How Virtual Offices Work

Your office is wherever you are. With the technology currently available, you can conduct business from almost anywhere. Tom Werner / Getty Images

Are you starting your own business and need to save cash? Do you want to test the sometimes turbulent waters of the business world first before you sign a lease for office space or get a mortgage for a building? Does your business lend itself well to operating in a virtual environment? Are your employees willing to work from their homes, cars, or other moving targets? Or, do you simply think the environmental benefits are reason enough to consider a virtual work space?

Whatever your reasons, we will guide you through some of the issues you have to deal with when setting up a virtual office. We'll also discuss some of the advantages and disadvantages of operating solely in cyberspace. Let's start with where your work will get done.


But where will you do your work?

Technically, your office is wherever you are. With the technology currently available, you can conduct business from almost anywhere. Your office could be in your home, in your car, in the airport, on the beach, or even on a mountaintop. In typical situations, your office will be based in your home regardless of whether you travel or not. If this is the case then you need to have a good setup. This includes a quiet location away from the distractions that being at home will always have. These include the refrigerator, TV, children, lawn work, dishes in the sink... you name it. It can be a distraction.

If you want to make it work, you have to have discipline and you have to make your office a designated work space -- even if it is in your bedroom or the kitchen. Put it in a place where you like to be. If your basement is dark and dreary, it's likely you're not going to enjoy working there. Bottom line... use the room that will be most conducive to getting work done.


First impressions mean a lot

But, what about your business address? If you're running a business from your home, you probably don't want your home address used as the business address. Depending on the type of business it is, it may just not give the impression you need. In this case, you have a two options. You can rent a post office box, or you can use a CMRA (Commercial Mail Receiving Agency) mailbox service that gives you a corporate-sounding address and a suite number.

Each option has the drawback of requiring you to go somewhere else to get your mail (although there may be services that will deliver your mail to you). Post office boxes have the additional drawback of not allowing you to receive packages because couriers won't deliver to a P.O. box. If you use a service that gives your business a suite number (actually, just another name for a box number), you can receive packages. You also have 24-hour access and can request notification when a package has arrived.

Visit How Setting Up a Home Office Works for additional tips and information about setting up your home office. Next, we'll talk about the equipment and furnishings you'll need to help your virtual office function just as efficiently as a traditional office space.


Virtual Office Setup

If your work involves traveling to client locations or other places away from your home base, you should probably consider buying a laptop computer rather than a desktop system. With a laptop you will always have your files with you and won't have any of those embarrassing moments where you left an important document at your office, because...well, your office is with you. While a laptop may seem a bit cumbersome to always travel with, there are many lightweight models out there that are very powerful. Just make sure you get a good carrying case that has a shoulder strap and room for your hard copy documents.

If always working from the keyboard and small screen of a laptop doesn't appeal to you, there are other solutions. Yes, they've thought of everything! To make using your laptop more efficient in your home office, a docking station can be set up that you can simply plug your laptop into. Docking stations make it easy to have a standard monitor, keyboard and mouse, printer, fax machine, scanner, and other peripherals always hooked and ready to use. By plugging your laptop into the docking station, you are able to use it just like a standard desktop system, and you won't have to worry about transferring or synching files to another computer.


If you do not travel, or if you do not need access to all of your files while you travel, you can just get the traditional desktop computer system. Make sure you have plenty of hard drive space, memory for running several programs at once, and a moderately fast processor. If you're doing graphics work (anything involving photo images, illustrations or animations) you'll need a much faster processor and as much hard drive space and RAM as you can afford.

Other equipment and hardware options you might consider include:

