In my career, I once served as the Chief Information Officer of a struggling startup. We were burning through $50,000 to $75,000 monthly, barely matching that in gross sales. Our survival depended on investors, who were becoming increasingly scarce, and the future looked bleak. After analyzing the numbers, I realized we could slash expenses by more than half by letting go of non-essential personnel and, more importantly, transitioning to a virtual office model. Initially, the executive team resisted, but I outlined the plan and the substantial monthly savings. After careful consideration, they agreed, and our company went virtual.
Following the difficult news to our employees, we closed the physical office. Each executive team member took essential files and equipment home. Critical employees received the necessary computers, software, and equipment. Before leaving the office, we implemented a virtual PBX phone system. Numerous providers offer these services online; GotVMail.com is one option we found to be cost-effective and reliable. Using a virtual PBX system maintains a professional image, similar to larger businesses with automated systems. Upgrading to a live receptionist is also an option. Incoming calls are routed to designated numbers (e.g., sales, support), and unanswered calls are directed to voicemail. These systems are remarkably affordable, costing us between $35.00 and $75.00 per month, including an 800 number. While everyone had personal phones, using them as ‘business’ lines drastically increased costs.
As the CIO, I relocated the computer servers and internet equipment to my home. I established a robust, non-business internet connection and ran our inter-computer network and website from there. We set up a VPN (Virtual Private Network) for secure internet connections, allowing seamless access to files and resources as if we were in a physical office. A password-protected FTP (File Transfer Protocol) site served as our central file server, ensuring secure and easy access for all employees.
For internal communications, we continued using phones and email. While virtual meeting software was available, we preferred meeting at restaurants for company-expensed meals.
Our business was now fully virtual, and our employees worked from home. However, we soon encountered a significant challenge. Employees were easily distracted by home environments, such as television and personal matters, impacting their productivity. Phone calls went unanswered, customer service suffered, and sales declined. I began to question the viability of the virtual office model.
In an executive meeting, we decided to address the problem or face closure. Our first step was a corporate meeting where we openly discussed the issue with our employees, emphasizing the potential job losses. Next, we restructured employee compensation. Base salaries were reduced, supplemented by performance-based pay. This shift focused on output rather than hours worked.
We also introduced software to monitor employee activity. Employees were required to log each completed task to receive payment. We implemented periodic checks to ensure accuracy. In some cases, detailed information, such as client selection or services provided, was required. Employees had to meticulously record their work in our database to get paid.
We generated reports on each employee’s performance for close monitoring. Some reports were accessible to all employees, while others were restricted. For example, the service team could view each other’s accomplishments, and the sales team could see sales figures (with customer information redacted). Senior employees monitored their subordinates, particularly voicemail responsiveness, creating a virtual supervisor system.
Everyone was aware of the level of scrutiny being applied. Although some terminations and rehiring were necessary, the system worked remarkably well. Sales and operations improved beyond what we had achieved in the physical office. Accountability was enforced across the company. Good work was rewarded with bonuses and promotions, while poor performance was penalized, potentially leading to job loss.
That startup continues to operate, though still faces challenges. I question the overall business plan, but the virtual office model has been exceptionally successful, exceeding my initial expectations.
Since then, I’ve observed a growing trend of businesses adopting remote work. A friend employed by a large temporary personnel agency now works from home full-time.
Given the available technology, running a business virtually, without a central office, is feasible and, in many cases, practical.