Virtual companies enjoy real workplaces

Businesses share office space, costs By Bonna Johnson • THE TENNESSEAN • July 7, 2009 The new office is no office at all. It could be a rented desk in a roomful of strangers. Or a virtual office that comes with a prestigious West End address. Entrepreneurs and startups are turning to unconventional workplaces that are a step up from a corner table at Starbucks to cut costs and win freedom from four walls and a desk. Advances in laptops, as well as smaller and smarter cell phones, have also helped make the American workplace more mobile just as a worsening economy makes long-term, high-rent leases that much more difficult to afford for small-business owners. "The workplace is never going back to what it was," said Ron Runyeon, a Nashville real estate investor who is planning a novel co-sharing workspace in Germantown. "For a company to hire 10 to 20 employees and put them in cubicles, those days are over." Runyeon's co-op is slated to open later this year and is among the first in Nashville to cater to lonely work-at-home entrepreneurs who crave social interaction and networking in a creative workspace. For a membership fee — probably less than $200 a month — entrepreneurs can come and go from the open-space office that will be furnished much like a coffee shop with couches and tables, along with a few desks and small conference rooms. Extras will include fax machines, computers for those without a laptop and, of course, a coffeemaker. It's a new twist on the virtual office concept, which has been around for decades but appears to be coming into its own during the down economy. "We didn't know if we'd have 100 clients or two clients, especially in our first year, when we decided to go out on our own," said Patricia McCarter, a partner in the Nashville law firm McCarter and Beauchamp, which specializes in family law, particularly divorces. To keep overhead low, she and her partner decided to do some of their work from home but also signed a one-year contract for a virtual office on West End for client meetings. A receptionist, upscale office décor and the hustle and bustle of a shared workplace filled with other entrepreneurs gave the attorneys instant credibility not easily won via meetings in a coffee shop or home office. Plus, "having an address on West End brought clients our way because it's a recognizable location," McCarter said. Offices grow by designThe Regus Group, which operates virtual or shared offices worldwide, manages two locations in the Nashville area — HQ Business Center at 3200 West End Ave. and 725 Cool Springs Blvd. — with about 200 clients between them. Inquiries about virtual offices in the Nashville area are up in the past 12 months and business has increased 23 percent the first half of this year compared with a year earlier, said Scott Nelles, Southwest region vice president for Regus. Nationally, virtual office subscriptions are up 12 percent so far this year, compared with 2008 and May sales were up 5 percent over last May, said Dennis Watson, Regus spokesman. Another virtual office center, Chesapeake Business Centre in Maryland Farms and Cool Springs, also has seen more inquiries. "I'm guessing it's because of the economy," said owner and leasing agent Murray Hatcher, who noted that some businesses are escaping from pricey office space and deciding to go virtual. A virtual office, usually located in a desirable business center, includes mail and telephone service, a receptionist, office and conference space, and some administrative support, such as copy machines. Virtual offices are popular not only with entrepreneurs, but also with businesses considering a second location in a new city or work-at-home employees of Fortune 500 companies, Nelles said. At Regus, prices start at $69 per month for just the mail service. "A business may want that legitimate business address, instead of a P.O. box or their home address," Nelles said. The most popular package costs $169 per month, which includes mail and phone services, as well as 16 hours per month of office use. A receptionist answers calls to the business and patches them through to the owner even if it's on a cell phone or at home. Space helps with clients"It's so nice for our clients when they arrive there," said McCarter, who usually holds meetings at the West End office three to four days a week. "There is a body there to welcome them, offer them coffee, make copies for us. It really projects a professional appearance." For the first six months of this year, her firm has paid a total of $5,000 for its virtual office, McCarter said. That's much less than the cost of traditional office rentals, she said. "We're a small shop, so this has been a perfect stepping stone," said McCarter, who said she and her partner are now contemplating leasing their own office space because business has been strong enough. Runyeon's co-op has less to do with casting a professional image and more to do with being a gathering place for entrepreneurs in creative industries such as design, music and film. "I may be a tech guy but have no marketing skills," Runyeon said. "I could hook up with someone I meet there on the marketing side, and we could barter some of those skills." The co-sharing office will take up about 3,500 square feet on the third floor of an old flourmill that Runyeon is renovating at 100 Taylor Street. He's unsure how profitable the concept will be, but as startups succeed, he hopes they will end up renting other office space that will be available on the first two floors. He plans to market the co-op as a "first step" out of a home office. "The drawback of people working out of (a) home is the isolation factor," Runyeon said. Other options aboundWhen Derek Hughey, 37, launched his own law firm in May, he opted for no office at all. The corporate and securities lawyer worked at Nashville's Bass, Berry & Sims firm before opening Hughey Business Law as an all-virtual, nearly paperless law practice. "Given these tough economic times, I know that many companies and individuals are looking for lower-cost alternatives," Hughey said. He figures he can offer rates that are 30 percent to 40 percent lower than what he would probably charge if he worked for a traditional law firm. "The way technology has changed, you have the ability to do high-end legal work without the overhead of a building, a secretary, an IT department or an accounting department," Hughey said. Merchant goes virtualDoris Franklin Matthews, owner of Chancery Lane Antiques, closed down her Belle Meade store in January after eight years there and 13 years in the business. Now, she sells antiques online through a "virtual store." "Business slowed down to the point that I knew I had to pare down what I was doing," said Matthews, who learned she was pretty savvy at Web site development. Annual sales used to exceed $350,000. She's not at that level online yet, but she has reached her former profit level, in large part because she no longer has the overhead of a brick-and-mortar store. The 2,000 or so small British antiques she stocks — mainly silver collectibles and antique tortoise shell — are in storage. She maintains the Web site, www.chancerylane.com, so potential customers can see her wares at the click of a mouse. "This has brought all sorts of people from around the world into my store," said Matthews, who likes the flexible schedule of running a virtual business rather than having to be at a store's front counter from 11 a.m. to 5 p.m. "I'm finding it much easier to do it this way," she said. "Profits are better than they've been in a long time."