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Crain's Profiles Lateral Link's Virtual Office Model

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Crain's Profiles Lateral Link's Virtual Office Model

Nomads shut down offices for good

Save on rent costs as employees work wherever they wantSteve Garmhausen

When Simon Sinek told friends two years ago that he’d decided to close his company’s 2,500-foot office, they assumed the worst.

“Everybody thought I’d gone out of business,” says Mr. Sinek, who founded business consulting firm SinekPartners six years ago.

In fact, Mr. Sinek was just doing what he urges clients to do: challenging the conventional wisdom. SinekPartners, with four employees, is one of the growing number of small businesses that are doing away with their offices entirely. From the chief executives on down, the employees of these firms have adopted the ethos of the nomad, working at home, in coffee shops or anywhere else that suits their purposes.

“They have found that through technology, they can have a virtual presence regardless of where their physical presence is,” says Chuck Wilsker, chief executive of The Telework Coalition, a not-for-profit that supports innovations such as “no-workplace workplaces.”

The chief advantages of letting the lease expire are saving money and increasing employee satisfaction. Mr. Sinek explains to skeptics that SinekPartners is saving $3,300 a month in rent that it used to spend on its space on West 24th Street. In addition, employees value the freedom of not having to put in face time.

Never had an officeLateral Link Group, a three-year-old legal recruitment firm, started life without an office in order to save money, and it’s worked out so well that there is no plan to create one, says Michael Allen, a principal.

Small businesses that go the no-office route need plenty of technological savvy. Lateral Link uses a Web-based platform to guide job candidates from around the country through the job-search process. And its own employees—26 in all—roam around the country without missing a beat, says Mr. Allen. A cutting-edge phone system routes calls through the Internet so that callers ring multiple phones at the same time, for instance.

Electronic documents are shared through a proprietary system, and invoices are generated automatically. The automation and outsourcing have enabled the company to function without a billing employee or an IT department.

“I don’t need to have a file cabinet,” says Mr. Allen, whose company has annual revenues of about $5 million. “I have access to all the information I need to run the business from anywhere.”

Even small businesses that make physical products have found that they need little in the way of office space. Chokola’j, a maker of artisanal chocolates in Moriches, L.I., has a 1,200-square-foot production area. The office takes up all of 100 square feet of that, and owners Daniel and Susan Kennedy are in it just 5% of the time.

The question of where to meet with clients is one of the challenges of not having an office, but these small businesses say it’s a very minor one.

The Kennedys meet with clients at lovely local vineyards, where Chokola’j does a brisk business providing chocolates for weddings and other events.

In the clubMr. Allen meets with clients for lunch or dinner at the Harvard Club, which has locations all over the country. In addition, Lateral Link belongs to The Regus Group, which allows businesses to rent office space by the hour in buildings around the world.

Replacing the informal relating that helps build a team sense is tougher. For one week twice a year,  SinekPartners gets all four employees together to work in one place.

That one place happens to be the home of the company’s chief executive—a former Microsoft executive who lives in Seattle. Since the firm has no office, there was no point in limiting the company’s personnel by geography, says Mr. Sinek, who lives on New York’s Upper East Side.