How and Why Your Startup Should Go Virtual

Working virtually sounds like heaven to many startups. After all, not having a central office staffed with employees saves money on rent, utilities, parking, etc., freeing you to invest in research, development or marketing.

On the other hand, operating virtually is no panacea. Before you make the virtual leap, you need to figure out exactly what working virtually means to your business.

The concept of virtual work has many names, from telecommuting and teleworking to distributed companies and remote workers. And virtual companies can be structured in several ways:

1. Lead a distributed workforce, consisting of full- and part-time employees, independent contractors or some combination, all working out of their respective homes.

2. Operate out of an office space (either your own or shared). You allow your staff to split their time between working at the office and working at home.

3. Be the only actual employee of your company. When you need something done, you outsource it to freelancers and independent contractors.

Thanks to improvements in broadband and collaboration technology, the ranks of virtual workers are swelling. According to the latest (albeit a little dated) numbers from the Bureau of Labor Statistics, in 2010:

• 64.2% of self-employed and contract employees worked at home

• 25.8% of part-time employees worked from their homes.

Good for young and old companies

While it obviously makes sense for brand-new startups to begin virtually, the concept also works for existing startups that began life in more traditional offices. My own company – GrowBiz Media – did just that. We leased space for about 18 months before realizing we could save many thousands of dollars by working from our homes.

Even established businesses can benefit from virtual arrangements. Matthew Goldstein founded Idea Consulting about 12 years ago, but the company went virtual about seven months ago. The firm’s 53 freelancers and part-timers are now happily collaborating on a huge project, the EuraMedia 2012 summit, while scattered across the United States, the United Kingdom and Russia.

But Goldstein admits: “We are still making mistakes.” His biggest hurdle was finding high-quality virtual workers.“The majority of the people we found were not qualified and overcharged,” he explains.

Goldstein also found that, despite what the virtual job placement agencies he worked with (Odesk and Elance) promised, “There is very little accountability” when it comes to contractors. You may not be satisfied with the completed work, but since the placement companies get a commission, “they tend to always side with the contractor.”

So how can you make virtual work fly at your company?

“You must put in systems of accountability that replicate those of a brick and mortar office,” advises Goldstein. “There needs to be constant monitoring, incentives and penalties, and strict management.” Also key is finding the right technology to make your project work. “Collaborative sites like Basecamp are great for helping to engage workers and get them to collaborate,” says Goldstein.

Ask the Expert

Sara Sutton Fell, CEO and founder of FlexJobs, a website for flexible jobs, offers more tips for virtual startups:

• Plan ahead. If you want to take a physical business virtual, you first have to think about all the facets of your business and how you envision them continuing to run virtually. What will this change mean for outside stakeholders — clients and partners? How can you make sure the transition goes smoothly for everyone? Sometimes the best way to go virtual is gradually, transitioning existing staff to home offices [or adding contractors] in small increments, so that your clients and partners barely notice the changes.

• Think about the technologies (computers, software, services, phones, etc.) that are essential for working virtually. Security and usability are two big concerns for teleworkers. You want to make sure everyone can access important information securely and easily, using reliable technology. Sometimes [usually] your workers’ home computers just won’t cut it. If possible, provide remote employees with a complete suite of required hardware, such as laptops, monitors, scanner/copiers, webcams, microphones and more. If you use independent contractors, don’t give them equipment, it can raise questions with the IRS.

• Consider communication services. When you’re managing a remote team, it’s vitally important to keep everyone communicating with each other. This helps keep people on task, reduces feelings of isolation and boosts engagement. Employing a wide range of collaboration tools like Yammer, instant messaging (IM), email, Join.Me