In this episode, Toby Mathis, Esq., of Anderson Business Advisors, sits down with Mike Sullivan from Alliance Virtual Offices to discuss the evolving landscape of workspaces. Mike details five compelling reasons to abandon traditional office spaces, highlighting Alliance’s impressive 40 years in the industry, with 20 years dedicated to virtual solutions. The discussion demystifies the concept of a “virtual office,” likening it to the ‘Airbnb’ of office rentals. Listeners will learn about the array of services offered, including phone support, professional addresses, receptionists, and flexible meeting spaces—all for a budget-friendly monthly cost.
Virtual offices can mitigate risks associated with rising rent and personnel disputes, providing the flexibility needed for businesses to thrive. Ideal for those navigating talent needs or seeking cost-effectiveness, Alliance also offers rental agreements that start with a six-month minimum, transitioning to month-to-month options. Tune in to discover how virtual offices can transform your business strategy!
Highlights/Topics:
- Five key reasons to ditch your office space
- Alliance’s 40 years in the business – 20 years virtual
- Ambiguity – exactly what is a “virtual office”?
- The ‘Airbnb’ of office space
- Services available – phone number, operators, address, receptionist, meeting space, workspace
- Monthly cost of $50-$70 per month globally
- Rent on an as-needed basis, for example, attorneys are the largest percentage of renters
- Mitigating risk/credit – eliminating rising monthly rent, credit, personnel disputes or conflicts, separating business from personal
- Flexibility is key for hiring and cost-effectiveness
- Talent needs – if employees are unable to work from home
- Rental agreements – 6-month minimum, then month-to-month is available
- Utilizing space for private interviews
- Share this with new investors you know
Resources:
Alliance Virtual Offices Offer for Listeners
Schedule Your FREE Anderson Consultation
Tax and Asset Protection Events
Full Episode Transcript:
Toby: Welcome back. Toby Mathis here. Today we have Mike Sullivan from Alliance Virtual Offices. What we’re going to be going over is the five reasons to ditch your traditional office space. I’m not going to waste any time on this. Mike, what’s going on in the world of office space? And why should somebody who’s an entrepreneur consider ditching their office space?
Mike: There’s more than five reasons that we could spend hours, weeks, months on this topic, but there are five key reasons that you would want to ditch your office space. I think the cost, risk, credit, flexibility, and talent are the big reasons to want to ditch the office space. With all the things, technology, the pandemic, uncertainty about the future, there’s an unbelievable number of reasons to do this. We can start with cost if that’s where you want to talk about.
Toby: Yeah, let’s dive in. I’m an entrepreneur. I’m thinking about starting up a business. A lot of people would go out and they’d get commercial office space. They get the little cubicles, they’d start hiring people. That seemed to be turned on his head during the pandemic for sure, but I know you guys been doing this. How long has Alliance been around? You guys have been doing this a long time, haven’t you?
Mike: We’ve been around in one way or another for 40 years. I haven’t been in this industry for 40 years, but our company’s been around in various flavors. We’ve been doing this Alliance Virtual Offices business for the last 20 years or so.
Toby: Worldwide offices, thousands of offices, the top five. I know that you got Regis, WeWork, and Alliance. You guys are some of the big ones, right?
Mike: Correct, yes.
Toby: All right, let’s dive in. Somebody’s looking at this. How is it going to save them money first off?
Mike: First of all, have you walked in anybody’s office in the past five years? I walk in my partner’s offices. I walk in the law office downtown. I go to the mayor’s office. It’s always a ghost town. I don’t know where people are. Are they on lunch? Are they all on break? Where are they?
Toby: They’re at home.
Mike: They’re at home. Is that a good use of money? Is that a good use of money? Is that a good use of your, of your company’s first or second, usually the second biggest line of the balance sheet? Is that what you want to do? Spend money on unused office space with beautiful artwork, great furniture, and all this stuff? No, you don’t want to do that. I think it’s a huge financial burden. It is something significant on the balance sheet that you can get off the balance sheet. It’s a ball and chain.
