Should you consider a virtual corporate office?

 
June 21, 2010 | by Jason Rummer
Each year, we set goals to economize and lower costs, improve communication and opportunities for organic and planned growth, and create more cash flow. Here's a terser dynamic: There are less customers spending money dining out, and investors still expect positive financial year-over-year growth.
 
One radical solution to consider is to "go virtual" with your corporate office. 
 
While this would be a huge change in operations for most, it might be a viable solution for you to achieve your goals in this ever-evolving world.
First, let's dispel some of the common arguments against the move.
 
 
For many companies, the "corporate" office is a masthead; a structure, a vehicle for communication that creates a feeling of success and permanence. Additionally, it can be considered as a tool to consolidate support operations (such as finance, franchising, supply chain management, marketing, talent management/training, etc.) so as to provide easy access and communication to the field. But, it sometimes can become something else that is not quite so productive. Ask yourself these questions: Does our field staff spend more time than they should in the office (instead of being in the field, or interacting with franchisees)? Is my office a conduit for rumors, office chatter, wasting of time, and possible misunderstandings?
 
Unfortunately, the answer might be yes to some of the above. If so, let's talk about change.
In fact, the world we live in today does not require that a "corporate" office be maintained to create security or an essence of permanence. These can be achieved by projecting how many stores or franchises are profitable, the overall tenure of company staff and franchises, and the growth potential of the niche or segment. In other words, the bottom line is the bottom line. The argument that the purpose of the office is to impress potential franchise candidates, bankers, and rising stars in your company can be downplayed by placing focus on where the revenue is actually generated, not collected.
 
Another point to consider for change is that a corporate office could be considered as restrictive in nature by younger staff members. This generation has been raised on computers, spending time on the Internet in coffee shops -- and now we expect them to be in an office 8:00 a.m. to 5:00 p.m. each day?
 
Now for the specific upsides.
 
Web-based video conferencing makes an office as a place to operate from almost obselete. To paraphrase Tom Peters ("In Search of Excellence"), "one of the best management tools to employ, is one where executives and managers interact/interface with the team on the floor and in the store."
 
"Management by wandering around," as Peters calls it, enhances communication, awareness and understanding, which lends itself to high-quality informed leadership.
But perhaps the most primary reason for "going virtual," as mentioned, is for the savings. Consider this:
  • Office rent is typically 6-8 percent of revenue. More in large markets. Heck, I have paid $20,000 to $30,000 in rent a month for an office. An additional 8 percent to the bottom line can make a huge difference!
  • Phone operating systems, T1 lines, and miscellaneous telecommunications equipment to be serviced/managed all contribute to increased cost. Many tech-savvy executives and middle managers already own their own communications equipment.
  • Leaseholds, tables, chairs, printers/copiers, etc. all represent office dollars that could be possibly better spent elsewhere and maybe save a few trees too. Miscellaneous costs: paper, pens, cleaning supplies, office parties, etc. do add up throughout the year. Your workers will likely not expense these items – at least, not the "new worker."
  • A virtual-based office will have less overall labor costs.

So, how do we start to go virtual?

  • Get a website that is interactive (an intranet) for your franchise partners and company staff to use.
  • Network your staff through instant messaging (IM) with any of the FREE public services (Yahoo, AOL, and MSN) that are available.
  • Research access to space to use for impromptu meetings that can be done for free.  Suggestions include your accountant's office, marketing agency, food distributor, and or a community college. One of your restaurant's party rooms also works well.
I won't say that converting to a virtual office is the most easiest and convenient way to operate a company. But it does make a statement that your company is a "lean operating machine" that could offer a larger residual overall benefit. Your banker should love it!
 
Jason Rummer is a 30-year restaurant chain executive with experience in development, operations, and marketing with two national and three regional pizza chains, and has also provided consultation to a number of small companies. To find out which ones, visit him on LinkedIn.

Topics: Business Strategy and Profitability , Commentary , Financing and capital improvements , Going Green , Operations Management , Telecommunications


Jason Rummer / Jason Rummer is a 30-year restaurant chain executive with experience in development, operations and marketing with two national and three regional pizza chains, including Papa Murphy's.
View Jason Rummer's profile on LinkedIn

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