During the Valley’s gasoline shortage in August, business owner Julia Hutton never worried about her employees calling in to say they couldn’t get to work because they couldn’t buy gas. In fact, if any had, they would have been fired, she said.
That’s because Hutton’s company, Orca Communications Unlimited LLC, is a "virtual" company — a company without a physical office where employees have to report each morning.
The public relations firm has four employees plus eight people who work for the firm as subcontractors. They all work out of their homes and communicate by e-mail and telephone. When the staff meets, they do so at one of the homes or a restaurant. Client meetings are held in their offices or at Hutton’s home office in Ahwatukee Foothills.
By using the virtual business model, employees save thousands of car miles a year in commuting time and expense. The company saves thousands of dollars a year in office space expenses. And employees sometimes don’t even need to dress up to go to work.
That doesn’t matter to Hutton as long as the final results please the client.
"Our employees are good at what they do and are able to meet and exceed goals largely because they are not drained by commutes and distractions of a typical office environment," she said.
Hutton estimates the virtual business model saves her about $50,000 a year in office space and other overhead expenses, which she passes on to clients in lower fees.
Development of such technologies as the Internet, cell phones, e-mail, personal digital assistants, Web cameras and video conferencing has made the virtual company a reality, and many entrepreneurs are figuring out how to make it work as a business model.
Statistics on virtual companies are hard to come by, but the International Telework Association and Council reported there were 28.8 million telecommuters in the United States in 2001, which was one in every five employees. Studies also show that people who work at home are often more productive. For example, AT &T said telecommuting by its employees generated more than $150 million in business benefits in 2002 through enhanced productivity, reduced overhead costs and lower turnover.
Of course, virtual businesses aren’t for everyone — particularly workers who need a lot of supervision or supervisors with a mania for control.
Hutton said the key is hiring employees who are self-starters. "A lot of people need the social environment of an office setting," she said. "When you are hiring, you have to think seriously about how they will do working alone."
Even with a group of self-starters, management of a virtual company can present unusual challenges. In particular, communication can be a problem when employees are based miles apart.
Hutton has tried to deal with that problem by instituting a buddy system in which everyone at the company has one person with whom they provide weekly updates via e-mail on project-related details. Also, employees are asked to send an "Out of the Office" e-mail whenever they leave their home office with estimated time of return. They also carry cell phones so they can be reached quickly if needed.
Documents are shared via fax. When conferences are necessary, Orca uses threeway telephone conferencing. For occasional human contact, staffers attend monthly meetings at homes or restaurants.
So far, most potential clients have not reacted negatively to Orca’s lack of a corporate office or suite, she said.
"We did have a business management consultant who thought we should hide the fact we were virtual and didn’t have an expensive office in a downtown Phoenix skyscraper," she said. "But I think clients appreciate that we don’t have that overhead."
Ann N. Videan, who operates her own marketing and public relations firm from her home in Mesa, has taken the virtual company concept one step further. She doesn’t have any employees; she works only with partners who function as subcontractors. They perform specialized jobs that Videan can’t handle. Videan includes a charge for their work when bidding on a project and shares the fee with them.
"I don’t have employees, so I don’t have those management responsibilities," she said. "Because I have a virtual company, I can draw on others like me . . . and grab the right person for a job if I’m not the right person to do it."
All of her partners are women, and Videan believes the virtual concept is especially popular with them because it gives them more flexibility to balance work with home responsibilities.
"I took a field trip to the Heard Museum with my daughter today," she said. "I couldn’t do that at a nine-tofive corporation."
Jeff Bohne, president and founder of HR Service Providers, a human resources outsourcing firm, has added his own twist to the virtual model. Instead of working out of his Gilbert home, he works almost entirely at his clients’ offices. He and his three employees handle human resources functions for a dozen clients, mostly small to medium-sized companies, spending three to four days a week in each client’s office.
"If done well, the customer gets a high degree of hightouch service because we are in their offices. They don’t have to go to us," he said.
Bohne figures that he can provide human resource services for about the same cost that a company would pay for a full-time junior-level HR person.
"But we can handle seniorlevel functions," he said.
Unlike other virtual business owners, Bohne doesn’t save on commuting.
"Actually, I commute a little more than the average because our clients are spread from the east to the west side of Phoenix," he said.