A virtual office is often seen as a more affordable means of running a business. And in post-pandemic times, a remote office can even be considered essential. But one question that you will likely have in mind when planning this is how much you need to spend on it. Here is a handy guide to planning your remote office budget and implementing it the right way.
What you save with remote offices
As has already been said, operating a remote office costs a lot less than having a physical office. A big reason for this is because you don’t need to pay for rent. For instance, if you have an office in San Francisco, you pay around $5.43 per square foot monthly. Even a small company with only a few employees can end up paying several hundred dollars a month.
With a fully remote office, you don’t have to worry about this since your employees would be staying at their own places. Even if you opt to run a central office, you will only need a smaller space to accommodate a skeleton crew.
Aside from rent, you also get to see a reduction in the amount you have to spend on equipment. Most notably, you don’t have to spend on furniture like chairs and tables to fill the place. Even smaller pieces of equipment like document trays and trash cans can add several hundred dollars to your operational budget.
Work equipment costs
With essential work equipment like computers, phones, and printers, the amount you can save by having a virtual office depends largely on what type of workers you employ. For regular workers on a remote working arrangement, you may or may not issue a work laptop, depending on circumstances. Freelancers, on the other hand, would be using their equipment, which reduces the costs more.
You also greatly reduce the number of auxiliary office equipment. For instance, you can cut down on the number of network printers in your main office since each remote worker will be using their own. This has an added benefit of cutting down your electricity usage.
The same goes for work-related software. Freelancers, in particular, will be using their own software. Other remote workers may use a combination of company-issued software and the ones they already have in their personal computers, like Microsoft Office. You do need to provide work-tracking software like Hubstaff or Toggle to monitor log times and task progression. But you can easily recoup the cost of these from the other savings you get.
Building your remote office budget
Now that you understand the savings and costs of running a remote office, you can start building your budget for it. The first thing that you need to think about is worker salaries. In a 2018 report, social media management platform Buffer noted that remote workers get paid less than their onsite-counterparts. This can be attributed mainly to the reduction of perks associated with physical commuting like transportation stipends and food allowances.
In an interesting turn, 40% of employees are willing to get pay cuts just to have the option for remote work. This provides you an opportunity to get more savings out of your remote office budget. The question is how much you can go in lowering their pay.
The cost of living in the areas where the employee will be working is one of the main factors that will dictate how much to pay them. People staying in San Francisco, with a monthly cost of living at around $7975, would want a higher pay than those in Miami (cost of living: $5200).
Many online tools will help you quickly calculate and compare the cost of living in different cities, such as NerdWallet and SmartAsset. Note that these might have some discrepancies between them, so you want to compare the results from each, as well as from official statistical data.
Industry practices will also dictate how much you will need to pay your remote workers. Fields related to medical practices and information technology, for example, are already well known for their high base pay. This gives you more leeway on how much you can cut for those doing home-based work. With other industries, you need to be careful about how much cut you do so as not to eat too much on employees’ paychecks.
Do note that paying remote employees’ salaries isn’t as simple as handing on-site employees their pay. You will often need to use other fund transfer methods like bank transfers or PayPal, which incur some charges. These charges become larger when sending money to workers located in other countries.
Hiring remote workers
The skill level is a particularly important consideration when hiring remote workers for your office. This isn’t just about how well they do the job but also how well they do it alone. Keep in mind that you won’t be able to physically check their work in progress and will have to wait when they submit it. As such, you want workers who will be able to deliver good results the first time around.
Additionally, you want remote workers who will be able to execute commands without the need for constant supervision. Much like onsite work, having to continuously feed instructions to workers can waste time and resources. And with remote work, this costs even more since you will need to use communication channels like phones.
Taking these factors into consideration, you would want to be willing to pay above the usual rates to attract good talent. This might seem odd since your goal with a remote office to save on labor costs. But the benefits of hiring skilled remote workers from the onset will inevitably outweigh their costs, giving you better returns.
Equipment for remote office teams
While we mentioned earlier that running a remote office will save you a lot on work equipment, you still want to provide your employees with something they can use. This makes their work easier and increases productivity. Note that your remote employees should be able to supplement these work equipment with their own to lessen the costs.
Image from Remote Office Tech.com.
Laptop
The laptop that you provide your remote employees should match the work that they do off-site. Graphic designers and video editors will need pricier, higher-end models that will be able to handle all the rendering work. But for clerical staff, you can go with budget models that have basic features for writing documents and sending files.
Work phone
The rule of thumb when deciding whether to issue a work phone to employees is whether they will be expecting a large number of calls. Those who are in customer and tech support would want to have a separate phone to divert such calls to. You can also throw in a good quality headset for them to use when handling calls through their computers.
Tech support
With tech support, you would want to have a dedicated line to your IT team for home workers. This way, they won’t be bogged down by onsite calls for assistance. The setup comes in at no cost but there are certain requests where your tech team might need to go to the remote worker’s location and assist them. In this case, you will need to shoulder at least their transportation costs,
Build your remote office right and increase your company’s productivity
The recent developments happening, like the COVID19 pandemic and increasingly heavy traffic in cities will likely push more companies to employ remote workers. By having a clear idea of the savings and costs involved, you can set the right budget for it and maximize efficiency. Get started early and you will be able to more effectively integrate remote workers into your company structure.