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Hanging your shingle - How to avoid those crushing office overheads


The majority of new businesses crash out at the early hurdles. An entrepreneur can have a world-beating product or service, and yet not be able to afford an efficient secretary, secure a respectable business address, or set up efficient communications. Then again, the venture might simply be sunk by hefty office rents.
Two tricks to taming these obstacles are serviced offices and virtual offices.

A high-end serviced office is a fully furnished office with state-of-the-art IT infrastructure, meeting rooms and a professional support team.

“You can be operational immediately, leverage off the infrastructure already in place, and share costs with other tenants,” says Olga Vlietstra, Japan general manager for serviced and virtual office facilities provider Servcorp. A serviced office is especially valuable in Japan, with its stringent real estate practices requiring significant capital investment, long-term commitments and guarantees, she points out. “For a business of one to 10 people, it will save about 60% in running costs compared with leasing your own office,” she says.

Then there is the virtual office, described by Vlietstra as “basically everything but the office”.

“This is ideal for those who need a great business presence, without the price tag of a physical office,” she says, adding that even when employees can work from home or are constantly on the road, a first-class address on the website and business cards is still critical for the company's image.

With a virtual office, the business gets a local telephone number, calls are professionally answered by a bilingual receptionist, and mail can be forwarded.

“You can use a secretary to assist with business documents, presentations or translations,” says Vlietstra. “A shared office or business lounge, with Wi-Fi, is available when you need a professional workspace. It's a lot better than those noisy coffee shops or hotel lobbies.” The way businesses use workspace is evolving, with management discovering how costly it is to have workstations unoccupied for big chunks of the working week. Even larger corporations are using serviced and virtual offices to reduce overheads.

Still, most numerous among Servcorp's virtual office users are small businesses in need of a professional image and start-ups that have to conserve cash.

“Second [most numerous] are branch offices of companies that want a presence in a particular place, or want their sales staff to have use of a business lounge,” says Vlietstra. “Then there are companies that just need the phone to be answered professionally.”

While the typical serviced office tenant for Servcorp is a smaller business or start-up, Fortune 500 companies are expanding in Japan and need such accommodation, or require space for a project – seeking to be operational instantly. It remains a significant advantage for any firm to be able to concentrate on core business and outsource day-to-day office administration.

It is not always merely an interim solution.

“A serviced office is indeed a permanent office solution for many businesses,” says Vlietstra. “Our oldest clients have been with us for over 15 years. Generally, they are small in size and just want to have an office in a great building and use our team as theirs. It saves time and money. One monthly bill – that's it.”

For virtual offices, on the other hand, the average Servcorp customer stays 18 months, though some have stayed 10 years or more. Only one month's notice is required to leave.

Interestingly, the profile of the serviced office client in Japan is changing, with many more Japanese corporations finally accepting the wisdom of such an option.

“We have a lot of IT companies and technology-focused businesses, who need our IT infrastructure,” says Vlietstra.

The client profile for virtual offices has not changed as much.

“Economies still thrive on entrepreneurs. Virtual office clients are entrepreneurs and small businesses working from home or from another city,” says Vlietstra. What has changed is the service offering. “We see increasing demand for even more flexible workspace solutions, and companies willing to share office space and collaborate more.”

The Servcorp Japan general manager is emphatic that cost savings are by no means the chief consideration when potential clients ponder the value proposition of a virtual or serviced office.

“Value for money is crucial, and has nothing to do with saving costs. It is what a serviced office or a virtual office can do for the success of your business that counts,” she says. “Each business has its own priorities and can choose among many different providers and service levels. However, at the end of the day, it is how your customers see your business and your product that will make the difference.”

When Italian IC services provider Yogitech was searching for an office, it already had Japanese clients, but needed a reputable and convenient location from which to further expand the business.

“We are very impressed with the professionalism and quality of customer service that Servcorp provides,” says Toshiaki Torigoe, the company's representative director for Japan. “And they don't just wait around for us to give instructions, but are always actively proposing ways to help make our lives easier.”

Besides shouldering tedious administrative tasks, Torigoe adds, Servcorp coordinated a company event at a hotel, with over 100 clients and partners to celebrate the opening of the Japan office.

“Servcorp's serviced offices are not just an office solution, but part of an important business decision,” he says.

Sometimes it's the little things that make a lasting impression.

“Starting our Japanese operations at Servcorp allowed us to stay lean in the early stage and focus on key business priorities instead of office management… and their espresso machine makes an awesome café latte!” says Hannes Graah, Japan director of music streaming service Spotify. Jin Takahito Koh, vice-president of Splashtop Japan, describes Servcorp as the key platform for jump-starting the software developer's entry into the Japanese market.

“They enable us to go to market faster, so we can get to revenue sooner. They are not just a strategic partner; they are our competitive advantage,” he says.

Jeffrey Brouse, managing director of Tokyo-based market research agency 3Waves Japan, praises the Servcorp team at Aoyama Palacio Tower as “bilingual, efficient, flexible, professional – and understanding client needs inside and out”.

Having chosen a virtual office or serviced office does not mean a business is stuck with its initial choice.

“It is very common to start off with a virtual office and, when the need is there and the business improves, upgrade to a serviced office,” says Vlietstra. It is just as common to “downgrade” to a virtual office when times are tough or when there is simply no further need for a physical office, she adds. “The great thing is that you can keep your telephone numbers and business address through any transition.”

Beyond legal requirements – such as verifying a client's ID and residential address, and checking business registration details – Servcorp can do little to assure itself of a tenant's ultimate viability.

“More than 70% of new businesses do not survive three years. Our job is to help them succeed, but we carry the risk in case they don't,” says Vlietstra.

With the Internet such a huge and growing part of efficient business operations, Servcorp's service offering has evolved constantly over the past 15 years.

A VoIP-supported communications network links 140 locations across the world. Clients also utilise the highest broadband in the industry. Servcorp's software solutions and apps cover everything online – from real-time meeting room bookings and IT helpdesk, to managing phone diversions and online schedule changes to update receptionists.

“No other provider offers ICT solutions developed in-house exclusively for small to medium-sized businesses who use serviced offices and virtual offices,” says Vlietstra. The aim is to place clients in an ICT environment, including cloud storage and cloud printing, far in advance of what the typical start-up operation could build for itself.

With 22 locations across Japan, including Osaka, Fukuoka and Nagoya, Servcorp sees immense potential for further expansion. For Tokyo, a new location opened recently in the Marunouchi district, near the Imperial Palace gardens and Tokyo Station, and six months ago the Fukuoka operation was doubled in size.

“We are hunting for new locations in top buildings in various cities in Japan,” says Vlietstra, noting that in some ways the Japan market remains immature. “Our biggest challenge here is to get people to understand what a virtual office actually is. We still have to do a lot of education.”

There are big challenges for serviced office providers as well.

“When you compare Tokyo to, for example, London, you realise that Tokyo has less than 20% of the serviced office space on offer as that of London. The biggest challenge is with landlords who prefer renting their prized spaces to one tenant or only a few. They are wary of serviced offices that offer shared accommodation to many different corporations,” says Vlietstra. “They should be more flexible, because serviced offices and virtual offices help the economy by providing a solid base for start-up businesses and entrepreneurs.”

Servcorp gives a big tick to the advent of Abenomics.

“Foreign investment returned almost instantly, and this has affected the business positively,” says Vlietstra.

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Olga Vlietstra, Japan General Manager