As part of the Global Workspace Association’s webinar series, Barry Gesserman of iPostal1 talked to members about the earnings potential of the virtual office industry. While many coworking space businesses are focused on the needs of their tenant clients, Gessserman explained that virtual companies represent an underserved market of the small business industry. He talked with members about how to tap into this market and earn profits with minimal work.
Why Virtual Offices?
Virtual offices need coworking businesses, and coworking businesses need virtual offices. For many virtual companies and offices, a physical office space simply doesn’t make sense, given that the vast majority of these companies are non-employers—they are one-person organizations.
That said, they do need a business mailing address, a professional-looking office building, and the workplace amenities (such as a fax machine) available to most businesses. On the flip side, coworking space owners who provide services to virtual offices benefit from being able to essentially serve as many clients as they want (without the spatial limitations on the number of physical tenants). They can also reach a local, national or even global market while garnering recurring monthly revenue.
Although virtual office growth was lagging a few years ago, virtual customer growth at Pack and Ship stores is booming, with 500 stores in 50 states. These stores made $1.3 million last year, and project more than double that for 2018. Coworking businesses can often offer more services than pack and ship locations, allowing them access to this customer base as well.
What do Pack and Ship stores offer?
Pack and Ship stores offer customers the benefit of a physical address to send and receive mail, rather than just a PO box. This can be helpful to businesses for a number of reasons, including providing them a street address to use when applying for a business loan, allowing them to receive packages, and even providing occasional meeting space. Traditionally, these stores serve a very small area—about a three-mile radius around the location—since clients must drive to pick up their mail.
However, Gesserman explained that a digital mailbox service can allow you to offer expanded service from your coworking space. These allow clients to view mail and manage packages from anywhere in the world, and can also include phone service, a fax number, and other extras that would increase your value and the price you could charge. Under this model, you would scan the client’s mail and send it to them. They would then be able to read their mail, have it forwarded, discarded, or shredded, or schedule to pick it up. Clients can generally view their mail either online or through an app. Gesserman recommended storing and organizing mail in a file cabinet (or a few).
Why Pack and Ship?
Catering to the clients that are currently using Pack and Ship stores is a smart business move right now, Gesserman explained. New small businesses—a large percentage of which are virtual, non-employer businesses, are growing at a rate of 540,000 each month, and 69 percent of them start at home. Many of these business owners don’t want to list their home address as their business address, for reasons ranging from not wanting to give out personal information to needing a registered business address in order to get a loan or register their company. Businesses also often value the appearance of a storefront business, which can be especially helpful for local clients who have a few hours of meeting-space time in the coworking space available as part of their bundle (a feature Pack and Ship stores can’t offer).
Virtual businesses—foreign and domestic—also benefit from virtual office services. In fact, 80 to 90 percent of virtual customers come from other cities, states, or abroad. They can be interested in a given location for a virtual office because of everything from legal and tax benefits to multiple market presence abilities. Foreign companies also often benefit from having a physical address to mark their presence in the country.
Technology and Outlook
Gesserman recommended looking into technology to help manage virtual client mail, including mail insertion, credit card screening, auto payment processing and package management systems. In spite of the large amount of work these kinds of services sound like they would be, Gesserman reported a need to only spend around 15 minutes per 100 customers each day. With pricing for virtual office space averaging at around $40 to $50 per month (for up to thirty pieces of mail), Gesserman said coworking businesses offering great service to these customers could easily expect between 500 and 1,000 clients, bringing in between $200,000 and $400,000 per year. Since coworking spaces already have a registered business address, they can earn this revenue without much extra cost to them.
Prices should go up for high volumes of mail as well as for added services. For example, a 30-piece plan for just mail would be $40 per month, while the same piece size with phone and fax services might be $60. While these rates are higher than those of the Pack and Ship stores, coworking spaces can often offer enough extra services and incentives (including limited office space, etc.) to make it worthwhile for clients.
Full Webinar Recording
This webinar was part of an on-going series for Global Workspace Association members. In addition to the information summarized here, Gesserman also gave a number of examples, as well as entertaining an extensive question and answer session. A full recording of this webinar, as well as invitations to all future webinars, are available to Global Workspace Association members. You can sign up for membership here.