Toby: Let me ask you this, Mike. When you say virtual office, this isn’t a pretend office, this isn’t a backdrop or anything. These are physical offices, but what do you do? You’re just giving access to somebody so that if they need to have a meeting, they’re able to do it? They can have a physical address, they have receptionist, they have those types of things? What are we talking about here?
Mike: There’s a lot of ambiguity around what a virtual office means, so I’m glad you asked the question. The way that we think about a virtual office is it’s an office with a commercial address, with a building that you’ve probably driven by a million times and said, hey, that’s a nice looking building, I might like to do business there. They’re sometimes in downtown central business district, sometimes in suburban office parks.
Usually there’s 30 to 50, maybe even a hundred offices that are for rent in, in those offices. What we do specifically is we work with the space owner. It might be a small coworking center or a large executive suite center. They’ve leased out the space and we offer the address. We offer meeting rooms. We offer private offices through our system to entrepreneurs and small businesses so that they don’t have to have sign a long term lease. They don’t have to put anything on their balance sheet.
Toby: Years ago I had your CEO, Frank Cottle on, where he predicted the demise of WeWork, by the way. It was pretty funny. We went into detail on that one and he was right. He said it was like an Airbnb for office space. You’re going out and you’re putting people who want to access space together with the people that have that space, and you’re putting a nice technological wrapper around it to make it really simple.
If I need a office and I know I’m going to need it once in a while, but I don’t know how often, I can make sure that I have that address. I have access to office space in that address for as little or as much time as I need it. If I need an office that I need 24/7, I can do that. If I need an office where I need it on a weekly or maybe once a month basis, I could do that. If I just need the address, I could do that. Is that accurate?
Mike: Yeah, that’s exactly what it is. The beauty of it is you can have an address, you can work from home, or you can work from some other office space, however you want to work. You can have that as your commercial address, where we will receive your mail. If you want to come by and pick it up, you can pick it up, or we can forward it. We can forward it to another address that you have registered.
We also have a receptionist who can answer your phone in your name. You can get just about any type of phone number you want, toll free, local in some other city. We have multiple numbers, and we have some AI operators that are coming online. If you want to have a live operator, you can have that, or you can have an AI operator.
Toby: Wow.
Mike: Yeah. That should be coming later this year or early next year.
Toby: What’s the cost, Mike? What is a typical? Let’s say I’m a real estate agent and something, and I know that I’m going to meet with people periodically usually at a home, but I need a place where I can meet with people maybe the first time, maybe to meet with a group, maybe to go through signings, or things like that. What’s a typical cost, just ballpark monthly amount that gets me a commercial office space?
Mike: The base cost for this would be $50-$70. Probably 80% of our locations globally are in that range of $50-$70 for the address.
Toby: A month, a year? What is it?
Mike: A month.
Toby: Per month? $50 a month gets me a physical office. Then what do I do? I pay if I need to use the office space by the hour or something like that?
Mike: Yeah, you can get a private office by the hour or by the day. That’ll range anywhere depending on what you’re looking for, $20-$30, $40 an hour. Sometimes we have really good rates for a full day or a full week.
Toby: Wow. That sounds like a pretty good deal. Let’s just say I’m a lawyer and I need to do depositions and things like that. Typically, I think I need to go get a 2000-3000 square foot office space and have cubicles for everybody. This might be a better solution. This might be, hey, if I need a space, I can reserve it for the deposition. Maybe I’ll reserve it for six hours, and now I don’t have to pay that monthly amount that I would if I had the overhead plus cams, plus all my utilities and everything else. That’s on the landlord, right?
Mike: We have so many lawyers. About 10% of our clients are lawyers. They are the most frequent users of our meeting rooms and private offices. A big portion of that is for deposition, so it’s a great use of our office space.
Toby: All right. Quite obviously there’s a cost benefit. I’m not doing a five year lease. I’m inflexible man, it stinks, I’m locked, maybe I really have to renew it for five years, I have to do a build out. I remember doing a build out in Summerlin, by the way. It was almost half a million dollars for 4000 square feet. These aren’t cheap.
