Going Virtual: Small companies reap cost savings, employees save time

By Deborah L. Cohen

CHICAGO (Reuters.com) -- Julia Hutton's office is command central for a team of some 20 publicists working for Phoenix-based Orca Communications Unlimited LLC, the firm she founded in 2002, after years of doing in-house public relations work for corporations.

Yet unlike the offices of most of her competitors, Hutton's operates on a near-virtual basis. Her publicists stretch from Las Vegas to Tampa, each with a laptop computer and working from home. They have clear work parameters; they must be accessible to their clients and to each other during daily business hours and file weekly reports that detail measurable results of their publicity campaigns.

Her firm's track record stacks up against any of its rivals, she says, and indeed Orca's clients - primarily start-ups ranging from pet care to consumer products- are featured in national publications and on morning TV shows.

Face-to-face staff meetings take place infrequently in a small Phoenix office, where the firm also brings clients when conference space is required. Otherwise, interactions take place on the phone and through a flurry of emails that begin early in the morning and can continue late into the night.

Orca ran a deficit its first year and was leveraged against Hutton's credit cards and a second mortgage on her house; it now clears over $3 million a year in revenue.

"When I started Orca, I said: 'We're going to do this'," recalls Hutton, 63. She'd worked from home at various points during her career and had long ago embraced the freedom from long commutes, expensive dry cleaning and time spent on her hair and makeup.

"I also knew that when you start a company, you need to keep your overhead as low as possible," she says. "What better way ... than not to have office rent and computers, etc., etc."

The need to tighten budgets in a weakening U.S. economy may lend increased momentum toward going virtual, says Bruce Phillips, senior fellow with the National Federation of Independent Business Research Foundation. High costs for gasoline and energy are becoming prohibitive for smaller companies running on tight margins.

"The biggest driver of small firms is to reduce costs in any way possible," says Phillips, noting anecdotally that NFIB's members and suppliers tell him virtual offices are becoming more prevalent.

Joanne H. Pratt, a Dallas-based consultant who studies new patterns of work enabled by technology, says the Internet allows for widespread distribution of information about products and services with minimal expense, eliminating some of the cost barriers for start-ups.

In 2002, her firm did an analysis of government data and found some 904,000 home-based businesses employed staff, of which 63 percent employed one to four. One percent employed from 20 to 99 people, with a quarter taking in sales receipts of $250,000 to $1 million and 5 percent clearing more than $1 million.

"Technology has enabled this change," says Pratt, noting that many of the clients of virtual firms work at home, at least part of the time, too. "I think it's far more accepted."

At least one of Orca's clients, herself a home-based entrepreneur, says she has no problem with the concept.

"The price was right," says Missy Cohen-Fyffee, president of Pelham New Hampshire-based Babe Ease LLC (and no relation to this columnist).