Share with your friends

Rocket Lawyer news about business law

A Step-by-Step Guide to Expanding Your Business on a Virtual Shoestring

Real estate attorney William DeClercq tells how he grew a professional business from a home-based startup to an executive suite—while minimizing his costs and keeping his legal cover. Mr. DeClercq is licensed to practice in California, and is a member of the Rocket Lawyer On Call® network.

Whether you’re setting up shop as an investment advisor, a designer, an architect, a salesperson, or—in my case—an independent attorney, the logistics are pretty much the same. When I first opened my law practice in December 2011, I had almost no savings, no overhead, and no clients. But I had a lot of bravado.

Home Startup

I started in the back room of my house. I set up a desk, used my cell phone and my wife’s computer, and I went about the process of heavy business development. The big advantage was that I had no overhead. Like many other professionals, my work did not require a physical location. There are also some tax advantages to working from home, but they can cut both ways. You can use your home office as a tax deduction—but I found out the hard way that you really need a CPA to do it right. It’s a complicated deduction because there are so many components, and you have to be able to use the space exclusively for your business.

As far as liability insurance, you’ll be covered on your homeowners policy, as long as you are using your home office solely as the nerve center for your new business and only seeing clients in the field. If you’re managing phone calls, email and paperwork, your biggest liability issue will be a papercut. Your professional liability insurance will cover your professional work.

There’s a catch though: if you ever see clients at your home office, you could face tort liability. If someone slips on ice on your front porch, you’re potentially liable for an unsafe premises. Even if you have incorporated your business as a separate entity, all you are doing is giving them two pockets to pick. That’s because premises liability attaches itself to the owner of the premises. Commercial liability may not protect you either. They can sue you, and your business. For that reason, I’d highly recommend against meeting with clients at a home office. You can avoid the problem altogether by meeting elsewhere, like Starbuck’s or even the client’s home.

The Next Step: Virtual Office

But there are other problems with home offices. Mine became unworkable very quickly. My business is very paper intensive, and I had nowhere to put things. At home you may have barking dogs or gardeners or children interrupting. People have a higher tolerance for that these days, but my preference is for total silence when I’m on a client call. It’s just more professional.

I found that my home office was really limiting my ability to grow. Within three months, I had a big enough work flow to think about something else. To anyone who is starting a professional business, I strongly recommend a virtual office as soon as you can afford it. You sometimes need a place to go, even if it’s just to get out of the house.

A virtual office is essentially a P.O. box on steroids. There are several national companies and some smaller regional ones that offer a whole menu of choices for a professional environment. For just $150 per month, I had a physical address where I could receive mail and packages, and client checks.

I’d book 16 hours per month for conference room time, and I’d tell clients, “Why don’t you meet me at my office.” The company provides a receptionist and a nice waiting area, and you don’t have to worry about premises liability.

Virtual offices also offer answering services, but I didn’t need to pay for that. I got a Google Voice number for free. It allowed me to grow very quickly, and have a phone number identity that I’ve been able to keep. It originally forwarded to my cell phone, and now it forwards to my office. I had my sister record an intro for me. She’s an actress, so it sounded like I had a secretary.

Moving on Up: the Executive Suite

The final benefit of virtual offices is that they all have the option of upgrading to an executive suite, which I eventually did. That way you get your own office, where you can keep all your stuff and close the door. You pay monthly rent, and get phone, internet, and a shared professional receptionist to screen calls. There’s a copy room, a kitchen, and the big advantage is they bring you donuts every Friday.

Plus, I still don’t have to worry about premises liability, or—with my type of work—general commercial liability insurance. If I was dealing with any kind of product or employees or transportation, I’d think about more insurance. But it’s unlikely I’d have a car accident while making a delivery, or have a sample explode in someone’s face. My liability remains limited to paper cuts.

My executive suite came with a lot more. It’s turned into a tremendous opportunity for business development. My space has quite a few attorneys, and we’ve basically built a virtual law firm. In fact, the case I’m litigating right now was a referral from one of those attorneys.

Another benefit is there are potential clients all around you. We have a wide range of business. There’s a real estate brokerage, Partners Trust, and I met the CEO in the kitchen. Since real estate is my practice area, it’s great for networking. There’s also a security guard training facility, with all these ex-military guys. Sometimes they practice hand-to-hand combat in the kitchen.

The major issue it’s much more expensive per square foot. I save by renting an interior office, and like an interior cabin on a cruise ship, the view is of the hallway. I pay $750 per month, which is still far less expensive than having my own office and employees.

Commercial Leases: Professional Help Required

At some point I could hope that I might be big enough to need a commercial space. One thing I can’t state strongly enough is that If you are venturing into a commercial lease, you need good counsel. Some states, like California, are very-tenant friendly so commercial leases are difficult to modify. That means landlords will create leases that are very landlord friendly. Leases are very complex documents and they vary quite a bit. But some people treat them like software license agreements: they assume it’s a standard document, and they sign without reading.

Commercial leases—even those for executive suites—need to be treated as fully negotiated document. Leases are not something to mess around without help. My lease doesn’t hold me responsible for premises liability, but you have to make sure yours doesn’t. You need bargaining power. I specialize in commercial lease litigation, so I’ve seen a lot of bad leases.

Stay Flexible

The good news about my situation now is that I can pass on all my saved costs to my clients. I’m going up against a firm right now that has 30 lawyers, and I’m billing my clients one-third of what they are. I still have barely any overhead.

For anyone offering professional services today, this kind of flexibility is key. You need the ability to expand and contract quickly, as your workload goes up and down. And sometimes, all you need is a place to do your invoices.’

 Related articles

Comments are closed.