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Updated Apr 04, 2024

The Pros and Cons of Virtual Offices

The trend of virtual offices still has momentum. However, like most options, they offer advantages and disadvantages.

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Jennifer Post, Senior Writer & Expert on Business Strategy
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Table of Contents

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Years after the start of the COVID-19 pandemic, many companies and employees still find themselves working remotely. As going back to the office becomes safer, are virtual offices still preferred? That depends on the company and its needs. 

The pros of virtual offices

Lower overhead

Virtual offices allow businesses to lower their overhead costs significantly and allocate funds to other areas that may require stimulation.

With prices well below those of brick-and-mortar offices — as is evident from the experiences of many entrepreneurs, thousands of dollars can be saved easily by replacing regular office space with virtual offices — they represent the ideal option for companies that are trying to make their presence felt in several places at the same time.

FYIDid you know
Virtual offices can range from $50 to $100 per month or more, depending on various factors such as what services your business requires, according to Alliance.

Less management needed

Regular offices have to be managed on a regular basis. A virtual office needs little management — simply the right tools for everyone involved. Employees also have greater flexibility to develop their workflow and productivity habits, which can lead to increased creativity and innovation.

A paper published by the Society for Industrial and Organizational Psychology found that in a survey of telecommuters, participants said that working remotely significantly increased job satisfaction and relationships with supervisors and significantly lowered work-related stress.

This is because virtual offices give employees the freedom to manage themselves, which can have major benefits if you have the right team.

Less opportunity for office conflict

Even the most amicable offices have their issues. It’s difficult to gather a group of people with differing personalities and not experience some conflicts or disagreements. Virtual offices allow companies to continue to be productive without creating an environment where personalities may clash. Communication doesn’t suffer — teams can always be brought together via messaging or video conferencing apps when a question or issue comes up that requires communication with the whole team.

Fewer sick days needed

In some companies, working regardless of illness is the norm and, sometimes, even encouraged. However, with fully remote companies, employees can’t pass illnesses from one person to another.

“An employee may feel comfortable reporting to work from their virtual work-from-home situation if they have a sniffle, whereas in the ‘old’ model — they would potentially use a sick day — or would report to the office and potentially expose other employees to their illness,” said Eric Mochnacz, director of operations at human resources (HR) consulting firm, Red Clover HR. “Continuing to maintain a virtual office allows your company the flexibility to open or close depending on individual situations.”

Mochnacz added Red Clover HR went virtual for a week because some employees were feeling ill and the company didn’t want to risk more employees getting sick.

“We didn’t lose productivity because we were afforded the flexibility to work from home if we were up for it,” Mochnacz said. 

No commute 

“One major pro of virtual offices is the eco-friendly elimination of commutes. By having one’s workstation online, people are not creating emissions with their vehicles nearly as much,” said Adam Bém, chief operating officer and co-founder of Victoria VR. “This reduces both the company’s overall carbon footprint and each individual’s own carbon footprint for a better, greener world.”

Aside from the environmental impact of commuting, employees spend a lot of time getting to and from work. Take that out of the equation and that’s more time they can spend on work.

“Our employees were losing quite a lot of time every day and, thanks to the chance of working in a virtual office, they no longer waste time commuting. Their moods have significantly improved as they can spend more time with their families or take breaks to help with some important chores,” said Denis Ristić, vice president of the global brands division of Catena Media.

The cons of virtual offices

Lack of physical space

The lack of physical space is naturally the most important downside and it is something that business owners have to include in their business plan. If space is something that will be needed later on, virtual offices might not be worth the upfront cost savings.

Although increasingly less necessary in today’s digital world, many businesses are not sustainable without a physical space. If you’re in a client-services business, having a physical location communicates a sense of permanence and professionalism that is hard to attain with a virtual office.

The nature of your business will largely determine if a virtual office is right for you. The future of work will most likely feature a hybrid of both virtual and in-person communication and, as a business owner, you’ll have to decide where you land on that spectrum.

Less community

Although remote work has its obvious benefits, diminished contact with co-workers can lead to isolation within a company. Face-to-face contact builds a sense of companionship and trust that is hard to replicate in a virtual office.