  • A black and white 600-1200 dpi laser printer if your final documents require crisp, high quality black and white output. Laser printers also provide the fastest output, so if you know your volume will be high you should also consider a laser printer.
  • A color laser printer if your documents need high quality color illustrations, photos, or charts. These are quite expensive so make sure you compare the print quality with a less expensive ink jet printer.
  • An inkjet printer if you need good quality text, color charts and graphs, or photos. With ink jet printers, the paper that is used often makes the biggest difference in the print quality. Get paper that is best suited for the job you are doing. Also, try to get a test print from different models to compare quality before you buy. Ink jets can provide very good quality but are not as fast printing as laser printers.
  • A fax machine if you will need to fax paper documents often. There is also the option of online faxing services such as E-Fax.
  • A scanner if you will need to scan documents or photos. You can also use a scanner along with e-mail or fax software in place of a regular fax machine.
  • A CD burner (CD-RW) if you need to provide clients with large files electronically, or if you want to back up your files on CD. There are many business uses for a CD writer, not to mention the ability to make your own music CDs.
  • A DVD writer (DVD-RAM) if you need to provide clients with extremely large files, such as video, electronically.
  • A removable media storage device. Iomega™ offers the most common drive of this type, called the Zip™ drive, but there are many others like it. Data is written to the disk just like it would be to a floppy diskette. The difference is the amount of data that can be written. Currently, there are 100 Mb and 250 Mb disks available for the ZIP drive. Iomega also manufactures Jaz™ drives that use disks that can hold up to 2 Gb of data.
  • A modem for accessing the Internet, faxing electronically, and e-mail. This can be either a standard modem that you use with your existing phone lines for dial up access, a DSL modem that also uses your phone line but does not tie up your line, or a cable modem that uses the same cable your cable television is hooked up to. DSL and cable modems are for broadband Internet access and require special connections.
  • A digital camera if your work requires photos for presentations, reports, a web site, or other documents. While you can also use a regular camera and scanner to get digital photos for documents, you may find the immediate access you get with a digital camera more efficient than waiting for film to be processed and printed. The quality of the digital image is still somewhat better with actually photos that are scanned, but for most business applications digital cameras produce sharp enough images. Images for use in marketing materials may need to be of higher quality.
  • A multi-purpose scanner, fax machine, copier, printer if your space is limited and quality not as critical. Keep in mind with this type of equipment, however, if one part of it stops working you'll be without the other functions until it can be repaired!

For obvious reasons, mainly because equipment in the technology world changes more often than some people change underwear, we'll not go into the technical specifications for the computer equipment you'll need in your office.


Virtual Office Software

On the software side of things, there are several options for you to consider. If you work independently and do not have others that you need to coordinate with then fulfilling your software requirements is not so difficult. Here are some categories of software you may need along with links to some of the most popular packages:

Many business applications come packaged in "suites" that provide all of the above product categories and then some. Some of the more popular packages include:


Many programs also have less expensive "light" or "limited" versions that may work for smaller businesses. They are also usually available for both Windows and Macintosh computer platforms.

Group software needs

If you are working with others, and have the need to coordinate scheduling, access central files, maintain a contact manager, meet in chat rooms, etc. then you have more of a challenge. There are programs available, such as ­Lotus Notes or Novell Groupwise, that provide these types of features as a software solution. These solutions may require quite a good bit of computer knowledge and an IT person to manage the system.

As an alternative, there are also online management services that provide these types of services on the Internet for access with your browser. These are fairly simple to use. They offer many features to promote coordination of information between members of a team, client interactions, or simply communication and file-sharing with co-workers. They typically charge a small monthly fee per user, or a larger flat rate for unlimited users. Some include free limited versions, however. Below are some of these services available on the net:

Your software needs will vary greatly depending on the type of work you are doing. Check with similar businesses or your industry association to find out what programs are preferred by your peers.

Don't forget about shareware too. There are a lot of great programs that may perform all of the tasks you need without the high price tag. Check out Tucows or ZDNet for shareware and freeware reviews and downloads.


Other Equipment to Consider

In addition to computer equipment and software, you'll also need a good telephone. Caller ID helps by allowing you to screen out telemarketers or other calls you can't take at the moment.

A surge protector is necessary not just to give you additional outlets for your computer and its peripherals, but to protect your equipment.


You'll need a desk with plenty of workspace. It should have space for a computer, as well as room to spread out paperwork if necessary. A corner "L" shaped desk works well for this. Make sure the desk has a large keyboard tray that can accommodate your mouse pad and mouse, as well. Many computer desks don't have large enough trays. Don't forget about space for your printer, scanner, fax and other equipment.

Shelves, cabinets, and file cabinets are also necessities that help tremendously by utilizing vertical space and keeping things organized. You may also be able to use the tops of these shelves and file cabinets for your printer, scanner, fax machine, etc.

Also, don't forget to invest in a comfortable chair that offers good back support. It should have as many adjustable parts as possible to help it fit your body. Arms on the chair will also make it more comfortable, particularly if you will be doing some work other than that on a computer. For more information on setting up your home office visit's Home Office Furniture page.


Virtual Business Communication Tools

Communications today are drastically different than they were even 15 years ago. E-mail has become a way of life and the only communication method you may have with some people. If you think about how you communicated in business in 1985 as opposed to how you communicate in business now, there's no comparison. You probably used your office phone, and... well, there wasn't a heck of a lot more back then... maybe a telex machine. Shortly after that, however, fax machines began to enter the market, then car phones and e-mail hit the scene. Things changed very quickly after that. As technology advanced, the expectations of the amount of work produced also advanced. Now, we produce a lot more work a lot faster and expectations of higher productivity continue to climb because technology is enabling us to do it faster.

With technology advancing so rapidly and workloads increasing along with it, the desire to work from home and alleviate some of the stress that comes along with commuting, juggling family life, etc. has also become very strong. In that respect, the same technology that took away our freedom is also allowing us more freedom than we've ever experienced ... well, except for back before technology forced us to work so hard!