You have these huge expenses, and I can do away with that and just use somebody else’s, and say, hey, you know what, you already did, it’s already got furniture, it’s got everything in there, I just want to use it and save myself a ton of money. All right, let’s go on. There were there was five things you mentioned there, and I want to go through them. We did cost. I think the next one you said was risk.
Mike: Yeah, risk. Who knows what’s around the corner? If you’ve got a lease, this is actually related to the cost. You’ve got a lease, you’re going to have an empty office all of a sudden.
Toby: All right. During the pandemic, you weren’t even allowed to come in there. But you didn’t have to pay your lease during that time, did you? That’s the seizures, right?
Mike: Yeah, absolutely. The risk is a big deal. There’s multiple factors in risk. I was talking a little bit about financial risk, but there’s also other risks associated with it. We can talk a little bit about the next form of risk, and that’s a credit risk.
Toby: I’m an attorney, so I’m going to just talk about another side of risk. I know you’re looking at this from a financial standpoint. Hey, it’s bad to have a five-year lease. Things could happen. You go out of business and you’re stuck with this thing, or you’re a guarantor on it, it could destroy you. We can avoid that doing the virtual space. But also, if you have people in a space together, if you’re a business owner, and one of your employees decides that they’re going to go out and start harassing people, touch people inappropriately, steal things, you have that type of risk too.
When you have an office space, you get to take that on. This sounds like I’m not going to have that so much. This is somebody else’s employee that’s sitting up there as a receptionist. If somebody says something inappropriate to that receptionist, I’m not getting sued for it, somebody else’s. Is that fair?
Mike: No.
Toby: But I can avoid it by doing the virtual office, right?
Mike: Yeah, absolutely. You don’t have the lease at that point. Your hands are free from that. One of the ways I think about it is before the pandemic, our industry, a lot of people didn’t know what we offered and why you would want to have a virtual office. People started businesses using their home address, using their personal cell phone number.
The good thing about after the pandemic, people started really learning and understanding the things you’re talking about. It was a topic of conversation that happened on the internet after that. What you’re talking about is one of them. Another thing is really understanding the idea of separating your personal assets from your business assets, from what you do.
Toby: I interrupted you, but I’m going to let you go back because you mentioned the credit side to it. This is a big one because if you’re going to be bankable, you’re going to have to make sure that you’re isolating out the business from the personal, right?
Mike: Yeah.
Toby: How does Alliance work in that?
Mike: If you’re working at home and you have your home that you pay your mortgage on, you have the deed, and all kinds of stuff, one of the last things you wanted to do is have your LLC registered to that home address and have your bank account for both your business and your personal registered to that home address. There are a number of things, and you can probably talk to those things better than I can being a lawyer and understanding Pearson corporate bail and things of that nature.
What we always encourage our clients is to not use a cell phone number ever to publish on their website, but use a virtual phone number from Alliance. That way, you can hide your cell phone number. You don’t have to have your cell phone number published anywhere so that people can get in touch with you. It brings a lot of privacy and security in that way.
The address, even more importantly, it separates your home, your financial security, your family from anything that could happen in your business. We talked about escaping the problems associated with a lease and all the legal liabilities of workplace inappropriate behavior. There’s also other things that people could come at your business for. If you have your business tied to your home address, it could easily be pierced.
Toby: I’m going to use an example. I have a psychiatrist friend who works with a lot of disturbed people, and the last thing he wants is people showing up at his home. He’s very, very concerned and wants to make sure that his house isn’t just sitting out there now. Law enforcement officers, people may not realize this, can get that protection and have their names not listed because they don’t want people that they’ve arrested to come find them and harass them. It’s happened in the past, it’s happened with judges. We’ve seen it.
It happens in regular business, too. Also, lawyers, when they target you, they love to serve you at home, get your personal address off of things. As a business, you do not want to have your personal address. It’s too easy to get around it. Alliance is just one solution. Obviously, you can use a registered agent office, which by the way, Alliance is a backbone of our registered agent service. We’ve worked with you guys for years and years and years to do that. You do a great job.