“Whether everyone is aware of it or not, we lose a great deal when we don’t bump into people or go out to lunch with them in person as happens in an in-person setting,” said Michal Strahilevitz, co-program director of the executive doctoral program in business administration at Saint Mary’s College of California. “It’s not just that socially you don’t get as close as we would if we worked next to each other physically, it’s also that humans are actually wired to want to be with other humans. There is a loneliness epidemic and when people are working from home, that exacerbates it, especially for people who live alone.” 

Team-building exercises, office parties and after-work social gatherings may seem unnecessary if your entire office works remotely. However, these activities can be great morale boosters and help build a sense of community within the workplace.

As a business owner, you can always decide to promote a culture of connectivity and interpersonal relationships, even if you opt for a virtual office. Scheduling the occasional in-person meeting or community gathering can be a good way to harness the benefits of a virtual office without sacrificing human connection.

Potential for decreased productivity

Although a virtual office may boost worker productivity, there is the potential for slacking. Many employees need the structure and discipline that a physical office provides to do their best work.

Communications may suffer if team members are emailing each other back and forth rather than having a direct conversation. If clear, actionable goals are not set and recorded it can be hard to tell if everything is running smoothly or if employees are cutting corners because they don’t have a supervisor looking over their shoulders.

Every employee is different and, while one person may benefit from telecommuting, another may suffer. As a business leader, you have to determine what is best for your team.

Increased employee burnout

Because there is so much flexibility throughout the day, employees may not realize how often they’re working, maybe even more so than they would be in an office, which leads to burnout.

“From a management perspective, fully remote employees tend to take less time off because they have so much flexibility in their lifestyles,” said Kristen Shea, president at Tribe Builder Media. “For example, they can work while traveling, arrange their work schedule for personal appointments, etc. To combat this, we regularly encourage employees to take PTO [paid time off] to ensure they are still taking time away to disconnect from work and have the breaks they deserve.”

Did You Know?Did you know
According to Zippia, 86 percent of those who work from home full time experience burnout.

Potential hiring troubles

Despite the pandemic being more manageable than ever, the fact is employees and potential candidates have become accustomed to remote work. Not only that but forcing in-office employment significantly decreases your access to talent.

“Hiring for a business that utilizes a traditional office can be challenging because employees have to be in relative proximity to the location, but a virtual office provides the ability to greatly increase your candidate pool,” said Greg Gillman, chief revenue officer at MuteSix. “If your business requires people with a specific skill set or is a niche industry, the amount of available talent will be limited if you can only hire from a general area or can be very expensive if you have to bring in someone from further away.” 

How to decide whether to have a virtual office

At the end of the day, it all comes down to the specific needs of your business. If you are looking for a cheap alternative to regular office space and don’t need additional physical space, virtual offices might be exactly what you are looking for.

“Speaking from experience, virtual offices can save a lot of money, so if your company is starting off on a low budget, then this may be the way to go,” said Alex Alexakis, founder of Pixel Chefs. “If your company is also capitalizing on workers’ skills and they are distributed all across the world, then a virtual office is once again the solution as you don’t have to limit your company to the resources you have available physically and can make the most of skills people may have in other places.”

It is easy to survey the current business landscape and see that, and there is no reason why your own business venture couldn’t benefit as well from a remote workforce. Consider what your business needs and how it will operate to determine whether this is the best option for you.

Shea recommends asking yourself the following questions:

  • Do you have the leadership infrastructure to support remote employees in the day-to-day operations and their career development?
  • How will a remote environment impact your customers and the customer experience?
  • Is remote work appropriate for every role or should you consider a more hybrid approach?
  • Do your employees want a remote model?

“Although most companies can implement remote work, developing the infrastructure and having a clear operating and management plan will be vital to your success,” Shea said. 

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Jennifer Post, Senior Writer & Expert on Business Strategy
Jennifer Post brings a decade of expertise to her role as a trusted advisor for small business owners. With a strong foundation in marketing, funding, human resources and more, she teaches entrepreneurs about the software and tools necessary for launching and scaling successful ventures. From email marketing platforms to CRM systems, she ensures businesses have the technological edge they need to thrive while also sharing best practices for everyday operations. Post's recent focus on risk management and insurance underscores her commitment to equipping business owners with the services needed to safeguard their businesses for long-term success. Her advice has appeared in Fundera, The Motley Fool and HowStuffWorks.
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