So, what does that have to do with communications and how we can communicate in a virtual business environment? A large part of work in any business is tied into communications of one type or another. If you can communicate effectively you can work more effectively. Take advantage of the technology available for communications and use your new found freedom to take back some of your life. Here's how...

  • With a simple cell phone you can go to your child's softball game without fear of missing an important call.
  • By using wireless web technology via cell phone or a Personal Digital Assistant, you can go the grocery store while you're waiting on that e-mailed file that needs your approval before it can be submitted.
  • With a virtual assistant or readily available office services, you can work from your basement but have a professional address, and a receptionist answering your calls.
  • With video conferencing you can communicate face-to-face with clients or co-workers across the country without ever leaving your city.
  • With teleconferencing combined with Internet presentation software, you can communicate with several people in real time while you're all viewing the same presentation from locations around the world. Sonexis offers these tools.
  • Using web hosted office tools you can perform scheduling, send files, communicate via chat rooms or instant messaging with co-workers, or clients.
  • In custom chat rooms or with instant messaging, you can have a discussion with several people from different locations and in situations where you can't necessarily talk.
  • Via web conferencing you can hold live interactive seminars, meetings, or other get togethers.

So, as you can see, communications in any office environment, whether virtual or not, are now quite simple and possible from almost anywhere. Don't forget, you also have the old standard, wired, corded, telephone you can use.


Setting up an Internet Connection

All of this hardware and software won't do you any good if you don't have a connection to the Internet. Your best bet is a broadband connection if you can get access. The term broadband just means a high bandwidth technology like DSL, or cable that allows you to send and receive files, sound, and video over a single connection.

If you can get cable in your home then most likely you can also get a cable modem and Internet access. DSL uses your standard telephone line, but requires that you be located relatively close to the provider's central office (in some cases 3-4 miles). Check with local providers to see if DSL is available in your area. Many providers offer online tools that simply require you to enter your phone number to determine if service is available at your home.


If you live in an area without cable or DSL access, you still have the option of Internet access via satellite. These systems offer fast connections, but require satellite dishes and receivers as well as special modems. Click here for more information about satellite Internet access.

If you do get an "always on" broadband connection then you also need to put in a firewall. Read our article about How Firewalls Work to get the skinny on protecting your files from hackers.

Regardless of the type of connection you get to the Internet, you will need an ISP (Internet Service Provider). In addition to access to the Internet, your ISP will give you an e-mail address, and possibly 5-10 Mb of free space for a website. You can also get additional e-mail addresses from sites like HotMail or Yahoo or Excite. These are free and the advantage of having one is that it doesn't have to change if you change your ISP. You can keep the same e-mail address and have the mail from that address forwarded to any other e-mail account you wish. It simply eliminates the process of sending out notices to all of your contacts that your e-mail address has changed. If you have an e-mail address from your company that you use for business, it is often a good idea to get a separate e-mail address for your personal e-mail.

If you need to connect multiple computers in your home, read our article about How to Network Your Home.


What about client meetings?

Meetings with clients can't always take place in cyberspace, or at the client's location. When you are faced with this situation, rather than having the client come to your home (assuming they are in the same city), look into executive suites or hotels that offer space that can be leased for short periods of time. If you own your own business and this is a common occurrence, you may want to consider leasing an Executive Suite that provides you with a receptionist, voice mail, e-mail, and other services, along with time-limited access to private offices, a reception area, and a meeting room. If you don't need this type of arrangement on a regular basis, you can also rent spaces on an hourly basis at a fairly reasonable rate.

For example, using, a meeting room at The Blake Building in Washington, DC with a seating capacity of five, reserved for three hours would be $75. A room for 15 for the same amount of time would be $120. These types of services can often be reserved online and maps, written directions, contact information, photos and information about additional room needs is also provided.


Of course, there are also always the other standard meeting place options that include hotel lobbies, restaurants, golf courses, etc.

The Cyber-assistant

Back in the good old days of corner offices with big windows and a secretary outside your door, you knew exactly how to get the administrative part of your work done... your secretary handled it. But what do you do when you don't have that office or that secretary outside the door? The answer is simple, in a virtual office, you get a virtual assistant (VA).

Just go to your favorite web browser and type in "virtual assistant." You'll find many links to sites that are built, managed and maintained by those people who used to sit outside your door and help you manage business.


These assistants can do just about everything their predecessors did. (You will have to get your own coffee!) They can provide services on an as-needed basis. Or, if you prefer, you can contract a specific amount of time each day, week or month. By using e-mail, fax, and other electronic technologies, you can get work in and out just as quickly as before. You pay only for the time you use rather than paying someone to sit idly at a desk during slow periods. Many of these VA's also offer after-hours services. There is even a Virtual Assistant University (AssistU) that offers 20-week courses for Virtual Assistants and awards degrees and certifications at both basic and masters levels. The program has received very good reviews.

