Growing a small business isn’t easy; every step you take needs to be well-thought and calculated. Business owners face many challenges and the biggest one is maintaining a steady workflow and generating a return of investment. Establishing a business comes with many expenses like renting office space, payroll, marketing, and more, so small business owners should always be on the hunt for finding new ways to save money.
During the pandemic, small businesses suffered and many of them didn’t make it through and had to shut down. However, there were businesses that embraced remote work and found ways to make it work for them. Remote work became specifically popular during these last two years and the results were surprisingly good.
Applying a remote work policy or a work-from-home option offers employees the chance to improve their work-life balance; it also boosts employee morale, cultivates a healthy work environment, and even increases employee retention.
A previous Stanford study conducted on 500 employees showed that remote workers experienced a remarkable productivity boost equivalent to a full day’s work. Eliminating things like office distractions, meetings, and commuting to and from the office, proved to make a significant difference in productivity. Now let’s find out, is it a cost-effective solution?
Is remote work a cost-effective solution for small businesses?
Global Workplace Analytics ran a study and estimated that a typical employer can save an average of around $11,000 per year on every half-time remote worker. This was money that went towards renting an office, equipment for the office, recruiting, turnover, insurance, and more. Here’s how small businesses can save money by remote work:
1. Save money on office space
Many small businesses can barely get by but have an expensive office lease to pay because they think it’s important to achieve a successful business. But with 69% of US employees working from home at the peak of the pandemic, businesses have become more accepting of remote work and realize the impact it has on their business and employees.
Small businesses can save a lot of money without having a physical office to pay and care for, the high expenses aren’t just rent, but the office requires furniture like desks and chairs, equipment like a fax machine and computers, and even stationery. All of these things should be accounted for when setting your budget.
One of the big names embracing telecommuting is Dell; the company has a flexible remote work policy and reportedly saved up to $12 million a year on real estate. You can save up to thousands a year if you had a remote work option. Thanks to virtual technology, you don’t even need a physical office to have a professional business address, you can sign up for a virtual business address.
A virtual business address is a real street address that you can use as your business address. It’ll give you the professional image you seek as a small business, increase your credibility with customers, and is a scalable option as your business grows. This address can be in the same city as your business or anywhere else in the world; you can get a professional business address for as low as $15 per month in a major city like San Francisco, New York City, or Chicago.
2. Decrease costs from turnover, rehiring, and training
Small business owners should aim to increase employee retention by keeping employee morale high by offering them flexible options, like being able to work from home. This encourages them to stay loyal, in fact, an Owl Labs survey conducted in 2020 found that for employers that didn’t allow employees to work from home, 54% of employees would stay but wouldn’t go the extra mile and 46% would look for another job.
Another Stanford study also showed that employee retention increased by 50% when employees had the option to work from home. This doesn’t only offer employees a flexible schedule and the ability to work in their own environment, it also saves them money.
A recent FlexJobs survey shows that a remote employee saves up to $4,000 per year on commuting, lunch, and clothes for work. It’s a win-win for both the employer and employees! With an increase in employee retention, you’ll witness a decrease in employee turnover, which would save you the cost of rehiring, running background checks, and training someone new.
OnDeck, a small business loans company, concluded that the average cost to replace an employee is $4,425, and it takes around 36 days to fill that position. Rehiring is a tiring process that consumes both money and time, so why go through it?
3. Attract key talent without geographical restrictions
If you don’t have multiple business locations or aren’t located in a big city, it may be hard to find someone with the skills you require and if you try recruiting better candidates from different areas, you’ll need to convince them to relocate and it won’t be cheap.
Small businesses find it hard to attract key talent because of the restrictions of their location but remote work solves this problem.
By working remotely, you have a larger pool of talent and can hire someone from the other side of the globe. It also gives you more flexibility, where you can hire someone permanently, temporarily, or on a project basis. With freelance on the rise, you can find someone skilled and qualified that charges hourly.
Freelance and remote work gives you more options to choose from, whether you’re looking for more talent, more experience, or lower rates.
How can you make the shift to remote work?
COVID-19 has definitely helped businesses become more accustomed to working from home and remote work, since most businesses had employees work from home at some point during the pandemic. But if you’re still concerned about shifting to remote work, take it one step at a time.
For starters, make sure your employees have the right tools to work from home like a strong internet connection, a laptop, etc. then you can start by having employees work remotely one day per week or more if needed. Get familiar with the concept, find out what your employees think, address any problems they’re having with remote work, and evaluate the progress of work and productivity on remote days.
This is a big change for you and your employees, creating a remote work adoption policy by collaborating more frequently and setting video conference calls, can ease the process.
Check more about: What Is the Future of Remote Work After COVID?