Pros and Cons: Running a Virtual Company With Remote Employees


I started my career in a cubicle as many white-collar workers do. It would be an understatement to say I didn’t enjoy it. I eventually grew accustomed to it and then transferred to a company with a better cubicle next to the amusing (and adorable) receptionist. Every time I watched an episode of “The Office,” I felt like I was watching something I’d seen before.

Then something unexpected happened: my job in the housing crisis dried up almost quickly, so I got a telecommuting position with a fledgling, virtual-only firm. It grew rapidly over the next 12 months, and I was promoted to vice president. That happened ten years ago. Since then, I’ve never worked a traditional in-person job, and I’ve also started my own virtual-only business.

While virtual firms have their own set of obstacles, they also have some compelling advantages over their physical counterparts. That’s not even taking into account the advantages that nimble, full-time virtual enterprises reaped during the coronavirus outbreak.

What Exactly Is a Virtual Company?

The image of virtual firms is that of online enterprises that sell digital products: software companies, computer companies, data companies – all ones and zeros with nothing physical or solid.

Virtual businesses are simply enterprises that do not have a central office, store, or physical location. Many people sell tangible goods, but they only do so online or over the phone. They use drop-shipping providers to fulfill orders because they don’t have a warehouse. Even real estate firms can be virtual, providing listing services, marketing, and other services that are provided in the physical world.

While certain businesses, such as coffee shops and bars, may never be able to go totally virtual since they market an in-person, location-based experience, the majority of the world’s enterprises can choose to decentralize. It turns out that cube farms and office space aren’t as important to business success as many commercial real estate agents would have you believe.

Many of today’s largest corporations began as home-based businesses, online-only organizations, or a combination of the two. Amazon was founded by Jeff Bezos in his garage as an online bookstore. Steve Jobs noticed the promise in Steve Wozniak’s hobby of experimenting with computers in his garage and decided to join him. Mattel began as a picture frame company conducted out of the garage by three friends.

Companies like Zapier, Buffer, Basecamp, Citrix, FlexJobs, and You Need a Budget began as virtual-only businesses and continue to do so.

Advantages of a Virtual Business

I’ve seen firsthand the enormous benefits of virtual-only businesses over the last ten years. Some are obvious, while others are not. Of course, there are some obstacles to overcome. However, in my experience, the benefits much exceed the drawbacks.

What’s in it for you as a virtual entrepreneur, whether you already have one or are considering starting one?

1. Startup Costs are Reduced

This one is self-evident. Physical space is expensive: it costs money to rent it, money to furnish it, and money to keep the lights on. Consider how much money Aetna saved by closing offices and shifting staff to telecommuting to put the physical costs of a business into perspective. Aetna saved $78 million after the switch because they were able to cut 2.7 million square feet of office space.

Our launch expenditures were low in my own company. We paid $9.99 for a domain name from GoDaddy, $20 a month for hosting from Bluehost (basic hosting starts at $2.95), and $90 to form an LLC. Compared to thousands of dollars to find and outfit a physical site, our launch cost roughly $120.

And, as everyone who has tried to secure money to start a business knows, the lower your initial costs are, the more likely you are to be able to launch without relying on outside capital.

2. Continued Overhead is Reduced

Physical office space is not a one-time expense. Furniture, design, the initial round of computers and office equipment, and possibly wiring are all one-time investments for brick-and-mortar firms. However, many of these costs will endure indefinitely. Every month, rent, utilities, and property taxes are due, which are frequently not included in the rent for a commercial location. And we’re all aware of how quickly technological equipment becomes old and needs to be replaced.

Global Workplace Analytics concluded that moving to telecommute saves firms $10,000 per employee per year, based on a review of over 4,000 research on productivity, expenses, and other differences between physical and virtual companies. That’s just the savings on real estate!

According to Forbes, American Express saves $10 to $15 million each year by largely virtualizing their employees. According to managed services firm LAC Group, the average in-office employee costs businesses $200 per year in office supplies alone.

If we had incurred overhead, my own company would not have lasted. The only reason we were able to continue forward throughout the lean months was that our monthly mandatory recurring expenses totaled between $100 and $200. Everything else can be cut down as needed.

