The ravages of recession are sending many small businesses from offices to the owners' homes as entrepreneurs seek to save on rent payments.
"We're seeing probably twice as many businesses doing that compared to a year ago," says George Cloutier, founder and chief executive officer of American Management Services, an Orlando, Fla.-based consultant to small businesses.
He and others see the move as a necessary step for many enterprises. "We believe this recession will be deep and long, so you should do whatever you need to do to cut costs viciously," Cloutier says. "That would include moving back into the home if it's physically possible."
Schroder PR, an Atlanta-based public relations firm, took the plunge. "A couple things came to fruition," says Jennifer Sheran, the agency's general manager. "Business was slowing a little bit and city taxes kept increasing."
In addition, "We realized that even though we spent much of the day sitting within shouting distance, we were constantly 'IMing' (instant messaging) each other anyway," she says.
Now the six staff members who were coming to the office all work from home. The company saves $6,000 per month in rent, parking fees and taxes.
Employees meet once a week at the business owner's home. "It has really gone great," Sheran says. The weekly meeting, which lasts four to six hours, replaces multiple shorter meetings, saving time.
"The team dynamic is great," she says. "There is more of a sense of ownership because no one is looking over your shoulder anymore."
Moving a business to the owner's home makes sense for some entrepreneurs, but not all. "There are businesses that can be moved into the home and enjoy the benefit of lower overhead and not suffer any consequences," says Eric Siegel, a small business consultant and lecturer at University of Pennsylvania's Wharton School. "But there are clearly instances where there's a trade-off. You gain in terms of reduced overhead, but lose in other ways."
Business imageOne problem is customer perception. "Rightly or wrongly, there's a presumption on the part of customers that a business run from home is rinky dink," Siegel says. "In some businesses, image matters."
One way to check exactly how perception will be affected is to ask some of your best customers. Find out if their thoughts of you will change, and if not, ask if their perceptions would change if they didn't already know you well.
At Schroder PR, clients haven't noticed any changes, Sheran says. "We told most of them we've gone virtual. Otherwise, they wouldn't see a difference. The phone system transfers automatically (from the old office number) to our own numbers, and we're probably more available."If you're going to hold a meeting with clients, you may want to rent a conference room so that you present a professional business image.
Schroder staffers generally meet clients at the clients' offices. And the firm found conference rooms it can rent for about $50 for four hours.