As the financial partner to growing marketing firms, we often find ourselves tasked with answering one all-important question.
How can marketers in today’s competitive landscape boost profit margins without sacrificing quality or employee happiness?
There’s one answer we keep coming back to: ditch the office. I know, I know!
Since the days of glamorous high-rise offices along Madison Avenue, it’s been taken as fact that the most successful agencies have fancy, physical offices. Where else can potential clients be wooed with pretty graphics and exciting sales projections?
But as the marketing world has gone digital, the necessity of a physical office location has diminished. This leaves an enormous opportunity for cost-conscious marketers to reduce expenses and, in turn, increase profitability. By how much, you ask? Depending on the size of the company, office space and related costs account for between 6% and 11% of total business expenditure.
For large companies, the savings can be enormous. Insurance goliath Aetna estimates annual savings of $78 million from its remote workforce of 14,500. Even for smaller businesses, rent can eat up a significant chunk of operating capital. Assuming that each employee requires 150 square feet of office space and an average cost of $2.75/sqft per month, a 5 person team will run your marketing firm’s rent to over $2000 per month.
That’s $24,000 per year that could be spent on acquiring more clients, boosting employee and contractor salaries, or stashed away for a rainy day. This figure is not likely to decrease anytime soon, either. In the nation’s largest metro areas like San Francisco and New York City, commercial rents are increasing by the high single digits year over year, making it more and more expensive to field a physical location.
The high cost of a physical office isn’t news to anyone who has held their nose and paid the office rent every month. The real question is...
Is Going Remote Practical?
More than just convention has kept the vast majority of businesses in a traditional, physical office location. Transitioning to a remote environment raises a host of other questions that must be addressed as well. What if employees working from home don’t actually spend their time working, but instead are distracted by all of the creature comforts of their most familiar environment?
Furthermore, what about all of the ‘creative juice’ that coworkers sharing a physical space benefit from? Will the water cooler conversations that lead to new ideas and innovative solutions disappear in a remote environment?
Research has repeatedly shown that these fears are largely overblown. One collaboration between Harvard and Stanford researchers found a 13.5% increase in productivity from remote employees compared to their on-site coworkers. That study is by no means an outlier. Major corporations like AT&T, Sun Microsystems, and Compaq reported similar findings.
The benefits of working from home aren’t just limited to productivity, either. Employees with the ability to work remotely also report lower stress levels and are less likely to change jobs. Retail giant Staples published a study that found work from home employees are both happier and healthier than their in-office colleagues.
What’s the Catch?
Working from home is not a cure-all, though. The same Stanford/Harvard study mentioned earlier also found that people who work from home are less likely to be promoted than their in-office counterparts. For small businesses with only a handful of staff, this can be easier to counteract than for larger companies, where an “out of sight out of mind” mentality can affect work from home employees’ chances of promotion.
There is some credence to the water-cooler conversation question. After all, one of the greatest benefits of having smart and hard-working employees is that, when given the opportunity to collaborate, they can find and execute solutions to problems. A remote work environment can make it difficult to recreate the type of inter-team collaboration that leads to progress.
The right software stack can go a long way to recreate some of that in-office collaborative magic. Tools like Slack make it easy for coworkers to communicate more quickly and fluidly than email, while Google Hangouts and Zoom both allow for easy, one-click video conferencing at high quality. Slack even recently released an update that allows for in-app audio calling; don’t be surprised to see in-app video conferencing entering the fray sometime soon as well.
Communication platforms like these coupled with workflow management tools such as Trello, Asana or Basecamp (more on these later) can make it easy to keep remote employees working in concert.
The Bottom Line
Transitioning to an all-remote office isn’t the right decision for every company. But as technology advances and office space becomes more costly and technology gets better at facilitating remote work, it is turning into a viable option for many small businesses. This is especially true for boutique and small marketing and advertising agencies.
The productivity boost, employee happiness and retention, and dramatic cost reductions make it a proposition worth considering seriously.