When you are applying from everything from business credit, all of that, if they see a personal address, and believe me, they’re going to check, if you’re trying to get business funding for your business, it’s going to show up in a US Postal Services, whether it’s a commercial address, blacklisted address, or residential address. If it shows up as a residential, you just nixed yourself on a huge amount of the business loans. You actually have to have a business address, physical address in your particular state. Alliance is one of the solutions.
I know you work with several of the larger business credit building companies as a service provider because of that, because that makes a huge difference. I don’t want to leave those ones lying around either. I want to make sure that we’re buttoning those up and that we’re doing it from the get go, if that’s what your intent is with your business, making sure that you do have a legitimate office address, commercial address that you can use for your business.
Mike: Yeah. I’m glad you brought up the part about the credit reporting. We have a lot of companies who come to us, because they’ve been suggested by people who are advising their business to get an address where they can build credit. One of the things that we do to enable that is we report to the credit bureaus on the business side so that when you start a business, you basically have zero credit. It doesn’t really have much to do with your own personal credit. You really have to do some things.
About 10% of our clients are in the transportation and logistics industry, and they want to buy a truck. They want to buy a fleet of trucks. They’re going to have a really hard time getting the money for an 18 wheeler or an Amazon style delivery truck based on their personal credit. They want to establish business credit.
Toby: I think we’ve hit three. We’ve hit cost, risk, business credit. Those are compelling reasons right there, but there’s more. There was a couple others. I think we said there were five.
Mike: Yeah. Flexibility is the next one. Flexibility is a bit of a soft reason, but it is absolutely key to hire people. It’s key to being able to be more nimble as a business and just to operate more cost efficiently. I’ll go ahead and bring up the fifth one and that’s talent. I mentioned in order to attract talent, oftentimes flexibility is key. In models that we’re seeing some companies use is that if an employee can’t work from home and they want to have a place to go meet with people, they can utilize one of our facilities on a more regular basis. They don’t have to do it full-time, it’s part-time.
Toby: A lot more cost effective. Maybe whether they in there for two or three days a week, two or three days a month, or a week a month or something like that, you could actually just use that tiny little bit of space in that location?
Mike: Yes, absolutely. If the business is in Houston, Texas, and you want to hire someone in Katy, Texas, you got to make that person drive in from Katy, Texas. They want to get out of the house some, and they still don’t want to drive to downtown Houston or whatever. We can provide something Katy forn them.
Toby: I’ve seen this. We’re one of them because we realized, during the pandemic as a company, we have about 500 employees nationwide, 38 different states. You still want to be able to get together with your folks, but you may not want them in every day. It’s becoming less and less where people will need to be in the office every day. It might be one day a week, it might be two days a week. This type of office space is way more flexible in our experience than doing these big, huge traditional spaces.
Now we have the big, huge traditional spaces. We had three floors in one office building prior to the pandemic. We had another building in Vegas. We actually had three locations in Vegas, and we didn’t need them. In pandemic, we got rid of the need for probably about half that space. They’re under five year leases, you have to wait for an expire, you’re still paying up the nose, and then you have to get rid of that stuff. This is an easy solution. Hey, if I need the space, I just scale up by adding more. Are these long term contracts that you’re entering into with people, or can they, 30 days notice, cut space?
Mike: They’re six-month agreements. After six months, they roll to month to month. We would like for them to be month to month, but then the prices would be a little bit different. We want to make it as affordable and as available to as many people as possible. To keep our prices low, we have that six month minimum.
Toby: Mike, that’s crazy good. Compared to a five-year lease, three year lease, at a minimum, maybe you get really lucky and you go year to year. You’re still having to renew with that landlord. There’s no such thing as six months and then month to month. I just don’t see it in commercials. You guys allow a lot of flexibility. That’s interesting.
