rent, and he'll tell you only in Boston, the company's headquarters. Those other locations are "virtual."

It works like this: Mr. Marston leases short-term shared office space in a historic, marble-entrance building in downtown Boston. The owner, Synergy Workplaces LLC, gives him full-time office space equipped with furniture, phone lines, copy machines and Internet service, as well as conference rooms and lounges that he shares with other businesses.

Then, for an extra monthly fee, Mr. Marston maintains virtual locations in four more cities where Synergy has offices. While he doesn't lease full-time space in those locales, he gets a local phone number and mailing address, as well as by-appointment access to office space and support services, such as faxing and copying, as his staff needs it. Each building has a Synergy staffer on hand to collect mail and field and forward calls to whatever number Exemplar chooses.

"It gives us the opportunity to get out there and develop a marketplace without paying for the infrastructure," says Mr. Marston, who estimates he pays between $6,000 and $7,000 a month total for Synergy services.

Shared office centers, which are shared by multiple companies to cut costs and come fully equipped, furnished and staffed, have been around since the late 1960s. But there was often a stigma attached: Shared space somehow wasn't "real" office space. Today, with the advent of the mobile work force, new wireless communications tools and economic globalization, that perception has changed -- particularly among entrepreneurs who want the flexibility to expand and contract without being tied down to long-term leases.

Recognizing that need, operators of these shared office centers are chasing the small-business market. Along with offering conventional shared office space, these operators are taking the concept a step further by heavily pushing virtual offices -- which give companies a bare-bones presence in a market of their choosing, such as just a phone number, mailing address and occasional use of office space.

Some virtual-office providers even offer international locations to companies that couldn't otherwise afford to go overseas. "If you tell me that you're going to expand into Europe but are not ready just yet to commit to the cost of entering that market, I can say, 'I can give you tomorrow a phone number and address and someone answering the call in Spanish on your behalf,'" says Guillermo Rotman, president of Regus Group PLC's Americas division.

Other providers, meanwhile, have no physical locations at all. Intellicomm Inc.'s Innoport system, for instance, simply offers businesses various phone-and-fax services in different locales -- not an actual office.

"My expectation is that virtual is going to be the hugest part of the business," says Jeffrey Landers, founder of, a New York-based online service aimed at helping small companies locate virtual or short-term space.

Overall, there are about 4,000 shared office business centers in North America and some 5,500 world-wide, according to the Office Business Center Association International. The average monthly cost when it comes to leasing full-time space ranges from $500 to $2,500.

Virtual models are cheaper, typically starting anywhere from $10 to $150 per month, depending on the level of service and what companies include in their package.

Operators of these services argue that they are a perfect fit for small businesses. For instance, Global Business Centers Inc., a Beverly Hills-based operator of shared office centers and virtual office services, is pushing its virtual-office service heavily to small businesses. "Most of the problems these small companies have is funding," says CEO Dan Manheim. "If you can cut the overhead, all that money can go to the business."

Similarly, Laura Kozelouzek, founder of New York-based Synergy, says she started the company in 2004 to specifically target the entrepreneurial niche. Now she estimates that some 70% of her 500 clients are small-business owners using her virtual service and/or renting full-time shared office space.

Companies use shared and virtual offices in a number of ways. In some cases, entrepreneurs work out of their home and use the virtual accoutrements to appear more professional to clients.

For instance, Peter Yu is a CPA in Fort Lauderdale, Fla., and mostly works out of his home, where he has a 10-month-old child. But for $160 a month, he keeps a virtual office through Intelligent Office Inc., and has a business phone number that goes directly to a personal voice mail. He also has a business address and mailbox at Intelligent's shared office space nearby, and can rent rooms to meet clients for about $15 an hour. "It's a very inexpensive way to start up a business without rent and utilities," Mr. Yu says. "For $160, you can't beat it."

In other cases, such as Mr. Marston's law firm, businesses that already have office space use the virtual model for expansion into new markets where they want to court new clients. Exemplar's Los Angeles- based lawyer works from home but uses Synergy's tony Beverly Hills facility to meet clients. "Part of it is psychological," Mr. Marston says. "It's important to maintain professionalism in our business."

Likewise, Rebecca Hall of the financial-planning firm Marshall, Hall & Associates pays Regus Group about $325 to $350 a month for a virtual-office presence in Washington, D.C., even though her real headquarters are in Tysons Corner, Va. "There's a real mental block to cross the bridge and leave D.C. around here," Ms. Hall says.

She typically spends two or three days a week at the Regus facility in Washington meeting with her D.C. clients, who account for about one-third of her customers; she also holds luncheons with speakers in Regus's large conference room. Customers, she says, are thankful for the convenience. "They know they can drop things off with a receptionist for me anytime, and I'll be there later to pick it up."

Of course, there are drawbacks to these approaches. For businesses leasing full-time space, the monthly payment often is just the start. Basics such as phone use, Internet access, beverages, copying and faxing typically cost extra and can fast add up. Indeed, once a business grows to 10 or more people in a single location, the economics of the shared office space become less attractive, says Mr. Landers of

Then there's the matter of close neighbors who might play music in their offices or eavesdrop on conversations if doors are open. And when using a virtual package, it pays to ask how many offices are reserved for virtual customers -- if there are just a handful of available spaces, it can be hard to get an office when you need it.

Some virtual-office operators are getting around that problem by not offering physical offices at all. The Innoport system from Intellicomm, for instance, works solely through phone and Internet.

At the most basic level, customers can get a phone number in any area code where Innoport has service or opt for a toll-free number. Starting at $9.95 a month, they can have a virtual private-branch- exchange telephone system with multiple extensions and have calls drop into voice mail, which in turn can be sent as an audio file to their email as an attachment. Faxes on that same number can also be forwarded to email via PDF or TIFF files. There is an inbound minute allowance each month; over that, extra charges apply as they do for call-forwarding. For more money, there is a higher-level plan that allows customers to add more numbers and extensions.

"We are more focused on the fact that having a virtual office is more of a state of mind," says Harprit Singh, CEO of Intellicomm. "The whole concept of a mobile work force lends itself to this -- having the capability to do work wherever you are and not being limited to a four-wall office."

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