If you’re running an existing company and aren’t ready to go completely virtual just yet, encouraging telecommuting or closing and powering down the office for a portion of the day can help you save money in the meanwhile.

3. Lower IT Expenses

As a virtual-only business, you don’t have to provide computers or even tech assistance to your staff. They provide their own equipment, and it is their responsibility to repair their computer if it malfunctions.

According to Network Alliance, the average company spends $700 per month on IT per employee. Equipment, office connectivity, technical support, and IT labor expenditures are all included.

Do staff oppose being in charge of their own equipment and technical support? As it turns out, not at all.

4. Employee Demand Is Growing

Employees enjoy working from home. According to Global Workplace Analytics, 70% of employees consider the opportunity to telecommute to be somewhat too highly significant when looking for a new job. In fact, 37% of employees say they would accept a 10% wage drop in exchange for the chance to work from home.

It’s logical. Flexibility — the ability to choose their own hours, be accessible for their children when they need it, and live anywhere they want — is more valuable to many employees than money. They see the potential for a better work-life balance, which means a lesser risk of burnout.

Employers who allow employees to work from home benefit from increased demand and competition among potential candidates, which helps them fill coveted positions more quickly and with better people.

5. Broader Labor Pool

Employers who can recruit employees from anywhere in the world have a virtually endless pool of candidates to choose from. However, for a physical business in a small town, the prospective workforce is limited to those who live within a 30-mile radius. That tiny pool of potential recruits may or may not possess the capabilities that the organization requires.

We have personnel in Pennsylvania and Pakistan, as well as Houston and India, in my own company. I spend the majority of my time in Brazil. We’re more concerned with an employee’s abilities, personality, productivity, and costs than with where they live.

When you’re ready to expand your remote team, start by deciding whether to hire a freelancer or an actual employee.

Challenges of a Virtual Business

Virtual businesses don’t come without their risks and downsides. Here are the challenges I’ve found with virtual businesses:

1. Team Communication, Camaraderie, and Culture

There’s still nothing like speaking with someone face-to-face. Email and phone communication are all well and good, but there are social nuances and body language cues that you pick up on when you speak to someone in person. A twitch of the mouth here, a slight frown there, the sparkle of good-natured humor in the eye that lets you know you’ve been included in a joke and not the butt of it.

In a team setting, where numerous people are trying to interact and brainstorm, these communication issues might be amplified. And the potential of misunderstandings and animosity increases tenfold when you have distributed team members all around the world with various norms, cultural backgrounds, and time zones.

Isolation and loneliness can be serious issues for remote workers, ranging from the CEO to the part-time virtual assistant.

2. Remote Management

When you can’t see an employee working, how do you know if they’re working?

It’s a largely illogical dread, to be sure. You wouldn’t stare over every employee’s shoulder every minute of every day, and just because they’re seated at their desk doesn’t indicate they’re working. However, there is some truth in this; when managing remote workers, managers are required to define expectations and success indicators more precisely.

In virtual businesses, standing around watching employees work and occasionally shouting at them to work quicker won’t cut it. (In fact, it’s ineffective in regular workplaces as well.)

3. Remote Hiring

Without face-to-face interactions, remote hiring, like everything else about remote work, can be difficult. When you can’t see the person’s micro-expressions and mannerisms, it’s more difficult to trust your gut and intuition. It’s more difficult to tell when someone is lying or to get a precise measurement of them.

And the basic truth is that not everyone is suited to working from home. Telecommuters must be intrinsically motivated and have a burning desire to work. Paper-shuffling bureaucratic types who work hard at appearing to work hard have no place in virtual commerce.

Last Word

In today’s environment, it’s easier than ever to establish and develop a business. In the twentieth century, selling widgets could have necessitated a pricey shop with plenty of foot traffic, but nowadays, all you need is a domain registration for $9.99.

Nonetheless, that knife can be used in both directions. Because the barrier to entry is so low, business owners must constantly contend with disruption and challenges from existing competitors as well as fledgling entrepreneurs. Turning your company into a virtual-only operation will help you stay lean, green, and agile while lowering costs and allowing you to focus your efforts where they’re most effective: marketing, sales, improvement, and expansion.

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