Virtual Office: Definition, Costs, Benefits, Drawbacks

What Is a Virtual Office?

A virtual office gives businesses a physical address and office-related services without the overhead of a long lease and administrative staff. With a virtual office, employees can work from anywhere but still have things like a mailing address, phone answering services, meeting rooms, and videoconferencing.

How Virtual Offices Work

Virtual offices operate as one unit to serve customers but do not exist in a fixed location. This type of setup is especially popular with startups and small businesses that want to minimize overhead. The creation of web-based office productivity software and services, such as videoconferencing, has helped drive the growth in virtual offices.

A virtual office can also lead to greater productivity, as its services free workers from administrative tasks, as well as commutes. Each employee can work from the location that is most convenient, and the business is not restricted to hiring employees who live locally.

As more people find ways to work remotely, the benefits of a virtual office are immediately noticeable. However, not everything is as easy as it seems. Some may find scheduling of virtual office space no different than the time-consuming scheduling conflicts inherent in a physical office.

Advantages and Disadvantages of a Virtual Office

The appeal of a virtual office to users is twofold. First, the monthly cost of a virtual office is far less than that of a traditional office. After all, it has none of the maintenance and upkeep costs, nor does it need to be staffed. A virtual office can also be secured via a month-to-month lease, so there is greater flexibility if a user's business changes (no waiting for a lease to expire or incurring the cost of a broken lease).

Costs for using a virtual office can range from under $40 to more than $200 per month. The more services that are added on, the more expensive it will be.

Second, a virtual office can provide a mailing address, telephone answering, and videoconferencing services. Therefore, a small business can appear larger than it is. It also can provide a physical address (or multiple addresses) for users to meet clients. Sometimes, the address can lend an aura of prestige to a virtual office user, such as if the address is a well-known location or street. A professional phone answering service can have the same effect.

Some of the services that a virtual office arrangement offers require pre-planning to utilize. For example, many packages come with limited use of conference rooms or limited teleconferencing and videoconferencing services. Virtual offices also may have restricted access on nights and weekends. Users may find the lack of flexibility limiting and inconvenient. There is also the potential for distractions that come with working from home and therefore some workers might not be as productive when operating in a virtual office environment.