What should you look for?

Aside from the flexible work hours and the reduced cost involved, the benefits of using VAs also include the wide range of skills you can find. Although the AssistU defines a Virtual Assistant as a person that provides long-term administrative support for clients, you'll see many people referring to themselves as VAs and offering skills ranging from basic data entry to web design to accounting. Make sure you see samples of their work and speak with references. When you speak with their references, ask not only about the quality of the work, but the also about the speed and accuracy.

With these VAs being entrepreneurs themselves, you'll also find that they may be pretty savvy about new ways of getting things done more efficiently in a cyber-environment. Look for innovative ideas on their web sites, and effective layout and formatting of the sample documents they provide you. Also ask the references you speak with if the VA has offered any good ideas for improving the work process.


Setting virtual office policies

If your business has employees all working from different locations telecommuting to your "virtual office," you should consider writing some home office guidelines. This will help standardize the capabilities of each worker, ensure compatible workflow throughout your system, and help you manage your employees in cyberspace.

Consider these issues in your guidelines:


  • Home office location -- Urge workers to set up their home offices in a separate room that will allow for uninterrupted work.
  • Home office equipment -- Provide or specify (depending on the situation) the minimum computer systems necessary for your workers.
  • Computer software -- Standardize the software programs used so files will be compatible and collaboration on documents will be possible.
  • Procedures for system logins -- Keeping track of who is accessing central databases and when may help you manage security, as well as your staff.
  • Procedures for submitting time-sheets
  • Accessibility requirements during regular business hours -- With the flexibility of working from home offices, you and your employees will find yourselves often working odd hours. Don't let this freedom prevent you from be accessible to other workers or your clients.
  • Procedures for forwarding calls or e-mails when workers must leave the office during business hours
  • Protocols for client interactions -- This should include e-mail protocols (since we tend to use less formal language in e-mail), traditional correspondence protocols, meeting place protocols, and any others that might come into play in your business.

These guidelines may not need to be formally printed and distributed, but there should be at least some thought put into the standards you want your employees to be aware of and follow. With regular communication and open invitations to employees for suggestions that can bring about improvements your business can not only succeed, it can thrive.


Legal ramifications of virtual business

From a home office standpoint, there are several legal issues to consider. First, is your home in an area zoned for business? What type of business can you operate from your home? Check out your local zoning ordinances to make sure you don't have to get any special permits or licensing, or have any restrictions on what you can do from your home. For example, if your business requires clients or customers to come to your home then parking may be an issue. Check it out before you get too far into things.

There are also the obvious tax issues of operating a business (or simply working) from your home. If you want to claim a home office, the IRS has stiffened the requirements to the point that you can't use that space for anything other than your work. So, if you're working from your dining room table then you probably can't take that home office deduction. There are some exceptions (like for home childcare, etc.), so contact your tax accountant or attorney to find out the law as it pertains to your situation.

What are the advantages and disadvantages?

While the advantages of working from a home/virtual office may seem obvious to you -- more freedom, more flexibility, the opportunity to be at home with your kids -- there are probably even more benefits that you haven't thought of. Here are a few.

  • Environmental benefits from not driving a motor vehicle in slow-moving traffic and polluting the air
  • Reduction in traffic congestion
  • Reduction in stress levels from not having to drive in congested traffic to and from work
  • Time saved not commuting to an office
  • Monetary benefits from savings in gas, wear and tear on your car, business clothing, and lunches out
  • Benefits from being able to manage your time more effectively
  • Productivity benefits from being able to work when you are most productive
  • Health benefits of being able to eat a better diet that includes less fast food
  • Opportunities to get physical exercise when needed mentally
  • Reduced stress benefits
  • Benefit of living a more balanced life
  • A more relaxing work environment
  • More opportunities to hire part-time or contract workers
  • A larger pool of employee applicants because location isn't as important


  • Lack of face-to-face communication increases chances of miscommunications or misunderstandings
  • Technical difficulties hindering communications or work progress
  • Feelings of separation or disassociation among employees
  • Less camaraderie among workers meaning possibilities for less cohesive work teams
  • Problems separating your free time from your work time because your work is always "there"
  • Less convenient to run errands at lunch time
  • Feelings of isolation if you are always home alone
  • Lack of support - both administrative and managerial

These lists can certainly go on. Your job is to identify the disadvantages that apply to your business and turn them into advantages. Seek outside assistance if you need it. You may need the knowledge of a professional, especially initially, to really make this work. Through good planning, communication, and outside technical support when needed, your virtual office can succeed and help foster future virtual businesses.