I want to touch on something with the talent pool. It was a tough job market. Very few times in the history of this country have we seen unemployment so low. It’s tough and it’s a fight to get good people. The ability to go into other states makes a huge difference to being able to avail yourself to a greater talent pool. You might be in LA, and you’re trying to hire people in LA. It’s a different cost structure in LA than it might be in Indianapolis, for example, or South Dakota.
Mike: Exactly. Our company not only offers virtual office services, but we work in a pretty distributed way. We have some people who are in an office full time or nearly full time. A lot of people work from home and a lot of people have both. We walk the walk and we leverage our own facilities.
I have an LLC just because I need to understand what it is I’m selling. I want to have an LLC so I can see what everybody that I work with and works with me has to go through. I have an LLC and I have a virtual office where that company is registered. I receive all my mail there. I’ve got that.
We have an office in Fort Worth. We have an office in Henderson, Nevada. We have one in Monterey, and we have several others around the world. Those offices are our virtual offices that we use. In some cases, the one in Monterey, we have 65-70 desks, and most of them are utilized. We have some of them that are hot desks, meaning one day, one person’s at it. That person goes home the next day and someone else is in there. We really leverage things that we’re talking about.
We have really good utilization of that one office. However, it’s a really flexible agreement. If we need to be out, we can be out in a short amount of time. I don’t expect us to need to be out of that, but you never know what’s going to happen in the world.
Toby: It sounds like the epitome of flexibility. I want to talk about one last thing and then we could be done. I worked at McDonald’s when I was 16. I remember doing an interview. I was sitting in one of those little booths with somebody, and they were going through interviews right out there in the middle of the public. I was always like, wow, that’s a pretty not private. Are any of these companies now coming to you guys saying, hey, we need to make sure that we’re doing interviews not in a public space? There’s no privacy.
I remember sitting down and there was interview after interview with all these people sitting around. Some of you guys might be late. If I’m interviewing someplace, the last thing I want to be doing is sit next to somebody who’s got three kids and they’re doing the happy meal thing while somebody is asking me pointed questions, and I’m a little under stress. Do you have anybody that’s using you guys now for that?
Mike: It’s interesting you asked that question. We do have a very large company, one of the largest in the world, that has come to us and said, we want to provide a service to companies all over the world that need more flexibility in their hiring practices and deliver that. We’re actually working with them to provide that service.
Toby: It seems to make sense. That seems to be logical. I just remember doing that and I see everybody else doing it. Just this weekend, some places, some people get interviewed right out there in the middle.
Mike: I saw it at Panera Bread the other day.
Toby: I’m like, there’s got to be a better way. Come on, guys. Come on. The lawyers out there that are working from home, I don’t think they’re inviting people into their house. They’re probably doing it at Starbucks or something. Gosh, no. I’m in real estate. I see these folks. They’ll be in a Starbucks for two or three hours holding their meetings. I’m like, come on, guys. Get a space for other things, but I’m going to apply that to business now. Come on guys, get a room, get a room. Don’t do it out here. Get a room.
All right. That’s enough, Mike. How does somebody get a hold of you? Can I put your information in the show notes? How would you like me to do that?
Mike: You can always go to alliancevirtualoffices.com, obviously. We will put some links specifically for Anderson and to get the best pricing that we can give you all. You can hit that link and visit our website. That’s probably the best thing to do in the show notes.
Toby: Perfect. I’ll put that in there. Anybody needs that, they can reach out. In the meantime, you can like and subscribe to the YouTube channel and share this with anybody that you think would benefit. I really appreciate it. It helps that algorithm out. If you’ve had any experience with virtual offices, whether it be Regis, WeWork, or any of the others, put comments in below. Let me know what you thought of it, what were the good, the bad, and the ugly.
Of the five things that we talked about today, the five reasons to ditch traditional office space, what’s your favorite? Put that down in the comments below too. I love the comments and really appreciate it. Mike, thanks for joining us, and we’ll have to have you back on again soon.
Mike: Yeah. Toby, thanks a lot for having me. I appreciate it.
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