Rob Shelton had a problem. The young financial adviser had been renting a four-room office in Provo, Utah, but now he wanted to expand his firm's reach into Salt Lake City, where there were many more potential clients. But at the same time, he didn't want the financial burden of setting up a second office in Utah's capital.
So instead, Shelton went "virtual" with a company called Davinci Virtual, which sells access to office space all over the nation. For a one-time set-up fee of $600, plus an additional $100 per month, Shelton now has access to an sleek new office building about 10 minutes from downtown Salt Lake, just off highway 215, one of the city's main arteries.
Davinci provides Shelton with an office suite at 2825 East Cottonwood Parkway, which he can use whenever he needs to meet with clients. As part of the service, the name of the advisory firm Shelton works for, Central Bank Financial Advisors, is listed in the building's directory in the lobby. A receptionist named Alexa fields calls from clients, greets them when they arrive for meetings and collects his mail. When he has a client to meet, Shelton books a conference room for an additional $75 per hour.
Shelton now uses the virtual office in Salt Lake City about 30 times per month. The money he spends for these services is substantially less than he would pay if he had to lease a second office. The Web site salariesreview.com reports that just hiring an experienced receptionist in Salt Lake City would have cost Shelton $27,841 per year, or $2,320 per month.
Shelton says his virtual office has done just what he hoped it would: saved him money and helped win new accounts. It gives his advisory practice the appearance of success, but spares him the expense and headaches that come with running multiple locations.
"We are very cautious about the money we spend," Shelton says. "We are young, aggressive and in growth mode. I don't want to use capital on an empty office. I would rather use it for marketing."
Financial advisers, like other entrepreneurs, are turning to virtual office companies as a smart alternative to conventional office spaces. There are now dozens of companies providing virtual office services, says Jeff Landers, founder of Offices2share.com, which helps small companies find virtual or short- term offices. Besides Davinci Virtual, others include Regus, Synergy Workplaces, Premier Business Centers and Office Suites PLUS. With the recession raging, these companies are trying to capitalize on the downsizing/outsourcing trend.
So he began looking around at virtual office companies in his area. He visited a few locations, some of which felt too crowded or dingy. He ultimately decided to use Regus, where he now pays for a business address, secretarial help and conference rooms when he needs to meet with clients. Regus now owns 500 locations in North America and 1,000 locations around the world, operating in 71 countries. The cost? $2,000 per month.
Turner has ditched the old brick-and-mortar office altogether. "We are purely virtual now," he says. "It is working out perfectly for us."
Shelton expects a wave of financial advisers to follow his lead into the virtual world. "Advisers are now looking at their costs and overhead," he says. "Given this economy, they don't want to have unnecessary liabilities."
Regus offers many variations in its typical virtual office packages. Its basic set of services starts at $99 a month. This package can include a professional business address, local phone number and receptionist, mail collection and handling, and two days of private office access each month.
Or clients can opt for the more expensive version, starting at $225 a month, which can include 40 hours of private office access each month, unlimited access to Regus business lounges and cafes worldwide, and exclusive discounts on office supplies, shipping and other services. (For instance, clients receive a 25% discount when they rent a car from Avis.)
Utah-based Davinci offers services for fees between $59 and $799 a month, depending on the features chosen. Davinci claims it now has 4,500 clients--a 200% increase in just the last 12 months.
CEO Dan Manheim of Global Business Centers notes that the virtual office model makes good financial sense, in particular for small businesses that are just gearing up.
"By using a virtual office, you are saving 90% of your overhead," says Manheim. "And your company looks a lot more professional. This gives you a better chance to survive as your start your business."
Jeff Landers of Offices2share.com advises folks to do some basic, common sense homework before they sign on the dotted line with any virtual office company: visit the location, check out the conference rooms and speak with the receptionists.
Also, he says, be sure to find out how long the company's lease is for the property you want. While a Park Avenue address in Manhattan may seem attractive and impressive, it's entirely possible that the virtual office company won't have it for too long. "You want to know that they won't be forced to relocate in a short amount of time," Landers says.
In general, Landers, who himself is a financial adviser with Wachovia (nyse: WB - news - people ), sees nothing but growth for the virtual office industry. Financial advisers, in particular, he says, seem like a natural constituency.
"As a financial adviser, do you think a client would want to sit down with you at a Starbucks and talk about his personal finances, not knowing who is eavesdropping?" Landers asks. "If I'm talking finance, I want to be sitting behind closed doors or in somebody's conference room."
Antione Turner is president of El Segundo, Calif.-based Wealth Concepts, a small wealth management company with five advisers. In 2004, Turner says, he began to think about ways the boutique firm could save money. They were then leasing an office that was starting to seem pretty costly. The firm was spending $10,000 per month, when they added up the costs of the lease and administrative help. "It was starting to get expensive," says Turner.